Whether the thought makes you want to cry or makes you daydream about your big day, it’s a fact of life that your friends, and maybe you, will be getting married soon.
One of the first big decisions married couples make is whether to have a joint bank account.
In fact, you don’t have to be married to open a joint bank account. Anyone can open a bank account together.
You may find yourself in a situation where your significant other wants to open a joint bank account with you, or you may be considering asking your significant other. Either way, it’s a decision you shouldn’t take lightly, so let’s look at the pros and cons.
The obvious benefit of a joint bank account is convenience.
Being able to pay for shared expenses becomes hassle-free: The money just comes out of the joint bank account. If you both pay equal amounts into the joint account, there doesn’t have to be any arguing over who should pay for what.
The joint money can pay rent/mortgages, bills and other shared costs, like dining out so neither of you will feel like one is paying for more than the other is.
Adding convenience to the mundane task of finances might make your relationship easier.
Joint bank accounts not only offer convenience, but also provide legal benefits.
For example, if one of you unexpectedly passes away without a will, the living person will have legal right to the money in the account, even if you aren’t married. In addition, you will both have 100 percent access to the account, so no one has to ask the other when they need money.
This brings us to the first disadvantage of having a joint account: Both of you will have 100 percent access to the account.
If you both aren’t completely honest when you use money, it will create problems. You have to set rules for what purchases need to be discussed with each other.
For instance, some couples may be fine with making $1,000 purchases without discussing beforehand, while other may not.
Problems could occur if you have different financial outlooks. If you’re a frugal spender and your significant other likes to make it rain at Whole Foods every week, that’s a recipe for disaster without effective communication.
Spending habits may also differ because one person earns more than the other, which could create conflicts about use of funds.
Finances can easily ruin a relationship, but the key is to have great communication skills to overcome your differences. However if you don’t have great communication this leads to the obvious disadvantage — what happens when you break up or divorce?
Since you’re both legally entitled to the account, separating the money can be a long and nasty legal battle.
You may not even see any of the money if your ex can drain the accounts. Yes, you can go to court but it’s a long process.
There are two disadvantages people tend to overlook when deciding to have a joint account.
The first is having a joint account isn’t romantic.
In a relationship, it’s nice to give and receive gifts from your significant other and to go on dates. However, a date might lose some of its charm when the money is both of yours.
The second overlooked disadvantage is a joint bank account can make people feel less independent because they feel they have to check with their significant other every time they want to make a purchase.
If the question this column aims to answer is whether you should open a joint bank account, then the answer I give you is: Well, it depends.
If you reread the pros and cons, you’ll see you can make almost every pro into a con and vice versa.
You may have heard of studies that found couples who share finances are happier than couples who don’t. However, take these studies with a grain of salt because correlation may not imply causation.
Couples who share money may be in a more stable relationship than those who don’t share money or couples who share money are most likely in more trusting relationship, and probably a happier relationship.
To decide on having a joint bank account, both of you should answer these three questions.
Are your spending habits similar? Do you have a joint budget? What would make you sleep better at night?
If you answer “no” to the first two questions, you can still make a joint account work. You just have to be honest and have great communication with each other.
If you answer “no” to the third question, there’s no negotiating. If it doesn’t feel right, then don’t do it.
Still can’t decide between opening a joint bank account or not? Remember banks allow you to have more than one account.
Try easing into sharing finances by opening a joint account and both of you only contribute a small amount of money and see how it works.
If I would make one suggestion to every couple, it would be to have both separate and joint bank accounts.
Take your paycheck and put 10 percent away for savings and retirement, 30 percent to your personal bank account and the remaining 60 percent to a joint account.
This setup allows you both to have your own spending money,while having a joint account to pay for any costs you’re both responsible for. However, this decision isn’t one I can make for you, both you and your significant other need to sit down and discuss what’s best for your relationship. This column should just serve as a road map for the discussion.
Jay is a 20-year-old finance junior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.