Are you and your significant other cohabitating sooner than planned due to the coronavirus outbreak? You’re not alone. If so, you might wonder whether it’s time to open a joint bank account.
While that might seem like the appropriate thing to do, there’s no one-size-fits-all answer. In fact, 24% of participants in a Policygenius survey admitted they didn’t share any major financial accounts with their partner.
If you’re thinking about heading down this road, take a step back and figure out if it’s truly the right move for your relationship. This could largely depend on your reasons for opening a shared account, and if you’ve already talked about finances.
“It’s a good idea to open a joint account once you’ve been able to have healthy money talks, and both agree that it’s the right step,” says Adam Kol, a financial coach for couples and founder of AHK Coaching.
Let’s dive into when (and when not) to consider having a joint bank account, what you two will need to hash out before taking the plunge, and some alternatives if you’re not quite there yet.
Are you and your partner ready for a joint account?
There are a handful of reasons why it might make sense for you and your partner to open an account. Let’s take a look:
- You’re saving for a shared goal. You might want to have a joint bank account for any financial targets you’re working toward together, whether that’s moving expenses, adopting a pet, or a far-flung vacation. It can help set up you for steady progress, and make sure each partner is contributing their fair share. What’s more, it can lead to developing greater trust and team-building.
- A significant life event is on the horizon. Moving in together, getting hitched, starting a family—these major milestones may be a good reason for opening a shared account with your partner. As you enter this new stage in your relationship, it could be easier to coordinate your finances. Plus, it could open the door to more in-depth discussions about money.
On the other hand, there may be some good reasons to wait on taking this step. Commingling your finances has traditionally been a sign of trust and commitment, but times have changed.
“We tend to ascribe meaning to having shared accounts,” Kol says, “and we might feel our relationship is strong only if we have them. Examine those ideas together—they are not always nor automatically true.”
Here are a few instances when it might not be in your and your partner’s best interest to get a shared account:
- You value your independence. If you and your partner are used to handling your own money and have a different way of doing things, it could lead to a strain in the relationship if you open a joint bank account. It could also cause resentment if someone feels like their partner is taking advantage of them. “For example, this may happen when one earns significantly more than the other,” Kol says.
- You haven’t had money talks. Let’s say you haven’t had open conversations about your finances. You’ll want to chat about both logistics and the bigger picture. “Before opening a joint account, couples would benefit from discussing their hopes, dreams, fears, and worries around money and having shared accounts,” Kol says.
- Your partner has suffered from financial abuse. If a partner has experienced trauma from some form of financial abuse—using money as a form of control, hiding mountains of credit card debt, or some other financial secret—then it might be best to hold off. “If either partner doesn’t feel safe, then there’s no need to rush into it,” Kol says. “In particular, someone who has survived financial abuse may need time to feel ready for a step like this.”
What else do you need to discuss before you take the plunge?
Once you’ve determined you’re ready, there’s still some more chatting you’ll need to do. Have a discussion around your goals, and address any concerns to make sure you’re on the same page. Before moving forward, Kol recommends sussing out the following:
1. Figure out how much each of you will contribute
This largely depends on why you’ve decided to have a joint account in the first place. If it’s to cover living expenses, will each of you be responsible for half? Or does the amount equal a percentage based on your respective earnings? If you want to open a shared bank account to save toward a goal, figure out the amount you’ll be saving and how frequently. If it’s the same amount each week or month, consider setting up auto-savings to minimize hassle.
2. Determine which expenses are to be paid from that account
If money from your joint account will go toward bills, determine exactly which living expenses are to be pulled from your shared account.
3. Decide who bears the responsibility of monitoring the account
Who will be tasked with paying any shared bills from pooled money and making sure the account is sufficiently funded? Should you move and need to change your mailing address, or there’s an incorrect late fee or another discrepancy, who will be responsible for making those calls?
4. Talk about how things will be handled should you part ways
While undoubtedly an unpleasant conversation to have, it could prevent stress and confusion should you split up down the line. Or if you want to switch up your arrangement, agree to schedule a “money date” where you sit down and talk about your money goals, and any changes you want to make in how you’re managing your shared finances.
What can you do if you don’t want to completely merge finances yet?
Maybe you made the next step of moving in together, but you’re not quite ready to merge finances just yet. If it’s not the right move for your relationship this very moment, here are some alternatives to consider instead:
- Use a shared account to only save for a shared goal. You can open a joint account solely to save for a common goal, such as a vacation, mutual emergency fund, deposit on a new apartment, or covering expenses for your fur baby. You might consider doing business with a company like Simple, which offers joint checking and debit cards. If you don’t want to open an account with a bank, you can download popular savings apps such as Digit and Qapital. They both enable you to set up rules to save on the regular.
- Have a mix of joint and separate accounts. In relationships, compromise is often the answer. If you don’t feel comfortable going all-in, consider opening a shared account while each maintaining individual ones. “Shared accounts can help couples strengthen trust and share in their financial progress,” Kol says. “The individual accounts allow for a valuable dose of freedom and independence.”
- Set limits and boundaries. Some joint bank accounts let you set rules. Start by establishing limits on your joint account. For example, make it clear that you can only take out money that you personally contributed. And if you’re pooling your money into a joint account, define what types of purchases that money can be used for. Another thing to consider is what type of purchases need an okay from both parties. Is there a threshold that triggers an approval? For instance, you might want to talk to your partner first before buying any non-essential purchases over, say, $100.
As you might expect, knowing whether you should have a joint bank account is rooted in communication. “It doesn’t make a relationship inherently better to have joint accounts. Rather, focus on having good conversations and making sure each of you feels ready.”
Whichever arrangement you decide to have, the key is to build a relationship that fulfills your particular needs. “Create your relationship so that it serves you and your partner, including around money,” Kol says.