In most cultures, marriage and lifetime partnership are just normal parts of everyday life. As common as this is, combining finances can be one of the most challenging aspects of bringing two households together. Fortunately, joint checking or savings accounts allow for one individual and their partner or spouse to have equal access and control, making it easier to do things like pay bills or save towards a future home.
What Is the Criteria for Opening a Joint Bank Account?
Like any other type of bank account, opening a joint bank account requires personal information such as government identification, permanent address, and employment details of both account holders. On a personal level, the joint account holders should be on the same page about what the account will be used for and how much each person is expected to contribute to the account.
Instead of opening a separate joint account, it’s possible to convert an existing individual account. These days, many banks will allow an account owner to add their partner as a second user. This typically requires filling out a form or a short visit to a branch location.
Advantages of a Joint Account
The most obvious benefit of a joint account is the ability for two people to pool their assets to accomplish a shared goal. With two people having equal access, joint accounts make it easier to track shared expenses like insurance, utility bills, or mortgage payments. Typically, this system makes it easier to prioritize certain financial obligations over others, such as paying down student debt or paying household bills on time. The shared access allows for complete transparency, so each party can see what and how much is being contributed. Joint accounts also allow access to funds during emergencies if one of the account holders becomes incapacitated in any way.
Disadvantages of a Joint Account
A joint account can lead to conflict if the account holders have different spending styles. Having two people’s expenses combined into one account is another source of possible conflict. Joint accounts can also complicate the division of assets during the divorce process if the account holders were legally married. In cases where the account holders were not legally married, the process of untangling finances can be even messier.
Fortunately, using a joint account for shared expenses and maintaining individual accounts on the side is a tried-and-true compromise that works for many couples. According to the experts at SoFi, conflict can be avoided by “creating a system for keeping in touch and on top of the money,” whether that is scheduling regular check-ins or having open conversations about financial goals.
Financial hardship is one of the top leading causes of divorce. It’s also unavoidable as long as the couple plans ahead. If utilized correctly, a joint account can improve a household’s financial standing. Communicating often, sticking to a budget, and regularly making and achieving different goals can all play a role in strengthening a couple’s finances and overall relationship health.
