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By Lyndsey Douglas
When a relationship starts getting serious, there is a foreseeable commitment that could become an elephant in the room.
Something that becomes more inevitable as time goes on, a long term commitment that binds you and your partner inextricably. And it all starts when you get down on one knee, and pop the crucial question:
"Will you open a joint account with me?"
Why open a joint account?
When your relationship becomes something you have both committed to for the far future, a joint account can be a savvy way of saving and operating. You'll only pay fees for one account, and you can both deposit into it. This allows for a greater pool of money to accrue interest, and you can make joint payments on power bills, home loans and the like with ease. It's great for your financial planning!
Remember the days of everybody depositing their portion of rent into someone's account and then transferring it to a landlord? Say goodbye to those with a joint account for you and your loved one.
Signing on the line
No two people's attitudes towards money are likely to be identical, even if they are compatible in every other way.
As the Australian Securities and Investments Commission points out, there are actually two types of joint accounts - both-to-sign, and either-to-sign. These are fairly self explanatory, either one or both parties' signatures are required before transactions are made.
If one of you is a more reckless spender than the other, a both-to-sign option could be useful to make sure you're both in check with your wealth management!
The risks of opening a joint account
No two people's attitudes towards money are likely to be identical, even if they are compatible in every other way. That's why you should sit down with your partner and work out how a joint account will function before you take the plunge and open one.
Think about questions like:
- Do I trust my partner with my money?
- Are we both in the same financial situation? Who will contribute how much?
- What are both of your long term financial goals?
- Who is going to handle the day to day finances? Will you both have cards?
- Will you be going into debt? Whose name will it be under?
Even if you both sign on for a joint account or home loan, you can still be liable for the entirety of anything that goes wrong. Closing a joint account in the event of a separation requires both parties to agree, get it in writing and settle outstanding debts too. Sharing your money with your partner is a powerful commitment - make sure you're doing it right!