“Sharing is Caring” – Does that Apply to Bank Accounts?

Ah, opening a joint bank account or credit card – so easy to do, yet so hard to untangle if things don’t go as planned.

Once you open a joint account, the money that was “yours” is now “ours.” That’s a big step for any relationship. Make sure you’re on the same page about how you will manage money as a couple.

Pitfalls of Joint Accounts

Like any financial decision, opening a joint account has risks and rewards. Co-owners of an account can legally spend, give away, or transfer funds to other accounts. They don’t need consent or knowledge of other account holders. This leaves you with relatively little protection.

Before you take this step, make sure you’re confident with your reasons for opening a joint account. What are your goals? Are there other ways to achieve those goals?

Financial Infidelity

As you think about opening a joint account, consider your views on financial privacy and “financial infidelity.” Do you think you or your partner should be allowed to keep some aspects of your financial lives separate and private? The National Endowment for Financial Education (NEFE) reports that over 40% of American adults who combine finances with a partner commit financial deceptions against their significant other. Plus, 75% of adults say financial deceit has affected their relationship.

Watch Your Credit Score

Joint credit cards can impact your credit score negatively, but they can also improve your credit score! If one partner uses credit beyond their means to pay, this can create financial hardship and conflict.

Check Your Money Values

Understanding how your financial values differ from those of your partner is key to managing money together. NEFE’s LifeValues quiz can help you identify the values that drive your financial decisions. I encourage you to take the quiz and compare results with your partner.

If you come out with different results, that’s okay! Use that as a starting point to talk about how you’ll manage different perspectives, behaviors, and values.

Benefits of Joint Accounts

Managing money together can be beneficial for both parties. It’s an opportunity to learn about each other’s money personalities, strengths, and weaknesses. It can also allow someone with lower credit to get more favorable credit terms (lower interest rates, higher credit limits) and improve their credit.

The key is communication. If you can’t talk openly about the pros and cons of opening a joint account, it might be better to manage your money separately until you’re on the same page.