Should my partner and I have a joint bank account?

Should my partner and I have a joint bank account?
2021 / 01 / 20

For the sake of making day-to-day banking fees as low as possible, having a joint account rather than individual accounts makes sense. However, for different reasons, some people are not comfortable joining their day-to-day banking with another person. Joint banking can also pose problems in the event of separation, divorce or if both people do not share the same views with respect to money management.

Perhaps a compromise is the best path forward. Such a compromise might involve each person having their own separate accounts for deposits of income, savings and payment of an individual debt or any other expense not joint in nature.

A joint account would be set up specifically to cover all household expenses which are joint in nature. For example, this might include, mortgage or rent, utility bills, groceries, childcare, vehicles as well as payment towards any other joint debt. Upon opening the joint account, both individuals would decide which household expenses will be paid through the joint account and then decide how much each individual will contribute to the account via automatic transfer each pay period.

After deciding which household expenses will be paid through the joint account and how much these expenses amount to, a buffer should be added to act as a cushion to help deal with unexpected or emergency expenses occurring along the way.

For illustration, let's assume household expenses being paid through the joint account plus a buffer amounts to $3500.00 per month and each person is paid biweekly and each person earns approximately the same amount of money. Each person would contribute $875.00 biweekly per pay to fund the joint account. For months where there are 3 pay-periods in the same month, contributing $875.00 biweekly from each and every pay will add extra for your buffer to cover unexpected or emergency expenses. The balance of each pay after contributing to the joint account would remain in their own personal account for personal savings, personal spending and payment of the individual debt or any other expense not joint in nature. If one person earned substantially more than the other person, the biweekly contributions to the joint account could be pro-rated according to the share of household income or some other factor that is fair and reasonable to both people.

Finally, it is important for both people to track all joint expenses monthly to review whether the amount being contributed to the joint account needs to be increased or decreased to ensure both people achieve financial stability and financial security.

For any questions regarding personal finance or a plan for dealing with debt, please do not hesitate to contact our office for a free consultation.

 

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