12/14/2022
As you move forward in a relationship with another person, the financial issue becomes important if you both want to move in together or get married. This may mean sharing bills and starting to save for future plans.
With the prospect of a life together, managing your finances should be a priority. That's why we show you what joint accounts are and their advantages.
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Relevant facts about joint accounts
We think it's important to tell you that, according to a TD Bank survey, 90% of happy couples discuss money matters at least once a month. In contrast, 68% of troubled unions do not.
In fact, those who address this issue reveal that this has strengthened their relationship and reinforced the intention of having common goals.
Similarly, poor money management can also be responsible for a couple's happiness. Some studies indicate that financial secrets are the first cause for ending a relationship.
Thus, 27% of Americans would consider divorce when there are hidden accounts and many would think about separating if their better half hides a debt of more than $15,000.
What are joint accounts?
Joint accounts are checking or savings accounts in the name of 2 or more people who share rights and responsibilities equally.
Beyond married couples, this category can include partners, close family members, business associates and more. This is common when people want to manage their personal finances jointly.
How joint accounts work
The right to withdraw or deposit money will depend on the type of joint account you decide to set up with your partner.
In general, the parties involved usually choose the joint-tenancy option. Under this type of arrangement, each of the account holders has the power to deposit or withdraw money with the consent of his or her partner.
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In addition, if one of the owners dies, the surviving person will have full control of the account without having to go through the probate process, which is required by the state when there is no designated beneficiary.
Advantages of joint accounts
Joining forces to manage household finances has its advantages, although it can also present certain difficulties. As the data reveals, couples who are more open about managing their income are more likely to have a healthier relationship.
That said, the benefits of joint accounts include the following:
It offers a clearer financial perspective.
When you both manage household expenses through a single account, it's easier to get a complete picture of money management. Often, too many accounts between 2 people make it more cumbersome to keep proper track of expenses.
With a single fund, it is easier to budget, see in which categories there are overages and which could be adjusted based on the current situation.
Promotes trust and transparency
Any financial planning expert will tell you that a joint account serves to establish more open communication about money management.
This shared concern also fosters trust, as you both try to address your medium- or long-term goals and work through any situations. This can be achieved with separate accounts, but closer couples prefer this option.
Greater availability when needed
Another advantage of a joint account is that either account holder can access the funds whenever they are needed. It is common for these instruments to provide couples with a checkbook, debit card and the power to make withdrawals or deposits.
In addition, many banks provide electronic banking services for both partners to access via the web or through an app, tools that simplify the management of shared finances.
Serves as a relief fund
A joint account can also function as a resource for financial assistance during complicated times or in the midst of a transition. If one of you gets sick, loses your job, or has a problem, shared finances can help you get through the crisis.
In addition, if one spouse dies, the other becomes the sole owner without legal complications.
Having joint or separate accounts has its pros and cons. As long as there is communication, a combined strategy can be applied, both to direct one's own income to a common fund and vice versa.
This way the money is divided in convenient parts to comply with the stifling, promote autonomy and have clear finances.
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