Being married to the love of your life is unicorns, sunflowers, rainbows, and magic — in fact, a complete fairy tale. Well, at least until it comes to finances. Money can be a sore spot among many couples. Almost 42% of American couples fight over finances on a weekly or monthly basis.
From concerns related to spending habits, hiding income, or managing the overall household, there are many reasons why couples keep tabs on each other’s income.
For shared finances, many couples open a joint bank account where both parties are informed of the transaction, and both have equal control over the assets in the account. It might sound like a great way to maintain shared finances, but are joint accounts worth it?
Let’s find out the pros and cons of a joint bank account for couples so you can decide if this venture is actually suitable for you or not.
Pros of a Joint Account
A helpful tool, joint accounts pose the following perks for couples who opt for it.
- Transparency in Financial Relationship
When you are married, finances are as important as love itself. Regarding financial planning for couples, a joint account holds a transparent approach, allowing both parties to track income, expenses, and other transactions.
It is a great way to build trustworthy and honest relationships. Moreover, allowing your partner access to your income shows that you are in it for the person and not the money.
Having a joint bank account also adds transparency concerning the financial position of a couple. Since all cards are on the deck, you won’t feel the need to explain to your family, especially the spouse, when things go south.
- Transactions Are Simplified
A couple pools their financial resources or a significant chunk into a bank joint bank account, which centralizes all the everyday functions of a household. Everything from your utility bills to groceries and mortgages are paid from just one account, making it easier to manage your transactions for taxes.
Besides this, it also simplifies the concept of who’s contributing how much towards the house and lifestyle. Having established parameters of shared goals, it becomes less stressful for the couple to decide who gets to pay how much.
- Emergency Access to Funds
One of the best things about marriage is that you don’t have to deal with your financial problems alone. In case of any financial crunch, you always have your partner to rely on. Joint bank accounts for married couples can also act as an emergency stash from where you can take out cash in case of an urgent need. Having emergency access to funds brings peace of mind that you have a backup at hand.
- Building Responsibilities Together
Having a joint account means that you and your partner can both benefit from an excellent credit score. A good credit score leads to better future opportunities and more financial freedom in case you want better deals or aid from third-party sources. With contribution from both ends, you and your partner will equally feel productive and responsible towards the house.
You and your partner can also work towards common goals that contribute to a better lifestyle and success in the long run. For example, you can save money for vacation, plan a house renovation or buy new and useful things for the home.
Cons of Joint Account
Since we don’t live in an ideal world, joint accounts do come with a number of limitations. Here are a couple of things that might seem a bit problematic for some couples.
- Reduced Financial Independence
Since you and your partner are contributing to the joint account, it is natural to feel a bit restricted. Your finances are now accessible to you and your partner which means that both partners can access funds at any moment. Although a great way to generate financial independence and stability in lifestyle, people who have been independent most of their lives might take a while adjusting to this new setup.
- Conflict Over Spending
Married couples can be quite different from each other. It can be anything from spending habits, ways of making transactions, or their frequency. It can lead to disputes between you and your spouse, leading to disagreements and conflicts.
For instance, you might be keen on shopping on the very first week of the month, but your partner prefers going for groceries every fortnight. Taking out a considerable chunk of money might irritate your partner, resulting in disputes.
- Financial Infidelity
Another reason why most couples don’t prefer a joint account is the risk of financial infidelity. It means that some partners might sneak around with money, which results in hiding income, taking money out falsely or making withdrawals under a false reason.
A person with a lack of honesty towards the financial situation of the household might cause an irrecoverable loss that hampers the overall lifestyle of the entire family. In most cases, both owners of a bank account are entitled to complete withdrawal without informing the other party. In some cases, people are known to withdraw cash from the joint account in case of a divorce.
- Legal Responsibilities
In a joint account, both parties are responsible for the financial transactions and events associated with the bank account. It covers everything from debts to credit scores, liabilities, and pretty much anything else.
If your partner is not financially stable or has a history of mismanagement, it can linger on you and your records as well. One of the best ways to deal with this is by confirming whether there are any bad debts or overdrafts under your partner’s name.
Another legal complication that might arise because of a joint account is in time of separation. When people part ways in their relationship, the division of finances can be challenging. Try to counter this with a written agreement that is submitted to the bank as well as your lawyer.
Conclusion
A joint bank account for couples is shared between two or more people. It is a top choice among couples looking for a stable and more financially transparent approach. You can simplify your domestic and financial concerns more easily by maintaining a clear picture of your financial position with your partner.
Joint accounts do come with some financial limitations leading to conflicts over spending and financial infidelity. Besides this, both partners are legally obligated towards each other in case of fraud and separation.
Joint accounts pose multiple benefits, but it is ideal to set terms and conditions with your partner to avoid last-moment problems.
