The Right Time to Open a Joint Checking Account

Money can be a sensitive subject for couples, but it’s one that should be addressed. As your relationship grows more serious, you may begin wondering how you’ll combine your finances and whether you should share a checking account?

Should you have one account for everything or keep a joint account just for shared expenses such as rent and utilities? Maybe you prefer two accounts – one for major expenses and the other for discretionary spending? While you may not find easy answers, here are a few guidelines that may help you make the best decision.

Things to consider when opening a joint checking account

Evaluate the advantages and disadvantages of combining your finances together in one checking account. Then decide whether or not combining finances is right for you.

Advantages

• You will only have one account, which is easier to manage than multiple accounts for two people.
• You will not have to determine who is responsible for paying a specific bill since your money comes from the same account.
• It will be easier to plan for the future since you will have a better grasp of each other’s finances and spending habits.

Disadvantages

• You will both have access to the funds within the account and may spend it without the other person’s knowledge – it could be more difficult to track income and expenses and could lead to overspending.
• If your partner has had financial troubles in the past, any joint account could be subject to garnishment by creditors.
• If two people don’t know how to communicate about money, managing a joint checking account can be especially difficult.

Challenges to overcome

One of the biggest challenges will be deciding who is in charge of the joint account. While both of you may monitor it, you may want to decide who will balance the account and ensure that bills are paid. The other option is to set up a day of the week that both of you sit down to balance the account. Together, you should decide how to spend your hard-earned money and agree on what you can afford and what you can’t. This is where open communication about finances in the relationship can save a lot of headaches.

It’s important to keep in mind your larger financial goals as a couple. Are you planning a vacation to Europe? Saving up for a wedding? Are you saving for a nice retirement? These are all financial goals you can work towards together.

Tips for managing a joint account

If you are ready to combine finances into a joint checking account, consider these tips for making money management for two easier.

• Create a budget together so both of you agree on how much to save and spend each month.
• Agree upon a small allowance that can be used for anything without the other’s permission.
• Decide who balances the account and pays the bills that cannot be set up for automatic payment.
• Maintain open and honest communication about money.
• Don’t be pressured into sharing an account if you are not comfortable with it.
• Make sure you understand the other person’s views on money and learn about any financial troubles your partner may have had in the past.

One person’s style of money management may not work for another. Just make sure you talk through the issue and reach an agreement both of you will be happy with, regardless of whether or not you open a joint checking account.