Should couples have joint accounts?

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Tunde grimaced as the cashier handed him back the debit card. “I am sorry Sir, but your card has been declined for insufficient funds”. Since he got married to Temi, this had become a problem. Temi was not as responsible with money as he would have liked and could be quite frivolous and impulsive about spending. Whatever money was deposited in the joint account through direct debits from their two salary accounts simply evaporated into thin air. Fortunately, Tunde always kept some cash on him so he was able to pay for the groceries.

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Today, economic circumstances mean that most households require more than one income in order to be able to sustain their standard of living and to build a secure financial future for the family. Tough economic times can strain not only a couple’s finances, but their relationship as well; where one partner is less “responsible” with money, their spouse may feel some resentment. Financial concerns are one of the most common sources of tension in a relationship. Fortunately, planning and communication can help you avoid financial friction and frustrating conversations.

Most people have already established their own financial personality and preferences even before they become part of a couple. For new couples, it pays to start off on the right footing by establishing a fair and open method for dealing with finances; money matters should be discussed and opinions expressed early. Here are some thoughts regarding joint and separate accounts.

Joint accounts are most common amongst married couples. There are also other instances where it may be prudent to operate a joint account. For example, an elderly parent may consider opening a joint account with their adult children in order to pay household bills or to avoid the probate court process in the event of their passing. A parent may also opt to maintain a joint account with their child in order that they have access to funds should the need arise.

In any partnership, there will be shared expenses which, regardless of who actually pays for them, the benefit is shared. These include food, utility bills, and the larger expenses that may be too large for one spouse to handle alone, such as rent or mortgage payments, school fees, and family vacations. It is important that there is complete clarity and communication regarding such expenses. If one person earns significantly more or less than the other, it would be fair to contribute amounts in proportion to the respective incomes to reflect this imbalance.

Joint accounts work best where both parties have established a solid level of trust between them. Whilst this offers convenience and transparency, it does mean that each spouse becomes financially liable for the other, and of course either party can go to the bank and drain the account. You can decide to have a joint account with anyone you wish but bear in mind the fact that once you sign on the dotted line, and no matter who set up the account or put in more money, in the eyes of the law, you are equal account holders with equal rights to the account balance.

If one person spends money in a way that the other considers frivolous, or you find a joint account restrictive as it affords you less privacy and independence, it is probably best to have separate accounts. Being able to spend money without having your partner scrutinise the minutest detail is certainly important to some.

Even though there may be no need to question each other’s personal expenses such as clothing, personal luxuries and hobbies, it is advisable that both parties should still be involved and consulted in relation to the significant financial decisions. There must be a conscious effort to keep the greater financial picture in mind as with separate finances one may lose sight of the family’s long-term goals.

Having a joint account for certain large and recurring expenses combined with individual accounts for personal expenses is a good compromise. Particular expenses may be assigned where one person will pay for certain bills whilst their partner pays for others. This is probably the most popular system where each partner takes some responsibility in maintaining the household budget yet each still retains some independence.

There is sometimes confusion about the difference between a joint account holder and an authorised signatory. Creditors view a joint account as they would an individual account, this means that each account holder is financially liable, and of course either party can withdraw at will.

It is important to note that whilst an authorised signatory is able to operate the account, the main account holder can choose to remove or change their access at any stage. If the main account holder dies, the other signatory to the account would cease to have access to any money because the account would form part of the deceased estate.

Remember there is no perfect answer to the joint-versus-separate-accounts debate; Parties to a relationship have to look at their own situation and work out what is best for them. The critical thing is that you need to talk about things from time to time and adjust as the circumstances evolve.

-Nimi Akinkugbe

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