By Reyna Gobel,Expert, Fea Money Financial Literacy School. Picture Credit Unsplash
I have received emails from various couples considering getting a joint checking account. Among them are couples who just moved in together after six months, as well as married couples who fought over small, everyday purchases and wanted a joint checking account for shared household expenses.
Regardless of your relationship status and spending habits, here’s what you need to know when considering getting a joint checking account:
1. How Names Are Removed
Once you get a joint checking account, both names stay on the account until the account is closed or you follow the procedures for removing the second name.
2. How You’ll Budget for Combined Finances
A joint account is a method of putting finances together, however, it doesn’t substitute for a discussion of how joint finances will be handled. Before you get a joint account, you should discuss combined budgets, what expenses will come out of the account, and how each of you will contribute from your incomes.
3. Whether You’ll Want Separate “Fun Money” Accounts
Some couples seldom argue about small purchases, while others do. Then there are bigger purchases such as shopping sprees, tickets to events, hobby equipment, etc. You may decide that you want to have separate accounts for anything other than household and mandatory expenses. If you do, this can be done in one of two ways:
- Your paychecks are deposited into individual accounts and then you each contribute a specified amount into the joint account for household expenses.
- You can deposit everything into one account and deposit the same amount into each fun money account.
The second method works great for two individuals with vastly different incomes, especially if one stays at home to raise the children or takes care of more household chores. It can be hard on one member of a couple to see the other have several hundred dollars of fun money to spend monthly when the other doesn’t.
4. Consider Joint Savings Accounts
Beyond fun money and joint checking accounts, you’ll also want to talk about savings. If you’re planning a lifetime together, you will want to have well-stocked retirement accounts, as well as have savings set aside for emergencies and possibly a home down payment. While these aren’t current household expenses, they are life occurrences that you’ll want to make sure you’re prepared for.
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