Don’t rush – this is a big decision (Picture: Getty/Metro.co.uk)
After leaving a toothbrush at their house, saying ‘I love you’, and meeting the parents, what’s the next big step in a relationship?
While some might balk at the idea of signing up for a couple’s railcard, others are ready to speed right into bigger commitments.
One major move that looms as your lives increasingly intertwine? Creating a joint bank account.
This makes sense for a lot of reasons. If you live together, it makes paying your household bills easier. If you’re saving towards a joint goal, it’s probably wise to have one pocket you’re both contributing towards.
But the decision to make a joint account isn’t always the best choice – and it can go wrong.
So how can you figure out if it’s the way forward, or if your bank accounts should stay separate?
Aline Jaffer, saving expert at Virgin Money, suggests that all couples ask these six questions before they take the financial plunge…
Are you saving up to make a large investment together?
If you’re planning to buy a property together or saving up for a wedding, a joint account is a logical step.
Alina says: ‘For many couples, sharing a joint account certainly makes life a lot easier. If you are planning on making more complex financial investments together like buying a home, getting married or having children, it can be a great option.
‘Sharing a joint account can make splitting the costs associated with such large investments much easier, as you are both able to view your recent transactions or make payments from the account on the go.’
If you’re saving up to buy a home together, it makes a lot of sense to join up accounts (Picture: Getty/Metro.co.uk)
Would you be using your joint account for everyday expenses?
Alternatively, you might want a joint account for smaller things, like the weekly food shop.
That’s fine too – but just make sure you both have clear expectations for what the account will be used for. You don’t want resentment to build because you keep buying what your partner deems personal items on the joint account.
‘Having a joint current account doesn’t just have to be for large purchases, many couples choose to open a joint current account for convenience if they are sharing daily expenses or household bills,’ says Alina. ‘As both parties are able to see just how much money is coming in and out of their current account at once, it can make sharing these joint responsibilities a lot easier.’
Are you opening the account because you feel like you should, or because you actually want to?
Don’t give into any strange pressures to set up a joint account as the way to make a relationship official.
Definitely don’t rush into a financial commitment just because your friend did the same in her relationship, or you feel like if you don’t, it says something bad about your relationship.
Joining up accounts is a big step – do it because you actually want or need to, not out of comparison and social pressure.
Make sure you’re on the same page when it comes to spending and saving (Picture: Getty/Metro.co.uk)
Are you comfortable with your partner’s credit history and money habits?
Alina says: ‘Remember that if you do take out a joint current account, you are jointly liable for it.
‘That means if your partner runs up an overdraft, you will be jointly responsible for repaying it. If there is a risk of this happening, you have to be confident that your partner won’t just leave you to pick up the bill.
‘Additionally, both parties must be able to hold themselves accountable for their spending habits and not just rely on their partner’s financial contributions as a safety net.
‘Any financial ties you might have with a partner, such as a joint current account, can have a positive or negative impact on your credit score.
‘It is important that you can rely on your other half to spend responsibly otherwise it may future implications when lenders are deciding what credit or financial services to offer.’
Have you talked about your financial habits?
Remember what we mentioned about having clear communication over what the joint account will be used for? That really is important.
‘The decision to open up your financial habits to someone else can be nerve-racking,’ Alina explains. ‘Your partner will be able to see how you manage money and vice versa. You may feel that you have to start justifying your spending decisions, or you may be concerned about your partner’s saving, or lack thereof.
‘Communication is vital so that you can find a solution that works for both of you.
‘One way to avoid conflict is to consider having a joint current account that you use to pay all shared expenses, and then have your own separate accounts.
‘That way, you can maintain the benefits of being able to access a shared fund while being able to spend the rest of your incomes as you like.’
Don’t take this step because you feel like you ‘should’ (Picture: Getty/Metro.co.uk)
What happens if you break up?
Sorry to be a downer, but this is something you need to consider.
Alina says: ‘It’s never nice to think about the worst-case scenario in any relationship, however when it comes to your finances you should always stay on the side of caution.
‘If you were to break up, your joint balance becomes vulnerable to either party withdrawing as much money as they wish regardless of how much they contributed.
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‘Should your relationship end badly, having a joint current account can become the topic of dispute and worry.
‘There are steps you can take to mitigate this happening, including asking your bank to put a “two to sign” mandate on the account, which means both parties need to sign for any withdrawals.
‘In addition to figuring out how to divide the leftover balance, you may also want to consider asking your credit rating company about financial disassociation. This might be useful if you were concerned about your partner’s financial history and the implications it may have on your credit score.
‘So, if in doubt, leave it for now. It may seem like the less romantic option, but if you have any nagging nerves about how the relationship might impact you financially, keeping your finances separate might be a whole lot easier.’
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.
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