One of the biggest decisions you’ll ever make with your partner is whether or not to tie the knot. Not far behind that is whether to tie your accounts together.
Joint accounts are a great way to pool your money and improve collective spending and saving habits – which is extremely helpful when paying off a mortgage.
But they are only really suitable for people who trust each other completely – both in good times and in bad – as you’re giving your partner considerable access to your money.
The joys of sharing expenses
Joint accounts are excellent for people who spend money in a similar way.
If basic ground rules are established – for example how and when money will be deposited and withdrawn – then joint accounts are an ideal way to help couples achieve their financial goals.
Joint accounts can make shared expenses like your mortgage and other bills easier to manage, saving you the hassle of sending money to one another. They can also help you save for something big – perhaps that dream holiday home.
Before you open a joint account
However, the whole ‘what’s mine is yours’ idea isn’t always the wisest approach when it comes to finances.
Before taking the plunge, work out ways to manage your money differences. If one of you is a saver and the other is a spender then you should sit down and work out what you’re both comfortable putting into different pots.
Communication is also crucial. If you’re running everything out of the one account, you don’t want to find yourselves in a situation where there are no funds in the account.
With all of the above in mind, here’s what you need to consider before setting up a joint account:
1. Contribute equally: Set up a joint account that pays for shared household bills and other expenses, such as groceries and holidays.
2. Don’t ditch your own account: It’s good to maintain individual accounts to cover personal expenses or indulgences, without affecting the household budget. Just make sure there are no secrets.
3. Communicate, communicate, communicate: The importance of communication cannot be stressed enough. Be clear about what bills should be paid from the joint account, and when.
4. Keep it organized: If one partner is in charge of paying the bills, the other can keep track of upcoming expenses. Division of labor will help in making sure everyone feels responsible for the joint account.
Being joined in both love and finances can be very complicated. Opening a joint account for day-to-day expenses is a big step and you must tread carefully.
If you could do with some advice on other ideas to help pay off your home loan faster, come in and see us. We’ll be happy to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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