Joint Accounts: Determine What’s Right for You

A joint bank account is one owned by multiple individuals, each of whom can contribute to and access the funds in the account. While many of us may think of joint accounts as something you consider when you get married, they can also provide benefits like adults supporting their elderly parents or parents aiming to teach their children about financial management.

Consider the following factors to determine what’s best for you and your financial goals.

Benefits of Joint Accounts

• Convenience: Managing bills and tracking the flow of your saving and spending becomes easier when you have all your money in one account.
• Monitoring spending habits: A joint account with your child can be a great tool when teaching them about managing their finances. It can also be used to easily transfer money if they live in a dorm or apartment and are no longer at home.
• Shared expenses: Couples can use joint accounts to cover shared expenses like rent, utilities and food. They can also save together for large purchases or common goals, such as vacations.
• Aiding aging parents: Adult children can assist aging parents in managing their finances through joint accounts. In case of a parent’s death, an adult child with a joint account gains immediate access to funds, bypassing lengthy legal procedures.
• Federal insurance: Each account holder is federally insured up to $250,000 in a joint account. This coverage is separate from individual accounts.

While money can be an awkward discussion for some of us, it’s important to understand each other’s spending habits and financial goals before combining your accounts to avoid issues.

Here are some potential drawbacks to joining financial accounts:

Potential Drawbacks

• Unequal contributions: If one person contributes more to the joint account than the other or takes more responsibility for paying bills, this can lead to resentment.
• Trust: Even with a joint account, it’s easy for one person to withdraw funds or rack up debit card purchases without the other person’s knowledge.
• Risks involved: Combining funds can put you at risk for decisions made by the other person. For example, if one partner has outstanding debts, creditors could come after the funds in a jointly owned account.
• Complications in separating accounts: Dividing joint assets can be emotionally and legally complex, time-consuming and stressful.

However you choose to manage your banking, we’re here to help. Find the checking and savings accounts that work best for your needs, and for personalized financial guidance, visit your nearest Financial Health Center.