A-Z of personal finance: J is for joint accounts

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

Tough economic times can strain not only a couple’s finances, but their relationship as well; where one partner is less “responsible” with money, the other partner may harbor some resentment. Financial concerns are amongst the most common sources of tension in relationships. Fortunately, planning and communication can help you avoid financial friction and frustrating conversations.

Joint Accounts
Whilst joint accounts are most common amongst married couples, there are other instances and relationships where it may be prudent to operate a joint account. For example, elderly parents 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 death.

In any partnership there will be shared expenses where, regardless of who actually pays for them, the benefit is shared. These include food, utility bills and larger expenses such as rent or mortgage payments, school fees and family vacations which may be too large for one partner or spouse to handle alone. 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.