Should my boyfriend and I have a joint bank account?
If both members of a relationship are open and honest with each other, a joint checking account could be a great financial tool. It allows you and your partner easy access to shared money.
Experts often recommend that couples contribute to the joint account in proportion to their income. This means that if one partner earns 60% of the household income, they should make 60% of contributions to the joint account.
A joint account demonstrates a level of trust between a couple, playing an important emotional role. A joint account may also mean you can borrow more, as your income and savings are pooled.
Separate: You may want to keep your income and spending totally separate. Each of you would have your personal account for deposits and withdrawals, as well as your credit card accounts for charging and loans for borrowing. Combine: Both of you would manage all income and spending from a joint account.
A joint account might damage your credit score
Opening a joint account adds a financial link to the other person. This means companies will look at both of your credit histories as part of any credit checks. If they have a poor credit history, this might lower your chances of acceptance.
However, research from MarketWatch Guide shows that joint banking could lead to fewer arguments and increased relationship satisfaction. According to the study, 55% of couples who use solely joint bank accounts claim they never fight about money, compared to only 39% of partners who have personal accounts.
According to the survey, a significant portion of married couples who share a joint bank account report a greater degree of happiness. Specifically, two in five Americans with joint bank accounts stated they were "extremely happy" in their marriage (39%), followed closely by a third who felt "very happy" (34%).
For couples, joint accounts mean transparency about who is spending what and can prevent arguments about money. However, if one of you has a poor credit history then opening a joint account or creating a financial association means the other person will be co-scored, potentially lowering their credit score.
43% of U.S. couples living together only have joint accounts: Here's what's wrong with this trend. Ana Staples is a former reporter for Bankrate and an expert on all things credit basics and personal finance for the younger generation.
Pros | Cons |
---|---|
More transparency about spending habits | Lack of financial autonomy and privacy |
Easier to budget shared income | Both partners have to account for each other's spending |
Should couples keep finances separate?
Key takeaways. Keeping separate bank accounts after marriage could help you stay engaged with your money. Paying for shared expenses could mean using bill-splitting apps and extra planning for emergencies, but it's worth it for some couples.
Having a separate bank account in marriage gives you a sense of financial independence, self-identity and empowerment. You make more than your spouse. I have friends who out-earn their husbands by a considerable margin and don't like the idea of splitting the difference, no matter how educated or progressive they are.
'Seriously consider' splitting bills by income
Couples should list all the household expenses, including fixed costs and an average for the variable costs, then split those costs according to income and deposit their allotted amounts monthly in a joint account, said Curtis.
One of the most important lessons I've learned about relationships of all kinds, but romantic ones in particular, is that they are never 50/50. That applies whether it's splitting money 50/50, household work, or emotional labor. Thinking you can split everything right down the middle with your partner is a nice idea.
Merging some, if not all, of your finances can help you strengthen your relationship by working toward shared dreams and goals. It can also prevent financial infidelity, a common cause of divorce in which one or both partners omits information or misleads the other about money issues.
The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren't the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses.
If the joint account earns interest, you may be held liable for the income produced on the account in proportion to your ownership share. Also any withdrawals exceeding $14,000 per year by a joint account holder (other than your spouse) may be treated as a gift by the IRS. This may subject you to gift tax.
If the funds in your joint bank account are considered separate property and owned exclusively by your spouse, they may legally be able to drain the account. Similarly, even if the account is community property, a spouse may be able to withdraw money for reasonable living expenses, legal fees, and children's expenses.
Let's go back to the question of separate or joint bank accounts. The Bible doesn't tell us whether spouses should share one account, because people didn't have bank accounts back then.
The researchers determined that a joint bank account can help couples align their financial goals and adhere to communal norms, rather than behave in a more transactional way. If all money is everyone's money, then partners don't need to keep score.
Can me and my girlfriend get a joint bank account?
Traditionally, joint bank accounts are opened by married couples. But it's not only married couples who can open a joint bank account. Civil partners, unmarried couples who live together, roommates, senior citizens and their caregivers and parents and their children can also open joint bank accounts.
Ask your spouse why they need a separate account.
More importantly, discuss what it means for your relationship. You might ask things like “Why do you need a separate account?” or “What is the separate account for?” You may find that a separate account simply helps your spouse manage their money better.
If you have a joint account, you both may have to pay taxes on a portion of the interest income. However, the bank will only send one 1099-INT tax form. You can ask the bank who will receive the form because that person has to list the income on their tax return.
When carrying out credit searches, some lenders will also credit search an applicant's financial link. If you have a joint account with someone with a very low credit score, you might be denied credit. In the same way, if you have a joint account with someone with a very high credit score, you might be offered credit.
If your spouse has a bad credit score, it will not affect your credit score. However, when you apply for loans together, like mortgages, lenders will look at both your scores. If one of you has a poor credit score, it counts against you both. You may not qualify for the best interest rates or the loan could be denied.
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