The lowdown on joint accounts

A guide to joining financial forces with your partner

Iona Bain – Virgin Money Living Mentor

by Iona Bain | Independent Money Mentor

Founder of the Young Money Blog and author of Spare Change

It’s one of the least sexy questions you’ll ever ask your other half: “Darling, should we open a joint account?” It may be a guaranteed passion killer, but it’s one of the most important financial decisions you will ever face as a couple, whether you’re in the first throes of romance or settling into domesticity.

And there isn’t a simple answer – at least not today. Joint accounts were the norm back when men were the primary breadwinners in society. Now women go out to work in greater numbers than ever before. Marriage is no longer an economic necessity and even those couples who do decide to shack up are typically doing so much later in life – with no guarantee that wedding bells or babies will follow.

So this new state of play may well require a new financial rulebook. When both partners are bringing significant assets – and baggage – to a relationship, it’s clear that the decision to join up shouldn’t be taken lightly.

The key things to consider before taking the plunge together are your earnings, the dynamic of your relationship and your respective financial situations. For many couples, having a joint account certainly makes life a lot easier. As you take more complex financial decisions together like buying property or getting married, it allows you both to see just how much money is coming in and going out. That way, you can make joint decisions about how to spend, save and generally keep your household finances on the straight and narrow.

And it’s not just about practical considerations. Uniting your resources seems like a natural progression for many loved-up couples – a concrete statement that “what’s mine is yours”. It may symbolise your intent to keep no secrets from each other and maintain absolute openness in the relationship. If you trust and love each other, what have you got to lose?

On the other hand, the decision to open up your finances to someone else is a fraught one. Your partner will be able to see your financial behaviour, warts and all, in a way that you might not feel comfortable with – and vice versa. You may feel that you have to start justifying your spending decisions, or you may be concerned that your partner is not leaving enough money in the account for important bills. It’s vital to keep talking about these issues but you’ll need to try to keep it unemotional and focused on finding a solution that’s fair to both parties.

One way to avoid conflict is to have a joint account from which you pay all shared expenses, and then have separate “play” accounts. That way, you can both spend the rest of your incomes as you like. But to make any joint account work, you have to make sure that neither party is tempted to empty the account or run up overdrafts. And bear in mind that your credit score will be tarnished if you open a joint account with someone with a poor borrowing history.

Remember that if you do take out a joint 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 be "missing in action" if you break up, leaving you to pick up the bill.

So if in doubt, leave it out. It may not seem romantic, but if you have any nagging doubts about the relationship, separating your finances will be a whole lot easier if you’ve mostly kept them apart in the first place.

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.