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Joint bank account: The Good, The Bad and the Ugly

joint-bank-account

We often hear from couples on our platform that they use a joint bank account to manage shared spending. In fact, my partner and I also have one to cover our ‘fixed’ costs.
However here at Monshare we believe that most of us chose a joint bank account because there was no better alternative… until now that is! In this post we will review the best and the worst of having a joint bank account and what you can do if you prefer sticking to the best only:-).

The Good

Joint bank account is a recognized and well marketed approach to managing joint finances. Every high street bank has an offering of some variation and it is particularly easy to get started if both of you are clients at the same bank.

We found that our joint account is perfect for fixed costs, such as rent or council tax. These are the costs which are easy to predict and they happen regularly without much thinking or involvement.

So this is what we do:

  1. We contribute an equal amount every month,
  2. Set up direct debits for all fixed bills
  3. Never look at that account again…There is nothing to cut or to analyze in that data.

If you do get a couple of credit or debit cards with your joint account, you can also use it for your variable costs. Then all your transactions are in one place and you can easily see where your money goes. It’s not customary to recommend one’s competition, but we really think that Monzo got their joint bank accounts right. You will get the best of the ‘Good’ with their offering.

The Bad

There are several logistical issues you need to work out with a joint bank account.
Like, if you plan a trip, do you pay in some portion in advance of the trip? Then it would have to be a debit…. Do you like using debit for your larger purchases? I don’t…

Or if you could not pay with your joint bank card for whatever reason, what do you do? Take a record and keep a ‘separate book of accounts’? Request a ‘back-payment’? It gets even tricker if you don’t split everything 50:50, based on income or some other agreement. Do you want the stress of these absolutely irrelevant decisions in your life? I don’t…

If you want to work around ‘The Bad of Joint Bank account’ you need to have a very open communication with your partner and be ‘on the same wave’ when it comes to finance management. Models that can work:

  1. You do a high level estimation of the total costs 1 months ahead, add 10% and pay the full amount in one go to your joint debit bank account. Both of you do.
  2. One of you takes the lead, pays for everything for a month and you pay in the half of the balance at the end of the month.
  3. Neither of you are particularly fussed about ‘fair share’ or ‘who paid what’ (Yay for you!). So you pay in when you pay in.

The Ugly

There is a reason why joint bank accounts require quite some paperwork… This is because your financial prosperity is effectively interlinked for the foreseeable future.
Just think about this: getting married to each other does not impact your individual credit score, but opening a joint bank account does!! 
What it means:

  1. If one of you has a better credit score than the other, their score is likely to go down just by virtue of opening a joining bank account (even if you don’t take any debt on that account…)
  2. Whatever amount is on the bank account belongs to both of you. That means either of you can withdraw the whole amount for whatever they please and will have no liability for doing so…
  3. If your joint bank account supports overdraft, funds from your personal account can be used to cover the overdraft costs, even if it was your partner who withdrew the costs.

I know your partner is the most loving, caring, reliable and trustworthy person alive. But there is a reason why there is a whole industry around prenups, postnups etc. Noone is planning on getting separated, but are you really ready to put all your personal and financial “eggs” in that one basket? It can get pretty ugly, but it really does not have to.

We offer Monshare as a best alternative to a joint bank account. With Monshare you can:

  1. Open an account without any paperwork
  2. Use your own cards with no joint liabilities
  3. Benefit from all the perks of your favorite cards
  4. Chose what you ‘share’ and what is ‘personal’
  5. Have great analytics on your joint spending

As always, if you have any questions or ideas about how Monshare can and cannot help you, do reach out to hello@monshare.io or find us on social media. And btw, have we already mentioned we just got FCA authorization? Read more about what it means for you.

Thank you for reading.

Regards,
MonOlga.

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