This V-Day, will you start a joint account with me?

Joint accounts for savings, expenses, and investments

This Valentine’s Day, couples may be discussing the finer points of their finances — and one such topic that comes up is the use of joint accounts. 

A joint account is a type of bank account that is owned by at least two persons. All parties on the account have equal access to the funds and can make deposits and withdrawals. Joint accounts are typically used by couples or family members who want to manage their finances together. They can also be used by business partners. 

Couples may share a joint brokerage account for investing as well.

With a joint account, transactions made on the account will appear on all account holders' bank statements; all account holders are responsible for any debts or overdrafts on the account.

Given this shared responsibility, it's important to consider the implications of having a joint account. Before you start one, it's a good idea to discuss and agree on a budget as well as a spending plan with all parties involved, as well as to consider any tax or legal issues that may come along with it.

Should you start a joint account with your partner?

Let’s take a look at the pros and cons to setting up a joint account for a couple. 

Pros:

• Easy and convenient: A joint account makes it easier for both partners to manage their finances as they can access the account from anywhere and anytime.
• Improved budgeting: It can help couples budget their money more effectively and track their expenses.
• Joint financial responsibility: It can encourage both partners to be more responsible with their finances, as they are equally responsible for any debts or overdrafts.
• Combined savings: A joint account can help couples save for larger expenses, such as a home or a vacation, by pooling their resources. There are also plenty of joint-account hacks in Hong Kong that allow couples to maximise on high-interest savings accounts.
• Symbolic significance: Some couples see a joint account as an official start of a committed relationship. 

Cons:

• Loss of privacy: Both partners have access to all transactions made on the joint account. This can result in a loss of privacy, and can cause tension if one partner disagrees with the other’s spending habits or feels like the other person is not respecting their privacy.
• Equal responsibility: While it can be an advantage to have both partners equally responsible for the account, it can also be a disadvantage if one partner is not financially responsible or is in debt. It also raises difficult questions on equitable contributions, especially when several banks’ high-interest savings accounts require parties to contribute income in order to enjoy interest rates in a higher tier.
• Complex ownership issues: In the event of a breakup, ownership of the joint account can be complex and may require legal intervention to sort out.
• Credit history impact: The account’s credit history and any debts or overdrafts will affect both partners, even if only one person is responsible for them.
• Symbolic significance: In times of tension, sometimes having symbolic matters breaking down can paradoxically hurt the relationship further. 

Honest conversations and common financial goals

In conclusion, setting up a joint account can be a good idea for couples who have a strong and trustworthy relationship and are committed to working together on their finances.

But beware of the pitfalls — start a joint account only if your relationship is anchored on open communication, and if you are both confident that tackling money matters together will bring you closer, and not farther apart.

And regardless of whether you have a joint account together, it’s important to set and agree on common financial goals and plans — such as buying your dream home, building your children’s education fund, and what type of lifestyle you want in retirement.

Learn more about financial planning for married couples here, and find out how you can build passive income together as a couple. Pick up financial planning tips for new parents in this article.

If you would like to start a joint investment account with your partner. Endowus is here to help, simple email support.hk@endowus.com and our client advisors are always here to assist.

Read more:

• How to invest your first US$100,000 or US$1 million
• Goal-based investing and why it matters
• Financial planning through life stages

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