My wife and I kept separate bank accounts up until a couple years ago. We paid expenses and spent our money through our own accounts without having them combined into a joint account. There was no reason other than being lazy; setting up a bank account requires an appointment, looking at the account options and switching all bills and paycheques over.
We recently started a joint account and it had more of a change in our spending habits than I thought. I assumed a joint account wouldn’t make much of a difference in our finances but it actually has.
Here’s how a joint bank account has helped us – and how it can help you better manage your money.
Better Tracking of Expenses
A joint bank account allows you to better track all of your expenses. Rather than having two separate accounts, the expenses can clearly be seen on one statement.
When we first got married we sat down and put together a household budget. The budget was pretty simple – it listed all the money coming in and out each month.
The budget seemed like a great idea – until we realized tracking our progress would be problematic.
Since we had separate bank accounts at the time, she would spend money from her account and I’d have no idea where it was going (and vice versa).
We finally combined our accounts into one and we can both easily see where the money is going – which allows us to easily track our spending.
Lower Bank Fees
Another reason a joint bank account makes sense is to pay less in bank fees. There’s no sense in paying bank fees for two individual accounts when they can be combined into one.
I don’t pay bank fees but if I did, I would be looking to get the most for my money – and a joint account would allow me to do that.
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Combining the balances from both accounts also means you’ll probably get more for your banking dollar. Since banks offer premium accounts to those who maintain a higher balance, the fees related to these accounts are usually waived as long as a minimum balance is maintained (which is usually higher if you combine two accounts into one).
Making Better Financial Decisions
Joint bank accounts allow both partners to clearly see where their money is going. They can then use this information to make better financial decisions on where they put their money.
A good example is when one partner wants to buy a new couch because he assumes his partner’s bank balance is higher than it actually is. Since he doesn’t have access to her account he isn’t able to see exactly what her balance is, but assumes they will have enough to buy a couch. They don’t realize they won’t have enough money to buy a couch until they have one picked out and start talking about paying for it.
A joint bank account lets both partners clearly see how much money they have, and then they can use that balance to decide where their money is going to go.
Better Communication about Money
A joint bank account has helped us communicate about money better. Rather than not knowing anything about the partner’s bank account, you can see how much money is available in the account at all times. It takes the guesswork out of the equation because you both instantly know how much money you have.
This means you’ll be able to easily communicate about your money. If you have plans to make a major purchase in the coming months, both partners can see if it is realistic and talk about how the money should be spent.
Conclusion: a joint bank account had a (surprising) positive effect on our finances. We communicate about money more often, it has taken the guesswork out of our finances and both of us can easily see how much money we have spent for the month.
Do you prefer individual bank accounts or a joint account?