Personal Finance Strategies - Joint Bank Account
So, you’ve decided to commit yourself to another person and have a household together. If you’re lucky, you bought a property together and are both on the mortgage and title! But now the question is: “How are we going to pay for all this?” Not in the sense of affordability (because you know not to live beyond your means), but in the sense of mechanics: how are the bills being paid and who is paying them? Today, I’m going to share with you my personal strategy for paying for joint expenses: the Joint Bank Account!
Why a Joint Bank Account?
When I got married, the biggest financial hassle I was worried about was the combination of finances. Things like credit cards, vendor accounts, and bank accounts. Getting joint accounts and authorizing users for credit cards and Amazon accounts sounded awful to me since there was so much paperwork to get on them in the first place. But we realized that even if you are married and need to combine finances, you don’t need to combine those accounts. The simplest way of combining finances is to have a joint bank account that will pay for the joint expenses. The joint account can be set up to make automatic recurring payments on things like mortgages (or rent), power, water, and internet bills. In addition to the automatic payments, funds from the joint account can be used to pay for groceries, supplies, and other joint expenses that can’t be setup on a recurring payment plan. The best thing about the joint bank account is that once you set up account access for both people and set up credit card payments, you’re practically all set!
Here’s a step by step guide:
Create a bank account and add both people as account holders - The mechanics of this will vary from bank to bank, but it is usually a very quick process.
Fund the account with money from individual accounts - After the initial funding, it's a great idea to set a monthly recurring deposit for an agreed upon amount
Link joint vendors and credit cards to the joint bank account
Pay joint expenses from the joint bank account
With no new lines of credit to open and no need to reconfigure existing accounts outside of adding the new payment information for direct transfers, this strategy is great for jumping headfirst into joint finances. So, if you find yourself in a position to try it, I highly recommend setting up joint finances through a joint bank account!