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5 Tips You Should Keep in Mind Before Opening a Joint Account

A joint account is an excellent way to budget for your common expenses or invest for common goals. But before you make a joint bank account, keep these 5 points in mind.

Have you got hitched recently or are you looking to get married? In this scenario, other than negotiating with wedding planners or photographers, it is vital to talk about finances. One of the critical building blocks of this financial dialogue should be on a savings account. As savings account is an essential financial product, it is important to decide what will be the journey going forward. While both of you may have your salary account, you can also think of having a joint account. In a joint account, both you and your spouse will be the owners of the bank account.

A joint bank account can be an excellent way to manage household bills or to save for common long term goals such as buying a house. Both of you can transfer a specific sum of money every month to the joint account from your respective salary accounts. You can also set up investments and systematic investment plans (SIPs) on your joint savings account.

However, joint savings account also have its minus points. Hence, you need to be careful before opening a joint account.  

Here are the 5 points that you need to keep in before opening a joint account.

Before opening a joint account (1)

1.Do adequate research

A joint account is little different than a normal savings account. There are two different types of joint savings account. In the first type of account, both the partners can operate the joint account. In the second type, one of the bank holder operates the account, and the person’s sign will be required to carry out the transactions. On account of the death of the primary holder, the second holder becomes the owner of the money.

2.Understand your partner’s financial nature

In a marriage, financial compatibility is of utmost importance. If the financial behaviour of the two partners is poles apart, then heated arguments are most likely to erupt. Money is one of the common reasons for fights among married people.  One of the individuals may be very careful with money while the other can be addicted to gambling. These are extreme cases, but you got the point.

Before you open a joint savings account, it is essential to the other person’s financial values. If it differs, then draw a plan and set limits in place so that both of you can make the best of the joint savings account.   

3.Make a budget and stick to your goals

As a couple, you are most likely to have common financial goals, such as buying a house or a car. In this aspect, a joint savings account can help you to work towards your common goal and have a common budget.  

A common budget can be a great starting point towards achieving financial goals. Both of you can decide whether you want to contribute equally to the joint account or determine a percentage. For example, you can set up SIPs in different mutual funds from your joint account to achieve your financial goals.  

4.Know the risks associated with joint bank accounts

While joint bank accounts is a great way to manage your budget and invest for common goals, it has a few drawbacks. One of the major disadvantages is that both the partners have access to the account and can view the transaction history. There is no privacy.

Hence, it is crucial to have an individual account as well. Sufficient money should be parked in the personal savings account to tide over any misuse of the funds by the other partner. Also, the money kept in the regular savings account can be used for personal expenditures.   

5. Compare the different joint accounts

Now, you should do compare the different joint savings accounts. Different banks provide perks and interest rate. Compare the interest rate and perks of the various banks and choose the bank that suits you the best.

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