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Mine, yours, and ours – no, it’s not quite Valentine’s Day yet!
I’m referring to the checking accounts that you may have set up between you and your significant other.
Significant other’s account
Whether you are married, engaged, or long-term lovers – you may be considering if sharing accounts are the way to go.
Today, I’m going to highlight 2 ways you can structure the movement of money to and from a joint account.
I will also give you 4 considerations when it comes to sharing accounts.
This extra information will help you in deciding whether it is the right thing to do for your relationship.
Who is ready to talk about love and money?!
2 Ways To Structure The Movement Of Money
This is a look of how it works if you have 3 accounts.
There are times when you may have more than 3.
I’ve heard of folks having 7-10 checking accounts!
There are 2 main ways to structure the movement of money.
#1 – Money is transferred from each person’s account to a joint account to be used for monthly expenses.
#2 – Money is transferred from the joint account to each person’s individual accounts. The balance left in the joint account is used to pay the monthly expenses.
In each case, the common theme is that the money in the joint account is used for paying bills, saving, investing, and other purposes you may have.
Let’s take a look at a couple of examples to give you a better idea.
Example #1 – Sally + Billy = Long-Term Lovers
The amount that each person transfers to the joint account can vary based on the amount of income that is earned for the month.
If Sally makes $6,000/month and Billy, her partner makes $5,000/month, the percentages would be 55% and 45%, respectively.
These percentages can then be applied to the total bill amounts.
The transfers would then be made to the joint account accordingly. There are many variations to this type of plan, but the execution is the same.
As you can view from the chart below, Sally receives her $6,000 paycheck for the month and transfers her portion of $3,300 to the shared account.
Billy does the same thing and transfers his portion of $2,250 out of his $5,000 paycheck to the shared account. Now, there is a total of $5,550 in the joint account.
That’s great, because the bills come due at any point now. Incoming!
Below is a visual of the types of accounts that both Sally and Billy are utilizing. For simplicity, let’s assume that the bills for the month are equal to $5,550.
For my purposes, although there are three accounts, it works in reverse.
In my household, I use the joint account to hold all incoming deposits and all payments are deducted from that account.
Any money that is allocated to me and my husband is then deducted from the joint account.
Example #2 – HP + Mr. FTD = Married
Here’s a visual of what I explained. Please note that these are not actual figures.
Why do I structure my accounts like this?
One of my household’s main goals with managing money is to accumulate funds in various investment accounts in order to diversify our holdings.
Each month, every dollar has a purpose.
Therefore, having all the funds in a joint account simplifies the process of transferring those funds into either a savings or brokerage account for short-term or long-term investing.
This way there is no room to use the money for unnecessary purchases.
My husband and I opened a joint account very early on in our relationship. It has always worked for us, but I can imagine why it would not work for everyone.
The next points I make will give you a few ideas to ponder and ultimately make the decision that is right for the relationship stage you are in.
Sharing Accounts: 4 Considerations
If there is a joint checking account in place, there’s going to be more transparency in the relationship.
In this case, both people would be on the account and have the password. Each person would be able to log into the account and view the transactions if they choose.
Here are a few reasons how joint accounts would be a viable option in your relationship!
#1 – A committed relationship + trust between partners + common goals.
If you both have similar money values and are working towards the same goals it is a big plus. With a shared account, it is important to be in a committed and trusting relationship.
If the funds transferred are to be used to pay the bills, there needs to be reassurance that one or more parties privy to the account won’t use the money for other purposes.
#2 – One person is the breadwinner.
If one person is making all the money, the non-wage earner should be included on the account.
This way, each party is included in the finances. In the long run, this minimizes any blame that may go to the person for not handling the money appropriately.
Even more importantly, the non-working party can feel as though they have a part in the financial solidarity of the relationship.
#3 – All incoming funds are already accounted for.
When the money is already budgeted and each person knows how much can be spent, then having a shared account won’t change the money structures already in place.
Let’s say Sally and Billy from the previous example have $100 of fun money each month – anything over that amount may have a likelihood of affecting the bottom line, so they habitually stay within the budget (AND out of trouble with each other).
#4 – Seeking an accountability partner.
Maybe one party is not that great at managing the finances and needs the other person to keep an eye on them.
When one person is more knowledgeable about the finances in the relationship it helps. That person can reel in the other party if they get too out of hand. C’mon, do you really need all those shoes hun?
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The Bottom Line
Overall, I left you with some aspects to consider and a breakdown of how joint accounts can be utilized.
Now, you can readily determine if the structure is right for your relationship. Currently, I have my accounts through a local bank, but if I were to open up an online account, I would use Capital One 360 Checking*.
They do provide “linked accounts” so you would be able to use it in conjunction with your current checking account set-up. That being said, there are a variety of joint account options both online or in your local area that you can use!
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*As with all financial and investment decisions, consult a professional. Read disclaimer here.
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