Tired of moving cash back and forth with your partner to pay for housing costs, monthly bills, or groceries? Opening a joint chequing account can be a convenient way to manage finances as a team. And joint accounts aren't just for couples - whether you've tied the knot, are common-law cohabitators, or a parent keeping tabs on your child's cash, you may find the joint approach to be convenient.
But there are some main differences to be aware of. Here are a few ways joint accounts differ from the single variety.
The process may vary slightly between financial institutions, but there’s a basic process for setting up an account as joint holders. Most financial institutions allow you to set up a joint account in person or online. The process is simpler if you and your co-applicant already have separate banking accounts at the financial institution.
Here is a list of information you and your co-applicant may be required to provide when filling out your application:
It's important to have "the Money Talk" - according to a recent BMO poll, over two-thirds (68%) of respondents say fighting over money would be their top reason for divorce, followed by infidelity (60%) and disagreements about family (36%). That’s right - fighting over money is worse than cheating on your spouse!
There are two separate approaches you can take to deal with joint chequing accounts. The first approach is to have one joint bank account for both your spouse and you. While this may sound great in theory, it can quickly lead to disagreements if you have different spending habits.
The second (and my preferred approach) is to open a joint chequing account and maintain separate accounts. The joint account is used to cover household bills, while you both maintain separate bank accounts for discretionary spending. Although your account balance may not be high enough to qualify for premium products, it may be worth it if you constantly squabble with your spouse over money.
The bottom line is that there’s no one-size-fits-all solution for couples. Each couple has to figure out which approach works best for them.
Sean Cooper is a Financial Journalist and Personal Finance Expert, living in Toronto, Ontario. He offers Unbiased Fee-Only Financial Advice, specializing in pensions and the decumulation of financial wealth in retirement. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his personal website: http://www.seancooperwriter.com/