A joint bank account can make managing your finances easier if you manage your money with another person. But while a joint bank account can make managing funds easier, understanding how joint accounts work can help you decide whether a joint bank account is suitable for you.
What is a Joint Account?
A joint account works like a standard account with one notable difference – two or more people can own the account. All account holders can deposit and withdraw funds, write checks, and make debit card purchases. However, the bank doesn’t differentiate between transactions performed by one party or another. This makes joint bank accounts useful for handling shared expenses or saving towards common goals.
Is a Joint Bank Account Ideal for You?
A joint account may be correct for you if you regularly manage money with someone else or multiple people. However, you should only open a joint account with someone you completely trust since you’ll give the person full control over the money deposited into the account. Here are some people you should consider opening a joint bank account with:
- Business partners: Opening a joint account with business partners can make it easier to share financial responsibilities, such as covering expenses and paying suppliers.
- Aging parents: Sharing a joint account can help you manage their finances, ensuring they stay updated on important bills and medical expenses.
- Children: Opening a joint account with your children can help you teach good financial habits to them. You can monitor their transactions and spending habits while teaching them how to use banking services. And if you have a college-bound teen, you can use a joint bank account to help your child manage monthly expenses.
- Spouse: Sharing a joint bank account with your spouse can help you manage shared household expenses, such as utilities, rent, groceries, car payments, or a mortgage. Sharing a joint account with your partner can help you save money towards common goals, like a vacation, home upgrades, or a new home.
Opening a joint bank account with the people above can make managing your finances easier. However, when you open a joint account, your finances become an open book, and all your transactions become visible to the other person or people you share the account with.
This can be a thorny issue – particularly in marriages if you aren’t both on the same page. As a result, the experts at SoFi recommend considering your comfort level before deciding whether joint bank accounts are right for you.
How to Open a Joint Bank Account
Opening a joint bank account is pretty similar to opening a regular one. To open a joint bank account, most banks require account applicants to provide the following information:
- Personal details, like name, contact information, and date of birth
- A valid government-issued I.D., such as a driver’s license, passport, or Social Security card.
Opening a joint bank account is a significant step in any relationship. If you decide to open a joint account, keep conversations with other account holders transparent to ensure the arrangement works successfully.