Yesterday I was invited to speak on ABC Radio Show Drive With Jules Schiller about joint bank accounts. The topic was triggered by an article about the declining use of joint bank accounts within relationships: 3 out of 4 married baby-boomer couples have a joint bank account, but only half of those who are under 25 and married or in a de facto relationship have pooled their finances.
Joint bank accounts can be great for saving towards shared goals and managing mutual expenses. They are usually best run in conjunction with individually owned bank accounts so each person has some money to spend for which they are accountable to no-one. This is much healthier for the relationship.
Some people will worry about the danger of one partner spending or depleting all of the funds, and this is a very real risk. However, this is usually a symptom of a much bigger problem, such as an addiction like gambling or oniomania (compulsive shopping), or a lack of trust and respect for the partner by the person taking the money. If you think your partner would do this with your funds, then 1) Don’t have a joint bank account, and 2) Consider couples counselling.
There are estate planning considerations to be mindful of as well. When one joint account holder dies, the surviving joint account holder owns the funds in full, regardless of any bequest in the Will. This might be exactly what is right for you, if it is important that the transfer of ownership of money is a seamless process – the last thing a grieving spouse needs is an inability to access money at such a stressful time. However, if you had other plans for the money – as is often the case with couples who get together later in life having already had their own children – then your wishes can be seriously thwarted through inappropriate ownership of your money.
The introduction of Osko by BPay means that the sending and receipt of money can be virtually instantaneous. So you can have your own bank account and a joint one, making transfers as needed – say for your share of the household expenses – and have it immediately available to pay the electricity bill if necessary.
Increased technology within banking has probably contributed to the decline in joint bank accounts. Conversely, the number of bank accounts we own as individuals has increased over the years.
You can listen to the radio interview here; start from the 1 hour 32 minute mark.
