Joint accounts offer convenience but there are things to know before intermingling money.

A joint account is a convenient way to manage money with another person. While you can open one with a child, aging parent or anyone else, this article focuses on couples. In any case, the same guidelines apply regardless of who’s on the account.

Trust comes first

Joint ownership—whether it’s a savings account, credit card or checking account—means the account belongs to both of you, equally. With savings and checking accounts, each of you can make deposits and withdrawals. With credit cards each can make transactions.

As joint owners, each person has full access to the account and its transaction activity. And you’re equally responsible for any fees, overdraft charges, monthly payments or interest charges.

Joint accounts work well for couples who trust each other and where each person is financially responsible. If you don’t feel your partner is financially trustworthy, reconsider if you should proceed with a joint account.

Have a candid conversation

Money conversations are difficult for a lot of people but it’s an important first step when considering a joint account. One way to set the stage for the conversation is to agree to a time to talk when you both are rested and able to provide your full attention.

You may not completely agree on money matters, and many couples don’t. That’s okay. What you do need is an understanding of how you both approach money, saving and spending. How do each of you feel about money that’s ours, yours and mine?

Deciding how much goes into the joint account

A key reason to set up a joint account is to make paying household expenses more convenient. To determine how much needs to be deposited, gather your monthly bills from the last six months (or more if you have them). Be sure to budget for periodic bills like homeowners/renters insurance and property taxes. Calculate the monthly average; this gives you a baseline figure to work with. Also, consider adding a small buffer to cover bills that fluctuate.

Deciding how much each partner puts in each month varies depending on your particular circumstances. Rather than focus on what’s equal, focus on what’s equitable and fair. For some couples, a 50%-50% split works well. In cases where one partner earns significantly more, you may decide to contribute in proportion to your incomes. For example, if your annual salary is $100,000 and your partner’s is $50,000, you might agree that’s it fair for you to contribute an amount equal to 2/3 of the household bills and for your partner to contribute 1/3.

Agree on timing of deposits

To set yourselves up for success, review the due dates for your bills. Then agree to timing as to when each of you needs to deposit your share into the joint account.

Setting up and funding joint accounts

The process of setting up a joint checking account is the same as an individual account. The key difference is that you both need to be present to open the account; you’ll be asked to provide your IDs and signatures.

Like individual accounts, joint savings and checking accounts are insured up to $250,000 by the FDIC at banks and NCUA at credit unions.

Once you you’ve set up a joint bank account, determine how you’ll make deposits. Common ways are direct deposit and online banking transfers.

Managing money together

Many couples maintain individual accounts in addition to joint accounts. A system of ours, yours and mine helps many people avoid conflict.

If you decide against opening a joint account, Consumers makes it easy to transfer money to another member – click here to see how it’s done.

 

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