MUST READ.......When to consider a joint bank account

hehehehe......Joint bank accounts can be ideal for couples, parents and their teenagers, and adults assisting their aging parents. They function just like personal accounts, such as a current account, but belong to two people, each of who can contribute to and use the money it holds.

On paper, and in an ideal world, joint accounts are great. What could possibly go wrong? Well, a few things.

According to www.nerdwalltet.com, here are few advantages of a joint account.

• Parents can monitor a child’s spending habits and can quickly transfer money to a joint account when necessary.
• Couples can use cash in a joint account to cover shared expenses such as rent, utilities and food.
• Adult children can help aging parents manage their finances.
• If a parent dies, an adult child has immediate access to funds in the account, avoiding a potentially lengthy legal process.
• Simple bill paying. For couples, a joint savings account simplifies the way you handle joint bills payment and expenses because all money is pooled in one place. You don’t need to divide expenses or decide who will pay for each item in the budget. An alternative is to have a joint account for bill payment with each person maintaining other separate accounts. One drawback to this approach is that money transfer is required to keep the accounts properly funded. Forgetting to transfer money to the joint account could result in an overdraft when bills are paid.

Disadvantages of joint accounts

Here are a few disadvantages of joint accounts:

• A child may spend too freely and become overly reliant on mum or dad refilling the account.
• Neither partner can control spending from the account, so one could drain it.
• One partner could overdraw the account, generating fees that both would have to cover.
• If one holder lets debts go unpaid, creditors can pursue money in the account for settlements.
• Both holders can see transactions in the account, which can present privacy issues.

Preparing to open a joint account

When to consider it? When there is communication and trust. Whether you’re planning on sharing an account with a child, significant other or aging parent, keep the channels of communication open. That may mean having difficult discussions about spending and savings habits. As uncomfortable as it may be, initiating these types of conversations can prevent even bigger headaches down the road, like those listed above.

“It’s important to lay out expectations with the other account holder,” says Carrie Houchins-Witt, a financial advisor in Coralville, Iowa. “If your teenager hasn’t quite grasped the concepts of saving and spending and personal responsibility, be careful about putting money in the account and expecting them to budget properly without your guidance.”

Opening a joint account

Setting up a joint current account is much like opening a personal one. Here’s what the process will probably look like:

• Select the “joint account” option during the application process.
• Provide the bank with personal information for all account holders, such as addresses, dates of birth, among others.
• If you’re opening a joint account with a significant other, don’t close your personal account, at least not right away. You may want to have money of your own for expenses or for gifts and surprises.

According to www.ally.com, a joint savings account can make managing your finances easier by facilitating family budgeting and saving. If you already bank online, you know how much simpler it is to conduct your banking transactions by computer rather than physically visiting the bank.

According to www.bankrate.com, opening another savings account and sharing joint ownership can make handling financial matters even easier.

To do this, simply visit your bank’s website to find out their requirements for making a savings account a joint savings account. If you have any questions that are not addressed on their website, get in touch with a customer service representative. You usually will need each account holder’s details, like telephone number and birth date, but each bank is different and may have different requirements. At some banks, opening a joint savings account is easy.

Many married couples like to have joint accounts to save money for a down payment on a home, a vacation, major purchases or debt management. With two owners, either one can contribute money or withdraw funds. Also, a joint account can help couples learn healthy financial habits by communicating spending and savings practices.

Who can open a joint account?

Of course, you do not have to be married to enjoy the convenience of a joint savings account. Children of elderly parents, for example, may also enjoy the advantages of a joint account. A joint savings account is a helpful money management and savings tool in a variety of circumstances.

According to www.thebalance.com, having one bank account allows each spouse to have access to money when they need it. Joint bank accounts usually provide each account holder with a debit card, a chequebook and the ability to make deposits and withdraw funds. With banks that provide such services, each account holder also receives online access to account information and tools, further simplifying the process of keeping track of money.

Some legal affairs are also streamlined with joint bank accounts. In the event that one spouse passes away, the other spouse will retain access to the funds in a joint account without having to refer to a will or go through the legal system to claim the money.

Depending on the state and local laws, the surviving spouse may have to go through a lengthy legal process to claim money in a separate account.

Finally, one of the main advantages of a joint bank account is that there is a smaller chance of encountering financial “surprises” when all money goes into and comes out of one account that both of you can see.

How joint account makes banking easier

A joint bank account comes with various banking and financial benefits for couples. This is why banking experts and financial analysts sometimes advise people to open one.

It is ideal for parents and children as well as couples. When it comes to tradition, when a couple gets married, they typically merge their money. This includes merging pay cheques or other recurring income, tax refunds, and cash gifts from the wedding into a single bank account. For many couples, this serves as a symbolic gesture, showing the union of two people into one unit. But for other couples, this isn’t a gesture at all. In fact, a TD Bank Survey found that many couples maintain separate bank accounts.

According to the research, 42 per cent of those in relationships who have joint bank accounts also maintain individual accounts. If you’re a newlywed, or in a long-term relationship, consider weighing the pros and cons of both options before making a decision.

According to finance.zacks.com, one bank account means less paperwork and bookkeeping to track your spending either as couples or parents and children. You will receive only one bank statement instead of two or more if you have separate accounts plus a joint account. When you save receipts and reconcile your balances, you don’t have to search through multiple statements and determine which accounts the receipts go with.

A single account is easier to watch if you’re waiting for cheques, bill payments or charges to clear. You are able to keep all of the banking information in one file without tracking multiple accounts.

Combining your finances into a single account means partners have immediate access to the money. Neither person needs special permission to use the bank account. If one partner needs to make a payment or large purchase, she is able to access those required funds without waiting for her partner to contribute. This brings a lot of convenience and comfort. With separate accounts, you may need to wait for fund transfers to make payments or purchases. This comes with some stress and hassles.