If you believe that marriage means two becomes one (cue Spice Girls refrain), then you might subscribe to the belief that a married couple’s bank accounts also need to merge.
While there are advantages of having a joint account, managing it well is key. Opening a joint account without clearly defined rules as to what it can be used for is a recipe for disaster.
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Which bank’s joint account should you go for?
A joint account is essentially a savings account with two account holders who can deposit and withdraw from it. So rather than looking for the best OCBC joint account, DBS joint account or UOB joint account, you simply have to read up on the best savings accounts in Singapore.
Importantly, decide how you will use the joint savings. If you will maintain separate individual accounts and want to set up a joint savings account for paying couple expenses only, you might want a savings account with less emphasis on salary credit. If both of you have $50,000 and above in joint savings, you can consider CIMB FastSaver, which can earn you 1% for the first $50,000. But for something more flexible with fewer hoops to jump through, you might want to go for something like UOB One.
Pros of having a joint savings account
The administrative convenience of joint accounts is clear — no more splitting bills down the middle! If both of you will regularly pay for big-ticket items like flight tickets, infant care fees and electronic appliances, it makes sense to contribute to a joint account and pay from it.
But there are other reasons which might make you think twice before giving your other half access to all your money. So before you start happily transferring over all your money, if you have any left over after the engagement ring and the wedding, that is, you need to first be aware that a joint account isn’t quite the same as getting her a bouquet of roses or giving him a back rub at the end of a long day. It could cost you a lot more.
Cons of having a joint account
1. Your spending habits go under the microscope
If you thought it was bad that your spouse checks what time you get back each night and asks who it is who’s constantly texting you, you ain’t seen nothing yet.
When both parties are privy to every last detail pertaining to their spouse’s spending habits, things can get a little hairy. No matter how well you think you know a person, it’s always a surprise to discover he spends $200 every time he goes out for a drink, or that her facials cost more than this year’s pay increment.
Unless you’re lucky enough to have a spouse who couldn't care less what you spend on, exposing all your financial activities can feel a little like being on a reality show. Your dirty little secrets get exposed, and you’d better get ready for some drama.
A good way to resolve problem is to maintain your own spending account separate from the joint savings account. This means that the joint savings account is strictly used for communal purchases only, and you can have the freedom to spend however you want with your own savings. This gives more independence and privacy and is what many couples in Singapore do.
2. One spouse is going to spend more than the other
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You might be a penny pincher and proud of it, but if your spouse isn’t exactly a beacon of financial responsibility, get ready for the fur to fly.
No matter how tolerant you think you are, if your spouse is constantly betting all your hard-earned salary at the MBS casino or channelling your funds into his or her shoe collection, you’re going to end up feeling used and bitter. Unless your spouse is 20 years younger and married you for your money, in which case you may ignore this point.
In reality, one spouse is probably going to spend more than the other, and once resentment starts to build, things are going to get ugly. (See: 10 money questions to ask before you get married)
Furthermore, it’s one thing to chide your spouse about a single expensive purchase. It’s another if your spouse is in debt and has to make recurring repayments right out of your joint account.
While joint accounts are useful when you’ve got joint debt, like a housing loan on your marital home, you might not be too pleased when you realise you’re contributing to your spouse’s study loan repayments for that degree in Egyptology she took 10 years ago, or his credit card debt incurred through all those “business meetings” at KTV lounges.
You could circumvent this by communicating clearly what the joint account should be used for, such as paying for utilities or kid-related expenses. And if you know that your partner has a gambling or shopping addiction, then maybe a joint account is not the best idea.
Also, decide how much each person has to contribute and stick to the plan. If you’ve decided to contribute $600 each month and your spouse $300, each party knows what to expect, as opposed to both parties vaguely agreeing to transfer an unidentified portion of their salary each month. Your plan should also take emergencies into account. For instance, in the event that your spouse loses his or her job, unless you have a hole where your cold, cold heart used to be, you probably shouldn’t expect him or her to contribute the same amount as before.
3. Piss your spouse off and you might lose your money
Even if you’ve been the one contributing 90% of the funds to your account, as a joint account holder your spouse is also regarded as the rightful owner of the funds. This means he or she can legally do anything he or she wants to 100% of the funds in the account.
This is one thing few couples don’t really think about, as they tend to view a joint account as a 50-50 sharing arrangement. In reality, when you open a joint account with your spouse, you give him or her the rights to all the money in the account.
This means there’s nothing stopping him or her from withdrawing all the money and closing the account if you push him or her over the edge with your nagging and the marriage falls apart (touch wood).
In the worst case scenarios, even if you have set ground rules about the use of the account (eg. only using it to pay utility bills or groceries), none of that will be able to save you if your spouse decides to take the money and run.
This article was originally published in MoneySmart.