So, you think you’re ready to take your relationship to the next level?
You’ve given each other adorable nicknames, you’ve got a bunch of in-jokes nobody else understands and you’ve developed cute, symbiotic mannerisms that cause your friends to more or less hate you. She’s comfortable enough in the relationship to let him see her eating peanut butter straight out of the jar, while he doesn’t clear the stack of pizza boxes in the living room when she comes over to visit.
These are all memorable moments on the journey to a happy relationship, but few milestones are as important as the day you decide to open a joint bank account.
A joint account simplifies paying for shared expenses.
There are a number of advantages to sharing your finances. Not only does a joint bank account make it easier for you to keep track of your money as a couple, it also helps establish equality in the partnership and makes you feel as though you’re progressing towards a unified goal. From a practical point of view, a joint account simplifies paying for shared expenses such as food, holidays and rent or mortgage.
However, there are some drawbacks to opening such an account. Many people struggle to deal with the loss of financial independence, and the level of trust involved with shared access to funds can often prove problematic for some relationships.
How do you know if you and your significant other are ready for a joint bank account?
1. You have open discussions about money
Australians love a good bit of banter, but one topic that remains something of a taboo is money. This is concerning, when you consider that the Australian Institute of Family Studies found that 27.3 per cent of all divorces are caused by communication problems, with a further 4.7 per cent attributed to financial problems.
Whether you’re opening a joint account or taking out a home loan together, it’s essential that you’re both on the same page when it comes to finances.
Where to start? The Australian Securities and Investments Commission recommends that you determine your combined assets, debts, income and expenses. In addition, have a frank chat about your spending and saving habits, and what you can do to improve the latter.
2. You’ve developed a strong sense of trust
If you trust each other on both a practical and personal level, you’ll be well equipped to handle a joint bank account. Over the course of your relationship, you’ve hopefully fostered a strong sense of trust in one another. From a financial perspective, this means he’s confident that she’s not going to be adding a new pair of Michael Kors to her wardrobe every weekend, and she knows he’s not going to be buying a new motorbike on the credit card any time soon.
3. You have similar goals
Your financial goals are inextricably linked to your lifestyle objectives, and establishing a common target is perhaps the most effective thing you can do before opening a joint bank account. For example, if you plan on travelling, having kids in the next few years or are considering a down payment on a home, chances are that you’ll want to implement a fairly aggressive saving strategy. Hitting these goals together and watching your joint bank account grow is immensely satisfying and will help your relationship further flourish, too.
What do you think? How soon is too soon to open a joint bank account?