Joint Finances for the 1st Time? What you should consider...
It's that time in your life when the first date is but a distant memory and the first home together is on the horizon and you want to start saving. Or, you are renting with someone for the first time and you want all the bills to come out of the one bank account to make things easier, whatever your reason for having a joint bank account, there are a few things to consider before financially linking yourself with someone. Here are a few things to think about...
What about the Fall Out?
Sorry to be Captain Negative, but think about what will happen if there is a breakdown in your relationship. Whether you are a couple in love or a couple of friends, there could be a strain on the relationship at some point and when money is involved it can make things more complicated. Do you keep a log of every penny you put in the account? Do you have an exit of 50/50 of any money in there? It doesn't matter what the agreement is, but have some plan, agreed by both parties on what to do if the relationship breaks down.
What is the Account For?
It is important for all parties to understand what the account is for. Is it merely for paying bills, is it for saving money into or is it there to run as a current account and have credit cards linked to it? Particularly with Credit Cards or any other loans attached to account, it is important to know that all parties will be liable for 100% of the debt. If yare both named on the Joint Account, you both have full responsibility for any debt on that account. If the account is for bills, it is best to put in exactly the same amount each and agree that in the event of any surplus in the account, you split the surplus 50/50.
What is the impact on your Credit Score?
When you have a joint account, you are officially linking yourself to someone to someone and that will appear on your credit file because you will then be 'associated' with them. Your credit score will not decrease or increase because you are linked with someone else but it may impact whether you can obtain credit as some lenders will assess your ability to repay any credit should there be a potential negative relationship with someone. If the person you have an account with has a poor credit score, you may be impacted. As always, make sure you are regularly checking your credit score.
Who can do what?
When opening a Joint Bank Account, you will have various options on who can do what. So if you both want internet access, you can have it, if you both need to sign off on withdrawals it can be set up that way. If you are happy to trust each other on what to do with the account you can set it up on an 'one to sign' basis so it only needs one of you to set up Standing Orders, sign cheques etc. Think about how you will set this side of the account up and speak to your bank if you have any queries or concerns over it.
As with anything financial, make sure you have looked at all eventualities because joining your money with someone else is a big step, so keep control of your money and enjoy the ride!