Benefits from Opening a Joint Savings Account

Opening a joint savings account is a decision people make when living with a partner. A joint savings account may be used to save money together, earning at a higher rate of interest. Trust is one reason why partners tie the knot financially, but what are the benefits? First, a savings account helps you save for specific short-term projects and build financial security in the long run.

Then, if both of you contribute a set amount to the account, for example, 10 to 40 percent of your income, this will help you avoid conflicts and arguments about money. You can keep the money you saved for emergencies or you can treat yourselves.

Of course, there is no guarantee your partner is not going to waste the money you both deposited. The fact that a portion of your salary is paid into the account gives you a degree of protection.

Speaking of savings, a key advantage of opening a joint savings account is that both partners can contribute any time, making it possible for the balance to grow faster. This, on the other hand, is useful if you want to save for big purchases, such as new kitchen furniture, family holiday, or anything else you are looking forward to buying. The same holds true for credit arrangements such as mortgages and loans. With two incomes, you can borrow more compared to a single person.

Joint savings accounts can serve as a safety net. If anything happens to any of you, for example, an illness or bad accident, it is important that the other has access to the account. If you need to establish a partnership, having a joint savings account is also a good way to do this. It can serve as proof you are involved in a partnership by way of showing the documentation of your joint savings account. This will be accepted in many cases.

In some families and partnerships, one of the partners works while the other stays at home. Thus, one of the partners may be making a significant contribution compared to the other. By opening a joint savings account, the partner earning and contributing more proves the other they are equal and can both access the account.

Children are an important consideration when you think of opening a joint savings account. Many spouses open a joint account to save money for education. With the rising costs of education, this may be one way to make sure money is available when your children grow. A savings account gives parents control over the funds as your child gets older.

Another way to use a joint savings account is to fund a checking account if you need money. Given that many banks offer online access to your account, both partners can log into the account as to transfer money. This can serve as a tool for money management, preventing overdrafts that may occur in emergencies and unexpected situations.

Making sure money is not disputed if one of you dies is another reason to open a joint savings account. At the time of death, assets that belong to the deceased are frozen and pending distribution. If you have a joint savings account, however, money deposited in it will be available to you as an account holder. Thus, the surviving child, partner, or spouse has access to money until the deceased estate is settled.

As with anything else, there are some disadvantages to holding a joint savings account. If you do not trust your partner or spouse, having separate accounts may work better for you. Second, if your partner or you have accumulated excessive debt, this can be a source of concern. Debt collectors may be after the funds, accessing the account even though you are a holder as well. When debt is an issue, it is wise to consult a lawyer before you open a joint savings account.