Should couples who live together open a joint bank account?

ATHENS, Ga. — When you decide to move in with a significant other, do you combine finances or keep separate bank accounts? A recent study by a team at the University of Georgia examined the factors that determine whether couples choose to combine their finances. Surprisingly, researchers found that simply moving in together was not a strong enough reason for couples to merge their financial resources.

Instead, factors such as marriage, dependents, and higher net worth increased the likelihood of forming joint accounts, while having two sources of income made couples more inclined to keep their finances separate.

The study’s co-author, John Grable, explains that the assumption that couples always pool their money is not always accurate, as the research identified different profiles of individuals and couples where pooling resources is less common. The findings shed light on financial integration styles and can help couples understand their approach to joint finances.

“Our research does suggest that people have a really hard time talking about money,” says study co-author, Ph.D. graduate, UGA part-time lecturer, and financial planner Michelle Kruger in a university release. “So, if they’re able to even establish whether they have the same kind of goals and values when it comes to spending money, that probably indicates a level of cohesiveness.”

Couple sitting in pile of bills, as financial struggles, money worries, debt grow
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Combining resources or keeping accounts separate?

Married participants were found to be 4.5 times more likely to combine finances, which aligns with expectations. Grable emphasized that pooling assets without a marital agreement can be risky for unmarried cohabiting couples, as the law does not provide the same protections as it does for married couples.

Surprisingly, the impact of net worth played a significant role in couples’ financial decisions. Couples with a positive net worth, where their combined assets exceeded their combined debts, were more likely to merge their finances. On the other hand, couples with a neutral net worth were less likely to combine accounts, while a negative net worth did not have a significant impact either way. It was intriguing to note that income level or debt did not primarily influence the decision, but rather the net worth of the household.

Household size also played a role, with an increase in household members correlating with a higher likelihood of combined accounts. However, couples with multiple income earners were approximately 50 percent less likely to pool finances. This may be because partners with individual incomes prefer to manage their finances independently. However, researchers pointed out that a non-working partner might face challenges if they cannot access any household income, highlighting potential power dynamics within the relationship.

Aside from demographic factors, the study found that agreement on spending habits was a crucial indicator of how couples managed their finances. Couples who engaged in open conversations about money and agreed on their approach were 105 percent more likely to combine their accounts. This finding aligns with existing research showing that pooling resources tends to contribute to marital stability.

The study emphasizes the importance of communication and agreement when it comes to financial decisions. Couples should consider their individual circumstances and find a system that works for them. Seeking guidance from financial planners or counselors can also provide valuable insights and facilitate discussions about managing finances effectively. Trust, communication, and finding common ground are key elements for couples to achieve financial harmony.

The study is published in the journal Contemporary Family Therapy.

How do you open a joint bank account?

Opening a joint bank account can be a useful way for two or more individuals to manage shared finances. However, the exact steps can vary based on the financial institution. Here is a general guideline:

  1. Choose the right type of account for the both of you: Joint bank accounts can come in various forms, such as checking accounts, savings accounts, or money market accounts. Choose the one that best fits your needs.
  2. Select the bank or credit union of your preference: You may want to open your joint account at the same bank where you have your existing accounts, but it’s also a good idea to shop around. Look for the best interest rates, lowest fees, and most convenient locations and online banking services.
  3. Make sure you understand the different types of joint accounts: In many cases, joint bank accounts offer “rights of survivorship,” meaning that if one account holder dies, the remaining balance in the account becomes the property of the surviving account holder(s). This is often true of “Joint Tenancy” accounts. However, you might also opt for a “Tenancy in Common” account, where each person owns a specific share of the account and can designate a beneficiary.
  4. Gather the necessary documents: Both parties will need to provide personal information to open the joint account. This usually includes proof of identity (passport, driver’s license, etc.), proof of address (utility bill, lease agreement, etc.), social security number or tax identification number, date of birth.
  5. Complete the application: Depending on the bank, you may be able to complete this process online, or you might need to visit a branch in person. Make sure you understand all the terms and conditions before you sign anything.
  6. Make an initial deposit: Many banks require an initial deposit to open the account. Check with your bank to see if this applies to you.
  7. Set up online and mobile banking: After your account is open, you may want to set up online and mobile banking features. This will allow both parties to monitor the account, make deposits, pay bills, etc.
  8. Communicate regularly: Communication is key when managing a joint bank account. Make sure both parties are clear on how the account will be used, who will pay what, and how disputes will be resolved.

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