This is a very popular topic and one that comes with a lot of questions requiring clarity.
Joint Accounts
A couple with a Joint Bank account will both be responsible for the behaviour and management of that account.
Because a joint account tends to play second fiddle to someones main sole account it is easy to go in to an unarranged overdraft without noticing.
Once the account goes in to an unarranged overdraft of say £7, months and then years pass and you are paying interest on interest with being none the wiser. This account balance in the *minus without an arranged overdraft will appear on both of your credit files. The same for any joint utility bills that are not managed well and fall under “missed payments” or the “returned direct debit” bracket.
*Solution = Check your accounts bi-weekly. All of them. Analyse your payments, be aware of when direct debits are due and make sure you have enough funds. Transfer funds between accounts if you need to.
Debt & your Credit Score
Joint loan accounts, Mortgages and the like.
Any unpaid debt, missed payments or defaults will affect the both of you. Even if the payments for the commitment had a direct debit set up from a sole account (Mr), if a payment is missed, this will be attached to both parties as the account is in joint names and both are responsible for the upkeep of it. This will bring down both of your credit scores. Credit agencies like Experian also have a feature where it has an area that lists “linked/associated” accounts. This will bring up your husband, wife, partner etc that you currently or previously had a credit account with or simply have a marital connection to.
When is the right time to open a joint account?
Everyones situation and set up is different, however we found that the right time for us to open a joint account and merge our finances was when we got engaged. We knew that we were committed for the long run and were in the process of planning a wedding, buying a property and supporting one another where necessary so it was crucial that the finances were clear, accessible and shared.
If it wasn’t for marriage or saving for a property I wouldn’t be too keen on having a joint account or intertwining my credit.
Similarly, I know some married people that keep their finances separate. No joint account, no joint mortgage. One pays for the residential home, bills etc and it’s all in his name. One pays for and manages the buy to let property and it’s all in her name.
Do whatever works for you.
Expenses & Savings Goals
The key to staying on top of joint expenses, commitments and saving goals is a spreadsheet! I love me a good spreadsheet, especially one available in a shared Google drive as both you and your partner can edit, access it wherever and whenever you want. The latest version is also always being updated and saved.
We edit the spreadsheet on a monthly basis and are both able to see how much savings we have, the “free” income we have to play with and the bills that need to be paid.
We’re both very visual people so we colour code most of what we do and have regular breakdowns for as much as possible.
A key to us making this work is sharing the load, setting up standing orders and constantly updating the spreadsheet.
Since having this spreadsheet, we have saved more in 6 months than we were able to save in 1 year due to being disciplined and making sure every penny is accounted for.
We have no debts (except a Mortgage) and are enjoying the fruits of our hardwork.
Side Note: We use our credit cards for large purchases like holidays, electronics etc, but clear them within 24 hours. This is so that we can make use of purchase protection, fraud, returns, points and ultimately credit cards act as a level of insurance. I will dissect this topic further another day.
An example of a similar style of spreadsheet my husband and I use to stay on top of our finances can be found below:
I hope this helps.
If you have any questions, please feel free to get in touch via the “Contact Me” tab.
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