Finances

The joint account

Once in a relationship, you could decide to put your incomes together and manage everything through one joint account. Is this a good idea?

There are plenty of advantages to having a joint account. However, it can be tricky if you only rely on that account for your family finances. It is important for each spouse to have their own personal cheque and savings account. This way, both parties are free to spend on themselves or save money for their retirement or other long term personal projects.

Joint account rules

There are two types of joint accounts: either both partners' signatures are needed to write cheques and withdraw money (there are no debit cards in this case), or one of the partner’s signature is enough to write cheques, make transactions or use a debit card. It is best to evaluate both sides’ advantages before making a decision. An account without a debit card may seem like a bad idea unless both partners want to achieve a certain spending discipline and make sure the money is only used for family puposes.

Once the joint account is open, you must discuss about each partner’s participation. This discussion will be much easier if both partners have already sat down to make a budget and have a realistic view of their spending habits. Once you know what sum of money is needed to cover all joint expenses (mortgage, grocery, insurance, loans, electricity, phone, etc.) you can determine each partner’s financial responsibility. If both incomes are similar, you can split everything in half, but if one person earns 65 000 $ a year and the other earns 35 000$, you can agree on a certain percentage of the salary rather than on an amount. This method is greatly appreciated by those whose revenue varies from one month to another.

Expect having to make adjustments along the way since you may have forgotten certain seasonal spendings (Christmas presents, vacations, important purchases, renovations, clothes, back to school material, etc.) and you may want to add them to your joint account budget.

Important
  • In case of a separation, the joint account must be closed and certain measures must be taken to cover the spending obligations as well as debts. You cannot keep using the joint account without the other person’s consent. 
  • Both partners are responsible for the joint account, even if you are unaware of certain transactions. In case of a problem (drugs, game addiction, etc.) one of the spouses can empty out the account without advising the other person, yet both spouses are legally and equally responsible for that account.
  • It is best to keep track of the account’s transactions personally to see how much money  each one brings into the account and look at your spending habits every 3 to 6 months. This way, you can adjust your budget before getting into debt.
  • In case of death, the joint account will be frozen, like all of the deceased’s other bank accounts. A power of attorney  signed at the bank will allow you to go around this provision of the law and will give you access to the joint account funds.
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