According to Fidelity Investments, one in four couples argue about money. That statistic may surprise some, but I can say that after my divorce earlier this year, I truly wish I had kept my finances separate from my ex. Thankfully, we’re both easy going people, which made dividing up our joint savings account a simple process—with the help of our lawyer.
“For unmarried couples, resolving [a dispute over a joint bank account] often involves complicated legal arguments that are notoriously tough to win… If one person takes out more than their share, best of luck getting it back,” says Jamie E. Wright, Founder of the Wright Law Firm in Los Angeles.
When you open a joint checking account or joint savings account with a partner, both parties have equal rights to the money held in the account, regardless of who deposited it. Either account holder can withdraw some or even all the funds at any time, for any reason. That’s one good reason why you should only open a joint bank account with someone you trust.
What the law says about joint savings accounts
Since it’s possible for a partner to spend the money in a joint account without your knowledge, it’s best to only open these accounts when you have the security of a legal partnership. Christina Previte, Founder & Managing Attorney at WOLF Esquires LLC, has been a family and divorce lawyer for 20 years, and she’s seen how people can get screwed over if they aren’t married.
“If your spouse cleans out a bank account and you get divorced soon thereafter, you can ask the spouse to account for the funds,” says Previte. “If the spouse didn't use them for the marriage (e.g., gambled it away or bought a paramour a diamond bracelet), you can ask for it back. However, if you're not married, you do not have rights to property the same way a married couple does. Your rights are not as clearly defined.”
This can leave you facing an uphill battle that could’ve been avoided with the right protections. Previte recommends that unmarried couples sign a cohabitation agreement that clearly states their rights and agreements to make sure both parties are on the same page—and to cover your assets if things go south.
Benefits of a joint savings account
If you and your partner are married or in a civil partnership, there are benefits to opening a joint savings. You can pool your resources to work together toward the same goals, such as an emergency fund or the downpayment on a house. Plus, by combining your money, you’re more likely to hit any minimum requirements needed to potentially qualify for a higher rate or avoid fees.
Since both partners can check on the account at any time, you’ll likely both remain more accountable to your shared goals. Furthermore, you can simplify money management tasks by limiting the number of transfers you need to make between separate accounts—or skip the endless exchange of Venmo requests.
One of the most concrete benefits of a joint account is increased deposit insurance coverage. The Federal Deposit Insurance Corp. (FDIC) insures deposit accounts at banks up to $250,000 per account holder—while the National Credit Union Administration (NCUA) offers the same coverage for credit union deposits. With a joint account, you get $500,000 in deposit insurance coverage.
Having a joint bank account can simplify estate planning. “One benefit of a joint account, if you designate the other as POD (payable on death), the funds in the account will not pass through the deceased person's estate,” says Previte. “The partner left behind will be able to access the funds right away (with a copy of a death certificate) without paying inheritance taxes and without waiting for probate.”
Drawbacks of a joint account
Beyond legal concerns that could come up if you ever separate, joint accounts create a higher potential for conflict if partners don’t agree on how to spend their pooled earnings. There’s a chance that one of you could overdraft the account or incur fees, in which case both of you are responsible for resolving the issue.
Plus, if one partner has unpaid debts or legal judgments against them, a creditor could come after the funds in the joint account. Beyond these concerns, some people just want more privacy and don’t want a partner’s input on how they spend their money.
How to manage your savings as a couple
While everyone’s situation is different, the key to handling finances together is communicating frequently and ensuring you stay on the same page. If this is your first time sharing a savings account with a partner, here are some tips to consider.
Define your shared financial goals: Work as a team to identify and prioritize your shared financial targets. These could include saving for the downpayment on a house, planning for retirement, or building an emergency fund. Write down your goals and keep them visible to stay motivated.
Regularly review and adjust your goals: Schedule periodic "financial check-ins" as a couple to assess your progress and make any necessary adjustments. Life circumstances change, so be prepared to revise your goals and strategies accordingly.
Set specific and measurable targets: Make your savings goals SMART—that is, specific, measurable, achievable, realistic, and time-bound. For example, instead of simply saying, "save for a vacation," make a goal such as "save $5,000 for a trip to Spain next fall."
Create a joint budget—and stick to it: Develop a comprehensive budget that accounts for both your income and expenses. Allocate funds for essential costs, discretionary spending, and savings. Using a budgeting app designed for couples, or at least multiple users, lets you easily keep track and sync your efforts.
Automate your savings: Set up automatic transfers from your checking account to your savings account on payday. This "pay yourself first" approach ensures you consistently work toward your goals without relying on willpower alone.
Consider a hybrid approach: If you have different money management styles, consider using both joint and individual accounts. Even if you are married, Wolf recommends contributing to a shared account for common expenses and savings goals while maintaining separate accounts for a rainy day. This can help balance teamwork with individual financial autonomy.
The final word on joint accounts
If you do decide to go with a joint account, it’s important to be on the same page about it. Given the advantages you can get from a joint savings account, Wright encourages couples to do the work they need to make it a success:
“Truly, a joint account can work, but only if you have crystal clear agreements upfront—such as how much each of you will contribute, how you’ll use the money, and what happens if there’s a problem,” she says. “It’s not just about trust; it’s about having a plan. Talk it through and make sure you’re both on the same page before you take the plunge."
