Getting Married? Here’s Something To Consider When Planning Your Finances

joint account

You’ve already found THE ONE and you’re planning to start a life together. But alas! You and your beloved discuss how to divide the household expenses and it’s just a big old headache! Who’ll pay for the household bills and who’ll be paying for the kids tuition next time?

It’s going to be tough having to tally the expenses daily and arguing who should pay what. Do you both contribute equally to the household or live by “your money is her money and her money is ALSO her money”? One solution to this problem is opening a joint account to help keep track of all your household expenses.

 

Hasn’t MoneySmart written an article on the pitfalls of joint accounts? Why encourage them now?

Well dearie, it’s not rocket science, there’s always two sides to a coin. Here’s the other side.

 

Why should I even get a joint account?

Our previous argument was that some couples refrain from getting a joint account because they believe that opening one means a loss of independence. Opening a joint account means having to answer how and why they spend their money, or running a risk of their partners running off with the money, or arguing about unequal contributions and output, and the list goes on…

…But let’s just face it, while that is true, when you’re at the stage where you’re actually getting MARRIED, does all that matter? Sure, you’ll need to think about the what-ifs, but you’ve got to admit it sounds funny when you’re going into a marriage still guarding your finances. It’s like you’re planning for a divorce BEFORE you get married. Last I checked, this isn’t the US and you’re not a billionaire.

That’s almost equivalent to saying you wanna get married but you’ll want to keep masturbating instead of having sex with your partner ‘cause you’re afraid he/she may give you an STD one day.

People get married so they can share a life together, that includes sharing a bed, kids, and yes, assets and other financial obligations. As risky as it may seem, a joint account can bring about many benefits like transparency and open communication, which translates to a higher level of trust between a married couple.

When you both pool a part of your earnings towards a shared fund, you’re handling all your household expenditure as a team and understanding each other’s spending habits more in the process. It depends on the lengths you’re willing to go really. Are you ready to go all the way with this person, or would you prefer to keep your guard up in case something bad happens? If it’s the latter, then why bother getting married?

 

And honestly, no one’s asking you to put ALL your money into ONE joint account

Just because you open a joint account together doesn’t mean that you should no longer have any personal savings accounts. Ideally, joint accounts should be used mainly as a means to pay all your household expenses, consolidate utilities bills and other shared expenditure, like childcare.

 

Okay fine… What are joint accounts and which should I choose?

Joint accounts are basically just extensions of your normal savings account. You add an additional name to the account and wham! It’s a joint account!

Joint accounts are divided into 2 categories: joint-alternate, and joint-all accounts.

Joint-alternate accounts allow account holders to perform transactions individually but still holds all parties liable for all transactions done. Meaning you’ll be equally responsible for any debt incurred by either party. For example, if one party signs for a facial spa package that you both cannot afford.

On the other hand, joint-all accounts require consent from all the account holders before any withdrawal is made, so this means your spouse cannot anyhow lah.

Do keep a lookout for the “joint and several liability clause” before you sign the agreement though. This means the bank can choose to either hold both you and your spouse accountable for things that go wrong (like writing a cheque without sufficient bank balances, for example), or do so individually.

 

Which bank should I go with?

In general, most couples would find the joint-all accounts more appealing as it is the “safer” route. But if convenience is what you’re looking for as a couple, and most of the household expenses is usually taken care of by one party, a joint-alternate account would be better. Since the key purpose of getting a joint account would be to consolidate marital expenses and savings, I would assume that you’ll have a separate account for salary crediting.

If you’re looking for a savings account just plainly to accumulate savings for long-term plans like your kid’s university funds and family holidays, CIMB’s StarSaver Account gives a flat cashback rate of 0.8% with no frills. But if you’re going to use the account for more all-rounded purposes such as paying your bills, groceries, insurance, investments etc, you might want to consider the UOB One Account, OCBC 360 Account, and Standard Chartered Bonus$aver. These give higher interest rates, but only if you use credit cards from the same banks (duh), pay your bills through GIRO, and other banking transactions.

Do note that these interest rates are capped at a fixed amount of savings you have in your savings. For example, the OCBC 360 Account only allows you to earn bonus interest on the first $70,000 in your account.

 

One final consideration…

Of course, as with all other things, when it comes to choosing an account, your choice of bank matters too. Besides the attractive interest rates, it’s also common sense to consider the convenience of the locations of bank branches. You wouldn’t want to choose a bank that only has branches or ATMs near central areas when you live all the way in Choa Chu Kang or something. Also consider if you’re going to be making transfers between your personal account and the joint account. Transfers are usually processed faster when you’re transferring between accounts from the same bank.

 

What are your thoughts on joint accounts? We’d love to hear from you.