Joint Account Hazards
Love is blind, especially when it comes to finance. However, money has always been a discipline that requires both eyes wide open. Many couples who are more caught up in the throes of their new relationship than in planning realistically for their future open joint accounts, only to find out later that they have put themselves in a disadvantageous situation. And contrary to popular belief, relationships do not have to sour for a joint account to be a bad idea, although, of course, the joint account does make breaking up even harder to do.
There are two types of joint accounts. The first type of joint account requires two signatures, one from each partner, to validate a withdrawal. The second type of joint account requires only one signature, from either of the two people in the relationship. The second type is the more popular type, as it is often quite inconvenient to have both partners available every time one partner needs to withdraw funds. There are also a few advantages to the joint account, the most obvious of these being the potential halving of bank and processing fees with respect to the account.
However, even though the single signatory joint account is more convenient, it can get couples into trouble. Since neither partner legally needs the signature of the other to withdraw funds, the money is subject to two people's thoughts of what is important. Since money eventually comes to represent the hierarchy of values in the relationship, small disagreements about what is important can easily turn into a financial disaster.
A single signatory account basically gives a partner access to your savings. What is important to that partner can now be financed with the money you earned, and may have wanted to spend on other things. And though many relationships are based on common interests, many times a miscommunication or innocent assumption can cause more problems than they are worth.
A joint account can also ruin your savings record at your bank if your partner overdraws the account or is otherwise irresponsible with the funds, causing you to make a mistake. Direct communication becomes an absolute necessity in the administration of a joint account, requiring time that many working couples simply do not have. Also, talking about money is hardly romantic, and holders of joint accounts have often reported themselves in many conversations that they would rather not have, which is potentially damaging to the relationship.