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For many people, joint accounts are just another term that gets lost in the sea of bank account types along with checking and savings, certificates of deposit, and lines of credit. But a joint account is more than just another similar-but-different option for managing your finances. Joint accounts use the power of your relationships to help you manage shared expenses with greater clarity, freedom, and peace of mind.

So what are joint accounts, really, and when should you consider opening one? Keep reading for our full breakdown of joint account features and best practices.

What Is a Joint Account?

A joint account is a bank account that is opened and managed by two or more individuals. That means that any type of bank account — from everyday checking accounts to specialized lines of credit (LOCs)--can be a joint account.

Each owner of the joint account has equal ability to deposit, withdraw, and transfer the funds it contains. This creates opportunities for family members or business partners to take care of shared expenses without complicated money transfers and continual financial headaches.

Who Uses Joint Accounts?

Joint accounts can be useful in many kinds of relationships. Some of the most common include:

• Couples: A shared account makes it easier to pay common expenses like rent and utilities.
• Parents and children: Parents can provide extra support and oversight to help their children build good financial habits.
• Business partners: With all their combined assets in one place, individual partners are empowered to manage business costs without recurring financial conversations.
• Caregivers and dependents: Joint accounts allow caregivers to protect seniors and dependents from missed payments or other financial issues.

Is a Joint Account Right for You?

It mostly depends on your situation and preferences. Here’s a quick breakdown of the pros and cons of joint accounts:

Benefits of Joint Accounts

• Transparency – Account owners’ complete understanding of their financial status builds trust within the relationship(s).
• Shared financial responsibility – Pooled funds make it easier to pay bills and take joint responsibility for costs
• Clarity – Partners can clearly track how their money is spent and manage their budget
• Emergency access – Any account owner can access funds to pay sudden expenses in a financial or medical emergency

Drawbacks

• Loss of independence – Since all joint account transactions are visible to account owners, partners don’t get any discretionary spending
• Reduced control – All account owners have equal access to funds, so one partner may be subject to the other’s spending issues
• Debt collection – When one owner incurs debt, joint account funds may be seized in order to pay it
• Closing difficulties – Closing a joint account may require the consent of all parties, even if the relationship has ended or deteriorated

Best Practices: Avoiding Common Joint Account Conflicts

Conflict often arises around joint accounts because of their collaborative and accessible nature. You can avoid common friction points with these strategies:

1. Talk About It Beforehand

Before you head to the bank, sit down with your potential account partners and talk about whether a joint account is right for you.
Make sure you discuss:

• Your collective and individual financial goals
• Shared expenses
• Hesitations about using a joint account

2. Define Your Account’s Usage

Lay out clear parameters for how your joint account will be used and how owners need to communicate about spending.

• Agree on what amount each party will contribute to the account and how often (biweekly, monthly, etc.)
• Determine which expenses will be paid from the account (and who will make the payment, if applicable)
• Establish communication requirements (if making a purchase more than $X, must communicate with all account owners)

3. Communicate Clearly and Regularly

Day-to-day communication as you use your joint account isn’t enough — you also need to talk with your partner about big-picture usage, goals, and problems.

• Schedule regular times to review account activity together (these could be weekly, monthly, or quarterly)
• Frequently review your account goals and adjust for shifting priorities
• Establish conflict-resolution methods for when issues arise

4. Prepare for the Unexpected

With intentional preparation, your joint account can be a resource in unforeseen circumstances instead of a point of contention. As you use your account, be sure to:

• Discuss possible emergency scenarios (both financial and medical) and your response in your regular account reviews
• Create a plan for large-scope life changes such as job loss, a significant raise, or long-term disability
• Evaluate past irregular or seasonal expenses and include them in joint account budget

Try Some of Both

Ultimately, one of the best ways to avoid conflict in joint accounts is to try a combination of joint and personal account spending. Talk with your financial partner(s) about areas where you may want to exercise financial independence.
Once you’ve decided what you want your personal and joint account ratios to be, you can look into ways to split your finances into those two locations. You can do this one of two ways:

• Depositing all paychecks into the joint account, then transferring a set amount into individual checking accounts
• Depositing paychecks into personal accounts, then transferring a portion to the joint account

Having trouble deciding how you might want to use a joint account? Middlefield Bank is here to serve you. Contact our team or visit one of our locations for a financial consultation today.

Joint Accounts at Middlefield Bank

At Middlefield Bank, we offer account options for every stage and venture of your life—including financial partnerships. Any of our personal, business, mortgage, or investing accounts can be opened as a joint account. Whatever you and your partner’s financial goals are, Middlefield Bank will help make them happen.

If you’re not sure what option is right for you, we’re happy to help with that too. Just contact us to get started on your collaborative financial journey!

Harness the Power of Your Relationships

Joint accounts aren’t just for married couples or ultra-ambitious business partners. No matter the stage or nature of your relationship, a joint account can be a great way to combine resources, share responsibility, and have greater peace of mind.

Ready to take your first step? Share this blog with your financial partners or reach out to Middlefield Bank to get the conversation started.