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Sunday, July 5, 2015
What to know about joint accounts
A joint account can be both simple and complex -- from sharing a basic bank account to
co-owning a big ticket item like a house or financial assets.
In the first instance, a joint bank account can be a helpful tool in a busy household.
Pooling funds into one account to cover shared expenses, such as groceries and rent or
mortgage payments, can help in sharing costs and keeping track of expenses.
In the case of joint accounts for property or financial assets, the situation is more complex
and can have unexpected consequences. That's why being aware of the ins and outs of
joint accounts is essential.
First and foremost, every couple and family is different, so one size does not fit all when
it comes to managing joint accounts. So, we tapped into the experience of two financial
experts to share their collective insights.
Why a joint bank account?
When talking about joint bank accounts, Karin Mizgala, co-founder of Vancouver-based
Money Coaches Canada, a national network of financial professionals, boils it down to
three main characteristics: personal preferences, simplicity, and organization.
Personal preference: "When you start having a joint account, it really depends on the
stage of the relationship," says Mizgala, who is also a certified financial planner.
"Hopefully you've decided that you're going to have ongoing conversations around
money and that you're comfortable in working together on at least part of your finances."
In many relationships, it's not an all-or-none decision when it comes to joint accounts.
Mizgala thinks it still makes sense for people to have a separate account in their own
name to be used at their personal spending discretion.
Simplicity: For most couples considering a common account, Mizgala thinks a joint
account that deals with the very obvious sort of simple-to-divide expenses is a good place
to start: "Things to do with the house, which are often split 50/50, could easily be done
through a joint account." Setting up a joint account for a dream trip can also be a helpful
saving tool.
Organization: If something should happen to one of the account holders, there is ease of
access and keeping things organized.
Despite the advantages of joint accounts, they should be considered with caution. "If
you're joint with somebody and have signing authority on the account it means that they
could deplete the account if they wanted to," says Mizgala.
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