Joint Savings Accounts are not a very common type of account in Kenya. The world over, joint accounts which have several advantages are shunned by many on trust reasons. According to Norwich & Peterborough building society (N&P), many Britons are keen to protect their wealth from their partners, while others do not want their loved ones to know what they spend. The research showed that more than six out of 10 Britons say that they do not open joint accounts when they are in a serious relationship.
This could be the reason why many people the world over, including Kenya, do not open joint accounts, whether saving or current accounts. Let us look at a few advantages and disadvantages of running joint accounts.
Why you should have a joint account
i) Keep track of saving
A joint account is easier to keep track of as the operations of the account are monitored by both parties. It limits the temptation to deverge savings meant for a certain thing to another. Many young newlyweds start saving up to buy their first home. With a joint savings account, they can track their progress and stay on top of weekly or monthly deposits.
ii) Faster saving
As they say, two pairs of hands are better than one. A pooled saving plan will grow the saving plan over a shorter period of time thereby enabling the saving parties to achieve their goals faster than when one person was saving for something. The two or more signature requirement to withdraw money from a joint savings account is almost a fool-proof way of ensuring that the money gets to where it needs to go.
iii) Creating trust and shared money management skills
When parties run a successful joint account, especially couples, they learn and share money management skills that either partner did not have. This also helps them create a sense of trust in each other as future business partners which helps them run both successful homes and businesses.
iv) A sure way of paying bills
A joint account is a sure way to have monthly bills and other essential household expenses taken care of. Without it, some couples might ignore bills assuming the other party had saved money for them only for them to pay the bills late which incurs an extra cost in penalties.
Disadvantages of joint accounts
i) Debts and Overdrafts
Any debt by any accounts related to the joint account will be tied to it and will be paid by either both parties whether or not they were aware of the other partners’ account transactions. Both parties will be responsible for any overdrafts–it’s not the bank’s job to monitor who is spending what. And all parties need to trust each other with this pooled asset.
ii) Divorce and seperation
In the cases of married joint account holders, should the marriage end in a divorce, it is possible that whoever is on the account can simply withdraw everything, and the other party will have no recourse except to go through lengthy court claims. The account in some instances depends on pure trust.
iii) Troubled relationships
Joint accounts, especially in the cases joint salary accounts limit partners freedom in the miscellaneous spending item. Joint accounts disclose to the other partner what the other partner earns, spends on what and when. This is something many people, especially in Kenya keep from their partners and joint accounts would be recipes for quarrels on the same. As Money Supermarket notes, if your partner turns out to be unreliable, or the relationship turns sour, you could therefore end up losing out to someone you thought you could trust.
So if you consider opening a joint account for whatever reason, carefully look at the terms governing the same, advantages and disadvantages. As Mandi Woodruff of Business Insider notes the whole “What’s mine is yours” idea isn’t always the wisest way to approach your finances.
Read Mandi’s list of 8 Things every couple should consider before setting up a joint bank account.