What are joint savings accounts?
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A joint savings account has more than one owner who can withdraw and deposit into the account, each with their own debit card. These accounts are usually opened for long-term use by married couples pooling their finances. However, they can also be used short term, such as when two people are saving together for the same goal (e.g. a home deposit).
While accessing shared funds through a joint savings account can be convenient, there are also drawbacks. You should always be careful, consider all the details, and make sure that all parties involved are clear about their responsibilities to each other.
Types of joint savings accounts
There are two kinds of joint savings accounts that can affect how you access your money. Whichever type you choose will depend on who you’re opening the account with and what the collective goal is.
1. Both people must sign
Joint accounts require both parties to sign for transactions. This offers more control and is good for monitoring shared money, like in business ventures or flatmates paying rent together. However, it makes accessing funds harder, as both signatures are needed.
If one person is unavailable, the other can't withdraw money, even in emergencies. But if you're saving for a goal and don't need the money soon, this could help both parties stay on track.
2. Either person can sign
For situations where you feel more comfortable freely sharing funds - like with married couples - you can opt for an account where either person can withdraw funds at any time, without the permission of the other.
It's a more flexible option but should really be reserved for people you trust wholeheartedly, as they're within their rights to take all the money out. Additionally, if they rack up fees, you're both responsible for paying them.
Who should use a joint savings account?
A joint savings account should only be opened between trustworthy partners like parents, siblings, romantic partners, and close friends in specific situations. Opening a joint account with someone you don't know well is generally not advisable. Even opening an account with a new romantic partner or friend can be risky since money can create friction within relationships.
Before considering a joint bank account, ask yourself if you fully trust the other person with your finances, if you have similar financial goals and habits, and if you're prepared to share financial responsibility.
Pros and Cons of a joint savings account
There are several advantages and disadvantages to pooling your money with someone, even if you've decided you trust them not to misuse the funds.
Some of these include:
| Pros | Cons |
| Pooling your funds makes saving towards goals together or sharing expenses much simpler. | There’s less sense of separate money - this can be nice, but it can also lead to problems if one person feels they’re getting a stiff deal. |
| You won’t be paying two lots of bank fees. | If one person misuses the account - incurs overdraw or dishonour fees, for instance - then you’re both responsible for it. |
| Transparency - you can each see and keep track of what the other is spending and how much they’re contributing. | Transparency. Both a boon and a potential problem, this means that your spending habits are laid bare - you’ll lose a considerable amount of financial privacy. |
| Pooling your money means a higher account balance, which means you’ll earn more interest. Plus, having two people using the account might make it easier to fulfil requirements - like minimum deposits - for bonus rates. | Although it’s not pleasant to think about, you should consider what will happen if the relationship breaks down. A joint account means the money legally belongs to both of you equally - no matter who put it in there. So, in the case of divorce, for example, whoever gets to the bank first might walk away with all the shared money. |
Tips for using a joint savings account effectively
Budget savings
Having a clear budget can make the responsibilities of all parties transparent. This involves making decisions about how much each person will contribute each month, how much is spent on essential bills and expenses, and how much is reserved for discretionary spending.
You can jump onto our budget calculator to get an idea of what your spending and savings looks like.
Communicate joint account responsibility
If you’re going to open a joint account, it’s important that you can talk to the other person about any issues and responsibilities. That might include:
- Who is in charge of paying joint bills?
- Should some finances be kept separate?
- Do either of you have commitments that the other is not responsible for (like child support or loans from the past)?
- What will you do if you can no longer keep the account together?
Getting these things out in the open is important to make sure everyone is happy with the situation.
Set savings goals
Part of your budget should include a plan to put away savings each month and a goal that those savings are working toward. This will keep you on track and can make it easier to allocate parts of your budget.
- For example, if you’re saving up for a home loan deposit, you may want to allocate any leftover money to that, instead of spending it on takeout or shopping sprees.
Having a shared goal can also help make financial management feel like a team effort rather than one person policing the other's spending.
Find a joint savings account
Different providers will often have different processes, so make sure to double check what accounts are allowed. To search for high interest savings accounts, head over to our hub page and browse some providers today…
^See information about the Mozo Experts Choice Savings Account Awards
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