Sharing finances usually means getting a financial product – like a bank account or mortgage – with someone else. It’s common among couples, although families, friends and housemates sometimes do it too. Sharing finances is a big step, so there are a few things to consider first.
What are the benefits of sharing finances?
With a joint current account, each member can make and view transactions, and they’ll usually have their own card for it too. This makes it easier to pool money and split costs, like for groceries, bills and rent.
Some couples share a current account to protect their partner in case they die. Accounts that belong to a single person are usually frozen if they pass away – and since it can take months to receive an inheritance, the surviving partner may struggle for money. With a joint account, the surviving partner won’t be locked out.
A joint savings account can help you save money with someone towards a shared goal, like a wedding or a deposit for a house.
Applying for joint credit means you can borrow money with someone else. For example, if you buy a house with your partner, you may want to get a joint mortgage.
What are the risks of sharing finances?
When you open a joint account with someone, you’ll both have access to the money and can spend it as you wish. What’s more, either of you can make changes, like increasing your overdraft limit. If you owe any money to the account, the debt will be shared – even if you’re not the one who actually spent it.
Just remember, you’ll only share debt on accounts you’ve taken out together. You won’t be responsible for someone’s debt if it’s not in your name, even if that person is your spouse.
Applying for an account with someone usually links your credit report with theirs (even if the application is rejected). This is called ‘financial association’. The link can be seen by companies that check your report and may affect whether they lend to you – both now and in the future.
This shouldn’t be a problem if the person has a good credit score. If they have a low score, you may want to keep your finances separate. Luckily, there are ways they can improve their credit score.
Ending a relationship is hard enough, and shared finances can complicate matters. It’s important to let your bank or lender know about the separation as soon as possible.
Usually, you’ll both need to give approval if you want to close the account, and you’ll need to pay off any debt first. If you’re worried about your ex using money or racking up debt, you may be able to change the conditions of the account – or even freeze it.
If you can, try and talk to your ex about how to divide savings or repay joint debt. If you can’t come to an agreement, you may need to use a mediator, like a solicitor.
How to decide
Choosing to share finances is a very personal decision, and what’s right for other people might not be right for you. Here are some things to consider:
Do you trust them?
Specifically, do you trust them to be responsible and fair with your money? If the answer’s no, stick with separate finances for now. You can always reconsider in the future.
What do you know about their finances?
It’s important to be aware of each other’s financial situation. For example, if either of you has a poor credit history, you could damage the other person’s ability to get credit.
Are your spending habits compatible?
If you have very different attitudes to handling money, sharing finances could lead to arguments and discontent. But you could try laying down ground rules, or limiting the amount that you share. It could even be an opportunity to learn money management skills together!
What will you share?
There are many different ways to share finances, and it doesn’t have to be all or nothing. For example, you might create a joint account with housemates, but only pay in enough money for shared bills. Or you and your partner might decide to pool your salaries in a joint account, and take out a small allowance for personal expenses.
Find what works for you, and remember that communication's key.
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