If you find yourself struggling to manage your day-to-day finances, it may be time to consider opening a shared bank account with a loved one to keep an eye on things and assist with bill paying.
Consider seeking assistance or asking for help if you’re having trouble with any of the following:
- Unpaid bills and bounced checks
- Calls from creditors
- Misplacing critical financial documents, credit cards, checkbooks, and even cash
- Making risky or uncertain investments
- Forgetting to file taxes
Further, if you have a loved one who has experienced significant life changes recently, consider checking in to assess how those changes may be impacting your loved one’s ability to manage their finances. These include:
- The recent death of a spouse or close loved one
- Physical illness, mental health issues, or severe memory impairment
- Difficulty performing routine daily activities like bathing, eating, and taking medication
However, as many can attest, there are definite pros and cons to mixing family and finances. If you are considering a shared bank account with your loved one, consider the following before moving forward:
Pro: Monitor Bill Paying and Spending
You can easily set up automatic payments for monthly expenses like utility bills, caregiver costs, and medication with a shared account. You can also check regularly to ensure that your loved one is spending appropriately on things like groceries and entertainment. Furthermore, having a system of checks and balances will give you peace of mind that your loved one isn’t becoming a target of fraud.
Pro: Immediate Access in Case of Emergency
In the unfortunate event that your loved one becomes ill, injured, or incapacitated, you can cover medical expenses from the shared account rather than having to withdraw from your personal funds.
Pro: Ease of Access After Passing
As a joint checking account holder, you will have immediate access to your loved one’s funds without having to involve lawyers or the court. While this may seem unnecessary now, that money could come in very useful to cover potential hospital or hospice care bills as well as funeral expenses.
Con: Repayment of Debt
As joint account holders, you and your loved one are considered equal owners of the money in the account. This means that creditors can pursue the money in the account to repay any debt that your loved one may leave behind after passing. Also, joint bank accounts are considered an asset in the event of bankruptcy, divorce, or liens. The money in the joint account would be viewed as an asset to be split if you and your spouse decide to divorce, for example.
Con: Financial Qualification
Because the money in the joint account is owned equally, it could affect either party’s ability to qualify for financial assistance. This is important to take into consideration if, for example, it would affect your children from receiving financial aid for college or place your loved one above the income threshold for Medicaid.
Con: Family Disagreements
Don’t be surprised if your loved one initially balks at the idea of accepting help managing their finances. The thought of doing so may make them feel as though they are losing an essential piece of their independence or leave them feeling embarrassed and ashamed. Furthermore, concerns surrounding a loved one’s money is a significant source of contention amongst siblings. If this becomes the case, it may be worthwhile to enlist the help of a third-party financial professional. Your relationship with your loved ones should not suffer because of disagreements over money.