What to think about when setting up a joint account

What’s the purpose of opening a joint bank account?

First things first. What are you opening the account for? Generally speaking, it’ll be for one of two reasons – either to save money together or to manage spending and everyday expenses such as regular bills.

 

You may want to know upfront what you’ll be using the account for, as that will help set the ground rules for how you’ll be using the account. Some people open up one joint everyday account for paying household bills, as well as another joint savings account for longer term savings.

 

How much will each of you put in?

You may decide both of you will deposit the same amount into the joint account. If you earn different amounts, you might decide to put in a percentage of your incomes. There’s no right or wrong method here, but might want to consider choosing a method that works best for both of you. Taking the time in the beginning to discuss who’s contributing how much and how often can be crucial.

 

If the joint account is for paying bills, it can be helpful to know upfront who will be responsible for ensuring they get paid. You can also set up direct debits and automatic payments to make sure you pay bills on time.

 

How will you operate your joint account?

Joint accounts can be set with two different access levels:
 

• All to sign – with this type of account all account holders have equal access and will both need to authorise transactions and sign for any withdrawals. Each person will be a joint account holder.
  
  
• Either to sign – as the name suggests, either of the account holders could access money in the bank account without needing the approval (or the knowledge) of the other account holder(s).
   

There can be risks involved if there is individual access where either account holder can withdraw money without the permission or knowledge of the other person, so it’s important to consider access decisions carefully.

 

Joint account holders can change access levels at any time by signing a new account authority, or amending the existing one. However, Westpac will normally cancel “all” authorities for operating the joint account if there is a death, bankruptcy or notified dispute between the account holders.
 

Will you still have your own accounts?

When combining finances into a joint account, some people choose to keep their financial independence by still maintaining their own personal account. Keeping a joint account and separate bank accounts may be wise, particularly when first joining finances together.
 

Communicating and setting the ground rules

Aside from the practicalities of how you’ll operate your bank account, you may want to chat about your general attitude to money. You and your partner might have very different spending habits – if one of you is a strict saver and the other is a shopaholic spender, you’ll need to have open conversations and compromises.

 

It may be a good idea to discuss what happens if one of you wants to make an impulse withdrawal from a savings account when you have an agreed goal in mind? Agreeing on spending and withdrawal limits as well as on any savings goals you both want to achieve may be helpful. What does collective spending look like? What are the agreed reasons for withdrawing funds? Will you have a spending limit in place?

 

You can utilise a range of tools in the Westpac App to help, such as Quick Balance, which allows you to see the available balance of up to three accounts without signing in. 

 

Setting savings goals for joint accounts

One of the advantages of joint bank accounts (particularly a savings account) is that your combined savings could help you reach goals sooner. Having clear joint savings goals to start off with – both long and short term – can be an effective method to work towards building your financial wealth; sharing and working towards those goals may also be good for your relationship.

 

You might want to consider having a conversation about what you want to achieve, both in the short term (perhaps a joint holiday) and in the longer term (maybe a house deposit).

 

There are plenty of bank account options to suit you. The Westpac Choice everyday transaction account gives both partners their own debit card and the fees are waived if you deposit $2000 monthly.

 

If you and your partner have multiple savings goals, Westpac Life account allows you to split your savings into up to six different goals with just the one account. Bonus interest rates also apply each month you grow your balance. 

 

Opening a long-term savings account

If you’re thinking of a joint long-term savings account, you may want to consider a term deposit as a shared account.

 

You can choose a term deposit duration from one month to five years, and will have a fixed interest rate, so you’ll know exactly how much interest you’ll earn over the term. You can apply online for a term deposit to start saving sooner.

 

Speaking of saving sooner, compound interest also helps you to save more money over time, and if it's more than one person depositing, you may be likely to reach your goals faster. The longer you save for, the more interest you may be able to earn, so it might be helpful to start saving regularly as soon as you can. Use our savings calculator to see how long it might take to save a certain amount. 

 

The importance of checking in regularly

It may be a good idea to regularly check in with how your joint account is faring. If it’s a savings account, check how your progress is going and how close you are to reaching your goals.

 

Once you’ve started kicking your goals, you may want to set some more. Or perhaps you need to adjust (either up or down) the amount of money you’re putting in.

 

Whatever the case is, keeping up the lines of communication to review, chatting about progress and planning can go a long way to ensuring the successful management of your joint account.
 

To sum up

Deciding to open a joint bank account and working together towards a common goal can be an exciting time! There are plenty of bank accounts to help support your needs, from the Choice everyday account with linked debit cards, to Westpac Life joint savings accounts and term deposits. By asking these questions and having important conversations about money upfront, you can approach opening a joint account with clarity and commitment.