In a recent discussion with my (younger) colleagues it transpired that we thought of Joint Accounts in rather different ways and I wonder how it is that you might use these - if you’ve ever done so?
If you share your income and expenses with someone else, how do you arrange your accounts?
There’s My Money / Your Money / Our Money
There’s only Our Money
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I have to admit I think of having a Joint Account as an alternative to having Personal accounts, but I can see the benefits of running it as one of several accounts.
Essentially, would you see the need for such an account as a way of combining all income and expenses, or as a way of segmenting them?
Conceptually it is interesting as it means that you might need to ‘Track’ more than one account to know how you are doing, but it also makes it easier to separate personal from shared expenses.
I’d be very interested to know if you’ve had one, and how you use such an account.
If Dozens were to offer these sorts of accounts (don’t get too excited yet, I’m not announcing anything - this is just for interest and discussion), how would you imagine it working best for you?
Our joint accounts are for specific purposes. One for all the house costs, one for all the child stuff, one for shared income.
I’d love to see a UK institution copy bunq and let you set up a large number of full accounts, any of which could be joint. I think encouraging people to organise spending by account is also incredibly powerful when it comes to budgeting.
So, you might set up an account priority and select an account for essential costs with at least a three month horizon, so any incoming money is automatically assigned to your next three months of bills…
Thinking of joint accounts just as a way of combining finances is a bit old school. They’re really just a way to organise spending efficiently
I have a joint account, which goes for household stuff, to which we contribute in proportion of our income. But the personal accounts are not remotely linked to that.
The whole joint account concept is well overdue an overhaul.
Some sort of “joint account agreement”, setting out the purpose of the account, how it will be funded and what will happen if either party wants to close it would be incredibly helpful for flatmates, couples etc.
I doubt that’s remotely possible though. It would take some very elegant legislation, plus governments have persistently avoided looking at the mess that is the law around unmarried couples, family carers, cohabitees and so on.
My wife and I have the same arrangement. Allows for sharing of monthly expenses (such as household, childcare supermarket costs) but allows us the freedom to use our own accounts for personal spending. Best of both worlds!
Few of my friends have joint bank accounts with their partner. I do not have one with my partner because there are some well-hidden drawbacks and pitfalls I won’t risk. Faster Payments has made it easy to move money allowing split spending to be settled quickly. I takes about five minutes for my partner and I to settle up each week.
I think the design and operation of joint accounts is out-dated and needs a major overall. Maybe it needs to operate more like a set of smart contracts?
In a smart contract, actions are triggered automatically based on events. An agreement between two people, e.g. to split bills, can be made up of a number of smart contracts to suit their needs all contained in a joint “jam jar”. A smart contract is transparent to everyone involved, so both parties can be confident whether the “terms” are being fulfilled.
The smart contract “events” would include bill payments or card transactions. The “actions” would be the movements of money. Here are some scenarios: -
(1) A and B agree to split grocery bills 50/50, but A does all the shopping and pays at the till using their personal account debit card. A smart contract for payment category “groceries” recognises the card payment and initiates an action to transfer 50% of the amount paid from B to A.
Person A can be confident they aren’t going to be stung for the grocery bill and Person B has not had to hand over money not knowing how it will be spent. Both A and B can see the details of the transaction that triggered the movement of money.
(2) A and B agree to spilt the bill for their Sky package that consists TV, landline telephone and broadband. B only uses the landline for incoming calls but does watch a lot of PPV films. The smart contract is linked to the Sky account. When a bill is paid, the smart contract takes 50% from each personal account for the broadband, telephone line rental and the TV subscription. The smart contract pays all of the PPV charges from B’s personal account and all the outgoing landline call charges from A’s personal account. Each person has paid their “fair share”, as agreed.
(3) A and B have a joint mortgage but it’s agreed that A will make the monthly mortgage payments. B needs the security of knowing the payments are being made on time because they have joint liability. In a smart contract linked to the joint mortgage account, money is moved from A’s personal account to the joint jam jar in time to make the monthly mortgage payment. The transactions recorded in the jam jar are visible to both A and B. Payments are adjusted automatically, e.g. when interest rates change. B can be confident the joint home isn’t going to be repossessed and A has not needed to share their entire bank statement just to prove the mortgage payment was made on time.
Simple smart contracts run outside the scope of the relationship between A and B and respects their mutual independence and privacy, so it does not matter whether it’s a house share, an unmarried couple or parents giving financial support to their children at college. The smart contracts will keep running even if the relationship between A and B breaks down although I appreciate there has to be a mechanism to shut down a smart contract at some point. I’m also aware that many people will argue that lasting relationships are built on a foundation off mutual trust, but a high proportion of those foundations crumble away each year and it can be messy!
I’m no expert on smart contracts and I appreciate there are gaps but I hope my outline makes sense!
Hi @Gaoler. In my outline Scenario (3), the joint mortgage is typically one of the major most problematic issues during a divorce. At things stand today, Person B would feel insecure because their home is under threat. Person A is having a hard time proving the contribution they have made to the marriage or how it was agreed initially what contribution each of them would make and their record in actually meeting their obligations. Smart contracts are a permanent, immutable and transparent record of the agreement and the transactions that fulfilled the contract. Sure, a court still needs to hand down a settlement, but the underlying smart contract is incontestable.