More than half of Brits have a joint account with their partners. But what happens if they split up? Dividing finances can be tricky and doesn’t always go well for both parties.
According to John Pears, managing director of debt management company Lowell, “Separations are always difficult, and if you have combined and intertwined finances then things can get even more tricky. Many people are not aware that when you break up, you are both equally liable for any joint debt – even if it was not you who spent the money.”
The impact of a joint account and finances
Research conducted by Lowell shows that 39% of Brits found it difficult to separate finances after splitting from their partner. And 46% said that agreeing on what to do with their marital home and any outstanding mortgage payments was one of the most stressful parts of their separation.
In addition, 45% said it was very stressful to deal with debts that belonged to their partners. And an additional 31% worried about how their partner’s financial behaviour was impacting their own credit score. For 30% of Brits, it was also an issue to agree on how to split savings, investments and other funds.
Joint finances aren’t always the best solution
In fact, a massive 47% of people surveyed felt that they didn’t really understand the implications of joint accounts and what would happen to their accounts during separation. Almost 60% of Brits say their previous experiences would put them off ever having a joint account again in the future.
There’s no one-size-fits-all approach when it comes to joint finances. Just because you’re getting married doesn’t mean you should be combining all your finances. In some cases, it might make sense to combine some things (like getting a mortgage together) but not others (keeping separate bank accounts for earnings).
What to do with a joint account during a separation
When going through a separation, Pears recommends trying to discuss finances with your partner to see if you can reach a mutual agreement. “If things are acrimonious, move your wage and regular incomes into a different account,” says Pears. “This will help to keep things separate from your partner when you receive any future payments.”
Another thing to keep in mind is that after separation, your budget can be seriously affected. This might mean less money coming into the household and different expenses. For example, you might need to cancel automatic payments you’re no longer responsible for coming out of your account.
Protecting your finances going forward
If you’re in a relationship and thinking about getting a joint bank account, discuss the pros and cons first. Compare your savings and spending habits and talk about your debt. This will help you understand your current financial situation and see where to go from there.
You should also spend time discussing financial goals. Do you want to save or invest? Eliminate debt? If you’re not sure where you want to go financially, a financial adviser can help. Long-term financial goals are an important part of a well-balanced relationship.
The post 50% of Brits in a relationship have a joint account appeared first on The Motley Fool UK.
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