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True or False? “Joint Banking with a Family Member is Bad!”

Regardless of whether you are in the ‘true’ camp or the ‘false’ camp, read on…  

Family finance is one of the touchiest subjects in a home! So, to mark the International Day of Families this year, we thought to share some inspiration for how you can strengthen your family’s financial position, specifically through joint banking.  

First off, let’s demystify the term “joint banking” and then we get into the meat of the matter. 

Joint banking basically involves two or more individuals or entities with equal access, control, and rights operating one account. It is common for close relatives or business partners to open joint accounts. However, these days we’ve seen club committees, friends, colleagues, etc., operate joint accounts. Interesting right? 

You’d find the use cases below even more interesting; 

  1. Jane and John are longing for a couple’s vacation… 

 


 

John and Jane got married last year. While they had a beautiful honeymoon, they are longing for another vacation together. They are considering beach destinations in Nigeria and Ghana. They estimate that they will need about 500K for all their vacation expenses. But who has that money sitting around?!?!? Especially in this economy 👀 

They figure that with some discipline, they can make their vacation dreams come true. They set up a joint account where they each contribute 40K monthly. In about six months, they should have enough for them to go on that vacation! This is how people live the soft life these days, they plan ahead!  

       2. Fola, Kola and Sola take care of their aging mother… 


 

Fola, Kola and Sola’s mum, Ma’Rose, is a 72-year-old pensioner who receives monthly annuities that are just enough to meet her basic needs. Fola, Kola and Sola want to supplement their mother’s annuities so that Ma’Rose has some extra money for unforeseen expenses that may arise. Ma’Rose loves make-up and jewellery, but her annuities cannot cover that! 💅 Fola, Kola and Sola set up a joint account with their mother to send her some extra money and keep her comfortable. They all have equal access and control, and all their contributions can be seen in real time. Now this is financial collaboration at its best!  

           3. Temi and Tomi are saving for their child’s education… 


 

Temi and Tomi have a one-year-old son who is set to begin pre-school in two years. They want their son to attend the best school they can afford, but that requires planning and saving. They set up a joint account to act as a sinking fund for their son’s tuition. They create a contribution schedule for them to both direct money towards ensuring he has his education set for life. And that’s the way they happen to life, they don’t let life happen to them! You get it? 

         4. Ugo gives his teenage son Ogo a monthly allowance…  


 

Ogo is a first-year student at Unilag. His dad, Ugo is tired of his sporadic requests for money. They sit down and agree on a monthly allowance for airtime, data, food, and transport. They set up a joint account that Ugo links to his personal account. Each month Ugo sends 40,000 to his joint account with Ogo. They set up rules so that Ogo can only withdraw 5,000 at a time and has a weekly limit of 10,000 spend. Ugo has visibility on what transactions Ogo makes on their joint account, and Ogo begins to develop the discipline to manage his allowance. Talk about fostering financial discipline for your kids! 

 Take this into consideration though… 

While we will be the first to recommend joint banking for your family, there are some things you should be clear on and keep in mind…  

  • What are the rules on the account? What is the signing mandate on the account?  
  • Are all parties clear on the purpose of the account? How do you handle a situation where one party abuses the joint account? 
  • When, if at all, do you close the account?  

 

We hope this piece inspired you to try some joint banking use cases in your family. 

Happy International Day of Families! 

Download Vested today and start exploring some joint banking features! 

 

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