When it comes to banking, your checking and savings accounts are basically the starter pack for everyone. But from there, things can get complicated — especially when you’re adding another person into the equation. The question then becomes what other accounts should we have? How many? And how should they be set up?
If you’re asking yourself these questions, you’re not alone. In fact, what is the ideal account set up? is one of the most popular questions we receive. And while there is no exact answer, what we can advise you on is what we’ve seen as to how some of the most successful couples manage the logistics of their cash flow. When we say “successful,” we mean everything from financial success to enjoying and simplifying family dynamics.
And that’s going to be a joint account approach.

How does a joint bank account work?
Like the name suggests, a joint bank account belongs to multiple people, each of whom can contribute to it and use the money within it. While it’s most commonly known to be used by married couples or those in long-term, committed relationships, it is also common amongst parents teaching their kids about money management. For some, the goal is to better monitor spending habits. Others feel it’s a demonstration of unity and trust, giving someone else complete access to their money. But in some cases, it’s just because it seems like the right thing to do after getting married. Regardless of your motivation, there are some great benefits to a joint bank account.
What are the benefits of a joint bank account?
First and foremost, a joint account should only be considered if you have a very strong, trusting relationship with the other person. If that’s the case, there are several reasons that a joint approach makes the most sense for your personal finances.
More transparency and easier management of spending habits
Can quickly transfer money to the account (for example, in the case of a parent sharing an account with their child)
Easier to budget shared income
Easier to manage shared savings goals, such as for a vacation, home purchase, car purchase, etc.
Easier to pay for shared expenses, such as mortgages, food, and utility bills
Establishes a sense of commitment and closeness
Offers a child immediate access to funds in the event of a death or emergency
Each account holder is federally insured up to $250,000 at a bank or credit union. (Joint and individual accounts are considered different ownership categories, so a person can be insured for up to that amount in a joint account and separately for up to that amount in an individual account at the same institution.)
What does the ideal account set up look like with joint bank accounts?
There are a number of ways to set up a joint account, the two primary options are:
Joint Tenancy, meaning the surviving party or parties will become the sole owner of the account. Often, married couples will use Joint with Rights of Survivorship (JTWROS) which will avoid probate on the first to pass but will also superseded your will.
Joint Tenants in Common (JTIC), meaning the survivor(s) does not automatically assume the account but the decedent’s share becomes part of their estate and passed by their will.
The ideal account set up for a joint approach should also factor in individual accounts, which are equally as important in various circumstances. The image below suggests the majority of their funds be combined for shared expenses, savings, and investments, while incorporating individual accounts that allow for personal spending and independent financial management.

The key elements of an ideal joint account set up include:
Joint Accounts: As you could already guess, these accounts form the core of the setup. They include a primary checking account for regular income and daily expenses and another account for emergency savings. We also recommend a joint account for short- to mid-term goals like vacations and larger expenses.
Retirement Planning: We have to emphasize company retirement plans as a way of maximizing employer-sponsored programs, such as a 401(k). This should be established before branching into individual retirement savings.
Emergency Savings: Having a financial safety net is crucial. Having a dedicated joint account for emergencies helps protect you from the impact of all of life’s curveballs. Ideally, this account and short-mid term accounts should be a high-yield or interest bearing account. Note: This account should always be accessible and liquid, no lockup periods, aka CD’s.
Individual Accounts: Each person can maintain a separate checking account and an IRA (Individual Retirement Account), which could be either a traditional or Roth IRA, in addition to any other accounts they may like to create for long-term personal investing.
It’s important to remember that this structure is presented as an ideal framework, which means it allows for customization based on your specific circumstances, financial goals, and risk tolerance.
So how many bank accounts should I have?
The short answer: it depends. But a good rule of thumb is as few as necessary to meet your goals and sustain your household. Two is the bare minimum (checking and savings), but most people will go beyond that for organization sake and budget management. Ask yourself this, do more accounts give you more reassurance or more stress? The way we manage our money should reflect the way we live and manage our lives.

If you want to discuss your financial goals and motivations to determine the best approach for you, give K Wealth Advisors a call. We’ll be more than happy to schedule a GoodFit meeting to discuss your goals and options. #KWA
Insightful Planning to Live Your Best Life. #IPtLYBL
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