Joint savings accounts are very convenient, but are they always the best option? Having a separate savings account may be more useful than you initially think. Opening a separate savings account does not mean that you do not trust your partner. It simply means that you are being sensible. There are other situations that may require you to think of a separate savings account, such as separating business accounts from personal ones and using more than one financial institution. There are many reasons why a separate savings account can be a good idea in all of these cases, and here are just five such reasons.
Specific savings.
A separate savings account can enable you to concentrate on a particular project. It may be that you want to save continuously for your retirement, your children’s future, special vacations or education needs. Whatever the reason a specific account, held solely for the purpose, is a very good idea. If the money is saved in multiple-purpose accounts, it will be all too easy to dip into your resources at the first emergency. Making sure that your separate savings account has only limited withdrawals allowed each year will also help the money to stay in the bank.
Better rates of interest.
If your separate savings account is not for everyday use you should be able to open an account with a very good rate of interest. In the UK it is possible to open Individual Savings Accounts which offer tax-free interest. Shop around for the account that offers you the best rate of interest available. Remember, you do not have to stick with your tried and tested bank but can look further afield.
Separate rather than a joint account.
Most couples have joint accounts. These are very convenient and safe. However, if the relationship fails and you go your separate ways, or, worse still, one of you dies, the other person could be left with no immediate disposable income. In the case of a death, it can take time for you to be able to access the joint account money. If you have your own, personal, savings account this will tide you over until finances are sorted out.
A different bank or financial institution.
The global financial crisis of the last few years has knocked the faith that many people held in banks. People have become scared of losing everything. If this is you, then perhaps having a separate savings account in a different bank would be a good idea. Make sure, though, that the bank is truly a different one. Some banks are owned by an amalgamation of banks.
Personal as opposed to business accounts.
If you run a business you need to keep at least some savings in a separate account. Keeping your business and personal banking separate can help your business to run more efficiently and will give it a more professional feel. At times when your business is not doing so well you will be glad that you have not “put all of your eggs in one basket.” When it is time for you to audit your business or complete your annual tax returns, it will be easier if you have separate business and personal accounts. If you have linked all your accounts together, it could be hard to make sense of what are business expenses and what are not.
Overall.
Joint accounts between a couple are a sign of trust. However, we all need to have a little independence and our own money sometimes. This makes it easier at Christmas, birthdays and if the relationship ends. Having a separate savings account may also help you to save seriously for the future.