That joint bank account can make or break your marriage

 

Trusting your spouse with money, the argument goes, is a great start to earning trust in other areas. Diana Namutebi explores the issue

 

Ambrose, a banker and his wife Naome who resigned her bank job, hold a joint bank account.  When they opened up the account, their plan was that Naome would resign her formal job, become self-employed and get time to take care of the children.

 

Naome says she and her husband opened up an account into which they agreed to deposit not less than sh500,000 every month to pool enough resources to buy a piece of land.

 

Using both their salaries as collateral, they acquired a loan to build a family house. They managed to clear the loan within one-and-half years and started saving to start a business for Naome.

 

They eventually opened up a hardware shop in Kireka, a Kampala suburb, and have now started building rentals in Kirinya using the money they deposited into the account. To them, pooling their resources as a couple was the best decision they could ever make as far as acquiring family property is concerned.

 

But another couple, Anne and Jerome, will not hear any of this story, which Anne prefers to call ‘a bogus idea that encourages exploitation’. Reason? She believes it was the cause of her marital woes, which culminated into a marriage breakup and left her a pauper. 

 

Anne is an executive assistant in a publishing company in Kampala while her husband, Jerome, is an accountant-turned businessman. 

 

Anne and Jerome opened a joint account in the early years of their marriage in 2009, with a plan to pool resources and build a family house. They would each deposit sh300,000 every month until they could accumulate enough to kick-start the project. 

 

In 2011, Jerome quit his job to start a real estate business. Without enough capital, Jerome convinced his wife that they should take a bank loan to top up their savings in their joint account and use Anne’s salary as collateral, after agreeing he would deposit the required monthly instalment into the account to service the loan so that Anne’s salary was not affected. 

 

The arrangement worked well in the first year, but along the way, Jerome started defaulting by not depositing the monthly instalment as agreed upon and, of course, as per their contract with the bank, Anne’s salary was on the chopping board. 

 

When Anne tried to inquire, he told her he had problems that could not allow him to service the loan promptly and what started as a good cause drifted into a quarrel and eventual marriage breakup.   

 

To date, Anne is still servicing the loan and her estranged husband does not seem bothered, despite the fact that his finances have improved. Having gone with half salary for the past two years, Anne has vowed to quit the arrangement as soon as the loan is paid.

 

Legally, when two people open up a joint bank account and acquire a loan through such an account, the lender (who is the bank), treats both account holders as borrowers with a joint obligation to repay the loan, regardless of who used the money, as long as they both signed the contract with the bank. 

 

In such a case, to recoup its losses, the bank will seize any property or other assets that the borrower(s) offered to secure the loan in case they fail to repay. 

 

Couples who hold joint accounts are entitled to equal access to the account and are held equally liable in case they fail to repay, as per their agreement. In the event that one holder is not satisfied with the arrangement, he or she is free to opt out by notifying the bank, but after the loan has been repaid.  

 

According to a lawyer, who prefers anonymity, couples should always have other personal accounts in addition to the joint accounts. She confesses having witnessed many scenarios where one party has been ripped off by another, either by the latter emptying the account or the two acquiring a loan jointly and one of them squandering it and jumping out, leaving the other to service the loan single-handed. This, she says, often marks the beginning of conflict and marriage break-ups.

 

However, Pastor Cyrus Rod of Dominion Church in Kisaasi says holding a joint account is a good practice that encourages transparency, accountability, trust and financial discipline among spouses. Couples, he says, should be open to one another, so things like selfishness and hiding financial information from each other should not be encouraged.

 

Rod says the arrangement helps a couple to plan how to spend and save, thereby building trust and improving communication.

 

Rosemary Bwire, a counsellor at Uganda Christian University in Mukono, agrees that the arrangement is healthy, but hastens to caution that it can be abused and problematic if traces of mistrust crop in. 

 

“The moment one’s spouse suspects the other of philandering or any kind of misuse of money, the arrangement may collapse,” she says.

 

Bwire, however, notes that there is a lot a couple stand to gain from holding a joint bank account as it enhances smooth running of affairs, with check and balances, protects family resources and encourages investment. For example, pooling money together helps couples plan and accomplish many things together. 

 

Ruth Ssenyonyi, a counsellor at Bank of Uganda, warns that it is not right for couples to embrace the system intrinsically. Just because it worked for one couple does not mean it will work for you, she warns. Situations differ and when it comes to financial matters, there is no template. 

 

“The success of operating a joint bank account as a couple is determined by each individual’s character. You might want to have a joint account as couple but one of you might be a spendthrift or may even be reluctant to contribute,” she says. 

 

For such an arrangement to work out, the couple should set rules that each must adhere to she advises. For example, how much should each of you deposit, how often should you withdraw and what should you use the money for.

 

Ssenyonyi insists that if you are to hold such an account, it should be made clear what you want to use the money for and the money should be spent on the things you both agreed upon initially, like building a house, paying tuition, among others.

 

Then each of you should have separate accounts where you can keep some money for personal use, for example if one of your siblings or mother falls sick or needs financial assistance.

 

She maintains that what matters is openness, trust and accountability. Even if you hold separate accounts and you are open about each other’s earnings and expenditures then you will still be able to work together.

 

Anthony Kituuka, the Kenya Commercial Bank’s head of corporate banking, says the decision to open up a joint bank account as a couple should be made at a personal level and no one  should coerce his or her partner if they are not interested in the arrangement. But the big plus for having such an account as couple, he says, is that it encourages openness on issues of expenditure. 

 

He says when operating such an account, it is important to involve your banking advisers to fully explain what such an arrangement entails, so that no one is caught off-guard.

 

It is also important to review the bank statement together so that you keep everything in the open, according to Kituuka. He emphasises the importance of notifying the bank immediately, in case the signing powers and ownership of the account changes.

 

Operating a joint bank account is not a piece of cake and so, if you are doing it as a couple, there are many things you need to consider.

 

If all goes well, a joint account can spur development and be a source of joy; but if things go wrong, your finances and marriage can go down the drain. Below a financial expert from Diamond Trust Bank gives tips that will save you the heartache.

 

Always have a goal and targets for the money saved in the account so that and you operate the account with the aim to achieve those goals. This will help you avoid wastage.

 

A joint bank account is like a mutual money pot for household bills and other expenses, such as groceries and tuition. Some couples maintain joint savings accounts for big budget goals such as building a house, buying land and starting business, which they both contribute to equally each month. You need to agree on how much each of you should deposit and when. In addition, how do you make the deposits? Is it through direct debit or a standing order?

As a couple, decide together which bank is convenient. Choose a bank you both have access to and can be able to serve your interests and not theirs 

You should have good knowledge on the product you are opting for. Know that there are different types of joint accounts. This information can only be got by asking your banker questions like: What is the required initial deposit? What is the minimum balance? What is the penalty in case of default? What is the limit for withdraws? 

 

Scrutinise the terms and conditions before you open the account or get a loan, so that you are not duped or put in risky situations.

 

Decide who will control the card. Unless you have two separate debit cards for your joint account, which is possible, you might want to select one person to keep the card. 

Also, if you are using the account to pay bills, you will need to split them or decide who of you is responsible enough to pay them on time. And, keep the other person informed about what is happening with the finances on a regular basis.

 

As a couple, agree on the signing mandate. It can be either or both of you, but it is always good to include a clause that requires both of you to consent before any action/transaction is made on the account. 

Keep communication channels open and agree before you even open the account to communicate openly and jointly to manage the account. Otherwise, one spouse could be left high and dry. In case something happens to one of you, the other one should have an idea of where to start. Honesty is the key to a successful operation of any joint bank account as a couple.

 

Create a disciplined culture that ensures you both religiously make deposits and withdrawals as agreed upon. Much as you are a couple, both of you need to independently monitor the account to see its progress.

 

Each person should have an individual account they can use to pamper each other or themselves without affecting the household bills, and be open about it.

Remember you are dealing with money issues; do not make blind decisions, even if you are madly in love with your spouse. 

 

Do not assume that any of you can hold the signing mandate, as characters and situations change with time. People often get disappointed because they blindly entrusted all the signing powers to one person.