This morning I spotted an article that made my uptight frugal brain explode and my money saving blood boil. A popular student money website suggested that students open a joint bank account with their housemates to make the bill-paying process that little bit easier.
It said this:
“All you have to do is set up a joint bank account that you all put money into to pay for bills each month. Setting up a standing order even does the work for you.
The main benefit of this method is that you can make the most out of bundled offers because you don’t have to split up (like above). There are currently some great deals on TV, Phone and Broadband packages for example.”
When I tweeted my annoyance at the advice, the student site’s Twitter account promptly pointed out that their suggestion does have a disclaimer beforehand. Here it is:
“DISCLAIMER: We suggest that you only use this method if you trust your housemates 100% to make payments on time as missing a bill payment will affect your credit score (even if it wasn’t your fault). Do not use this method if you’ve only just met your housemates.”
Personally, I don’t think this is good enough. Here’s why:
- Once you’re named on a joint account with someone, their financial behaviour has an impact on you
- If a housemate wanted to take all the money out of the joint account and spend it on themselves, they would legally be within their right to
- If the account becomes overdrawn, all account holders are responsible for the missing money. You could become liable for another person’s debt
- If your credit rating is damaged because of the joint account, it can take years to rebuild your score
- A bad credit score can make it extremely difficult to buy a home or secure a loan
- Some lenders do provide ‘poor credit loans’ but these come with extortionate interest rates which can see you spiralling into debt
Because I love ranting, I’m about to elaborate on why this advice has annoyed me so much…
You might also like: 5 Ways To Save Money On Food (Plus a free £5 voucher off your next supermarket shop)
Students do some really stupid stuff
Equipped with degrees in everything from Aeronautical Engineering to Law, on the face of it students seem really intelligent. And they are! But at the same time, let’s be honest – they make some pretty poor choices too.
Whether they’re lighting their own farts, using stolen traffic cones as home decor, or throwing TVs down staircases moments before their housemate walks through the front door (happened to me – I could have died), students do some pretty stupid stuff sometimes.
So, without wanting to sound extremely patronising, can we please refrain from telling students that opening a joint bank account with their housemates is a really good idea – especially when we don’t properly emphasise the risks?
Joint bank accounts sound super sophisticated
I may be in the minority here but, way back when I was a student, if a trusted student money resource told me to open a joint bank account with my housemates, I probably would have done. Do you know why? Because it sounds like a sensible and grown up thing to do!
I’d probably go home for the weekend and proudly tell my mum that I’d just opened my very first joint bank account before handing over a week’s worth of dirty washing because I didn’t have the slightest idea how to work the machines at the launderette.
For students looking to get their shit together and ‘adult’, opening a joint bank account sounds like a clever move. It’s easy to overlook the fact it can mess up your credit rating and damage your already slim chances of ever being able to buy your own place.
Trusting your housemates isn’t a good enough reason to make such a big decision
“We suggest that you only use this method if you trust your housemates 100%” the student website warns. I don’t know about you but personally, I don’t think trusting your housemates is a good enough reason to open a joint bank account with them.
It doesn’t matter how much you trust someone, trust won’t stop them screwing you over. Besides, how much can you really trust a bunch of drunken 19-year-olds you’ve only known for a year? Come to think of it – how much can you even trust yourself?
I consider myself to be a pretty honest and decent member of society but thinking back to some of the drama that happened when I was at uni, I definitely would have revenge-spent some of the joint bank account after a drunken row with my housemates. Sure, I’d regret it the next morning and would desperately try to pay it back, but what if I couldn’t? What if a drunken mistake made in the heat of the moment screwed up mine and my friends’ finances for years to come? It’s simply not worth it.
Next time you and your housemates are getting ready for a night out, look around you, dear student. You’ve probably got Sarah on your left who has fallen asleep at 3am with sausages in the oven on three separate occasions and Dan on your right who you’re pretty sure will wake up in a puddle of his own sick in the morning. Are these really people you want to be joining finances with? I don’t even want to open a joint bank account with my boyfriend and he’s my favourite person in the entire world. (December 2016 update: A month after I wrote this post, my boyfriend cheated on me and we split up. Good job we didn’t have a joint bank account).
We need to start thinking about our long term finances rather than just quick wins
One of the things that annoys me most about this student website’s advice is the suggestion that joint bank accounts are worth getting because they allow you to make use of bundled offers for TV, phone and broadband. Soz pal but I really don’t think it’s worth taking on such a long term financial commitment with a bunch of people you barely know in order to save a bit of cash in the short term.
In recent years young people have built a reputation for having a bit of a YOLO attitude to money. We like to live in the present and spend money on experiences rather than things, but when it comes to thinking ahead and saving for houses and retirement, we aint all that keen. One could blame extortionate property prices, excessive student debts, and crippling living costs for our lack of enthusiasm and forward-thinking, but that’s a discussion for another day.
Since we millennials are so focused on making our cash go as far as possible in the present, I think it’s a bit irresponsible to encourage students to turn to joint bank accounts as a way of saving money. Sure, it could save us a tenner each month, but at what cost?
What do you think? Is it wise for students to combine their finances with their housemates to make bill paying easier? Or is it just downright stupid? Let me know in the comments below or send me a tweet to @CantSwingACat
What's the magic word?
Subscribe today and I'll send you the secret password for the free resource library. There you'll find free guides, workbooks and cheat sheets designed to transform your finances