Everyone is holding onto their money tighter than ever, and now young people are opting to share bank accounts with their friends to help the cost of living burden – but is it a good idea?
The cost of living crisis has transformed the way Brits spend and save their money – but would you ever consider sharing a bank account with your best pal?
It’s a new phenomenon flooding TikTok, as friends are turning to each other to help ease financial pressures by opening shared bank accounts or creating group saving pots.
Many people feel blighted by sky-high living costs at the moment, so sharing your finances with a friend may be the answer if you haven’t got a partner to do it with. The question is, when did living alone become so unobtainable people are having to split their finances this way? And is it really a good idea?
Two friends who have been open about sharing a bank account are Caitlin and her pal Tahlia. The housemates took to TikTok to reveal they share their finances while renting an apartment in New York. They said that because they do so much together, it just made sense for them to share a bank account.
Caitlin explained that she gives Tahlia half of her salary, and Talhia gives her half of hers. She said this allows the pair to have financial stability – despite all of their other friends thinking it’s “weird“. Aside from using their joint account for bills, Caitlin said they also use the money for personal shopping as well.
“Think of it as one person puts in $100 and the other puts $180, you then have $280 in total and then we just split that in half and both get the same amount,” Caitln explained. Even though the pair have different earnings, they said it “fluctuates” and sometimes they can earn more than the other and vice versa.
Liz Hunter, money guru and director at Money Expert has shared telling insight into the good and the bad around “friends funds” and why people are starting to do this.
Joint accounts essentially allow two or more account holders to pay into, or withdraw money from. Each person can also have their own individual debit card for the account. Having a joint account means you can pay bills from the account as well as set up direct debits. Liz stated that one of the main benefits is that all account holders can manage shared bills and expenses.
The idea of buying your first home feels extremely out of reach for most people in the current economy. The latest government data published in May 2024 shows that the average UK annual pre-tax salary is £35,464 and according to figures from Zoopla, the average property price in the UK is £264,500. This means that, horrifyingly, the average UK house price is almost 7.5 times the average salary.
Because of this, more people are moving in with friends to help pay bills and save – leading to more people opening shared bank accounts and Liz said that having a joint account, “stops you having to chase people when your bills are due for their part of the payment.”
Caitlin said sharing a bank account adds a “layer of security” to managing finances, before revealing she recently quit her job. She took to TikTok and explained: “I had so many conversations with Tahila about it before quitting. It also allowed me to have the freedom to quit and for us to still be financially stable.” She then said it “empowers” them to make decisions together and allows them to “live our life to the fullest”.
She thinks sharing a bank account has made her more “financially responsible” because someone else is watching what she does with her money. It seems as if the world of friendship funds is on the rise, as Caitlin’s videos explaining the lifestyle has racked up over 100,000 views, with hundreds of people asking how it works. Due to so many people asking questions and intrigued by it, the content creator then started a four part series explaining why and how it works.
Monzo bank also offers a handy way to save money with friends. People can simply open a “shared tab” on their Monzo account to help split ongoing costs. It’s also a good way for friends to save for a holiday or when they are meeting up as they all deposit money it into a shared pot to use when together, another emerging trend online.
Money expert Liz explained: “There are many reasons why people would open a joint account with friends and family. The cost of living crisis has made household bills soar, and for some people, it has pushed them into financial difficulty, leaving them struggling to pay their bills, especially if they live alone.”
There are benefits to sharing a bank account, and Liz said one of the best reasons to do so is to help save for a “shared financial goal”. “It also makes saving a lot easier as you can both view your money in one place, helping you to build a better financial relationship with money which could even help you reach your target amount even quicker,” she explained.
However, there can be downsides, including awkward conversations around salary earnings and spending habits. Money expert Liz advised that if you or the person you’re opening an account with has a poor credit rating, it could have a negative effect on the other person’s score.
“This could lead to issues with getting financial products such as loans and credit cards in the future. To avoid this, make sure you all have a conversation before you commit to opening a joint bank account together to ensure that this is the right decision for you and won’t affect your financial situation in the long run,” the expert said, adding: “If either account holder overspends and enters into the overdraft, it is both parties’ responsibility to pay the money back.”
Liz also explained that there’s no legal protection in place to fall back on “if any of the funds are withdrawn” either.
If the relationship does break down, the expert advised: “You should always speak to your bank as soon as possible to let them know that the relationship has broken down, as they will be able to offer solutions such as separate accounts or a temporary freeze.”
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