A novel way to maintain strong friendships? Creating a joint bank account.
That’s the guidance Madison Machen received during a chat with her flight seat-mate to New York last year. The woman was heading to meet her best friend on one of their scheduled trips. She explained to Machen that their excursions were funded by a shared account with her friend.
“I loved the concept so much, I went home and I called my best friend and I was like, I think we need to do this,” Machen said.
Half a year later, residing in Austin, Texas, and with her friend Kim, they had accumulated over $1,000 in their joint Cash App account. Their plan: a trip next May for their 20th friendship anniversary, potentially in the south of France, Machen shared.
“It’s enjoyable for us, as we can create small bets, similar to a swear jar,” Machen explained. “I’m preparing for a marathon, and a personal rule is, if I skip my long run, or any run, I owe $5 to the account.”
Machen is among a few individuals on TikTok who have gone viral by sharing videos on how this saving technique is also a relationship enhancer.
This trend starkly contrasts with the rise of “Buy Now, Pay Later” programs, which let consumers postpone payments. However, BNPL loans may lead to missed repayments, The Associated Press reported last month.
In a society where most financial choices are made independently, embracing “financial intimacy” with friends can also fortify those bonds, suggests Alyssa Davies, author of “Financial First Aid: Essential Tools for Confident, Secure Money Management”.
“When we start to approach money in creative and fun ways like this, it makes money less intimidating, overwhelming, and there’s way more transparency,” said Davies, who goes by the username mixedupmoney on Instagram. “It becomes a lot easier to spend intentionally when you have this accountability with people that you trust and love.”
Tori Dunlap, a content creator known by the username herfirst100K, who offers tools to help Gen Z and Millennial women with financial decisions, stressed that the rise in popularity of joint accounts is due to consumers looking for flexibility when it comes to spending.
“They don’t want to feel the pain of a big purchase all at once,” she said.
But some of the videos about the trend, which quickly picked up hundreds of thousands of views, have also garnered some scrutiny from people who question whether making an account could actually put friendships at risk.
Dunlap said she believes the biggest risk in entering this type of arrangement with friends is trust.
“Everyone on the account typically has equal access, which means one person could withdraw funds without permission,” she said. “If someone loses their job, goes through a breakup, or just changes their mind, it can get messy quickly.”
In order to avoid a potentially messy situation, Dunlap said it’s best to set clear expectations for everyone involved, whether by having a conversation or having everyone sign a written agreement.
“Agree ahead of time how much everyone’s putting in, how it’ll be used, and what happens if someone backs out,” she said.
Financial content creator Taylor Price, known as pricelesstay online, also warned that, in addition to friendship drama, setting up a joint savings account with friends can come with financial risk.
“Joint account holders are equally liable for overdrafts and fees,” she said. “If one person has credit issues, it could impact everyone’s banking relationship.”
Although Price warns against creating shared accounts, especially with friends, she recommends using individual sinking funds. This budgeting strategy involves setting aside a small amount of money regularly to save for a future expense.
“When it’s time to book, everyone pays their share from their own fund,” Price said. “You get the same result without risking your friendships or your money.”
However, Kim Brindell said that having a shared account has helped her friend group in Australia pay for everything, from flights to hotels and meals, on their trips. It’s also allowed them to avoid conflicts over splitting costs, she said.
“Even with apps that track spending these days, this is another layer of ease, not having to think about grabbing your phone to note things down as you buy a round of drinks,” Brindell, who also posted about the trend on TikTok, said.
Their group began by setting up automatic transfers of just $10 a week to their shared account.
“We’ve now had a girls’ trip every year for three years, which is a first in our group, and most of us have been friends for more than 20 years,” she said. “It’s definitely made an impact in how we prioritize quality time together as friends.”
