What are some novel ways to maintain strong friendships? Creating a joint bank account.
That’s the advice Madison Machen received while chatting with her seatmate on a flight to New York last year. The woman was on her way to meet her best friend on one of her regular trips. The trip told Machen that it was funded by a joint account with a friend.
“I loved the concept, so I went home and called my best friend. I think I need to do this,” Mashen said.
Six months later, Austin, Texas, resident and her friend Kim saved more than $1,000 on her joint cash app account. Next is a trip to celebrate Friendship Anniversary on May 20th next year, hopefully in southern France, Machen said.
“It’s fun for us, because we can do it almost like a stake, almost like a vow,” Machen said. “I’m training for a marathon now. One of my goals was to have to put in $5 if I skipped either in the long run or skipped either a running.”
Machen is one of the handfuls of Tiktok who went viral after posting a video about how this money-saving strategy was a benefactor of friendship.
This trend contrasts with the popularity of “buy now, pay later” incentives. This allows consumers to delay payments for purchases. But BNPL loans could lead to people falling behind in repayments, the Associated Press reported last month.
In a world where most people tend to be isolated and make financial decisions, practicing “financial intimacy” with friends can also help strengthen these relationships.
“When you start approaching money in such a creative and fun way, it’s intimidating, overwhelming and less transparent,” says Davies, who goes on Instagram with UmbyUpMoney, a confused username. “When you have this accountability with people you trust and love, it’s much easier to use it intentionally.”
Tori Dunlap, a content creator known by the username Herfirst100K, which provides tools for Millennial women to make financial decisions, stressed that the growing popularity of joint accounts was due to consumers seeking flexibility when it comes to spending.
“They don’t want to feel the pain of a big purchase at once,” she said.
However, some of the videos on this trend quickly featured hundreds of thousands of perspectives, drawing scrutiny from people questioning whether creating an account could actually put friendship at risk.
Dunlap said he believes trust is the biggest risk when entering this type of arrangement with a friend.
“Everyone in your account usually has equal access, meaning one person can withdraw funds without permission,” she said. “If someone loses their job, goes through breakups, or changes their minds, it can quickly become messy.”
To avoid any troublesome situations, Dunlap said it is best to set clear expectations for all involved, whether or not they have a conversation or anyone signs a written agreement.
“Everyone agrees in advance how much it is in, how it will be used, and what will happen if someone retreats,” she said.
Taylor Price, creator of financial content known as Pricelesstay Online, warned that in addition to the drama of friendship, there is financial risks by setting up a joint savings account with friends.
“Co-account holders are equally liable for overdrafts and fees,” she said. “If one person has credit issues, it can affect everyone’s banking relationships.”
Prices warn against creating shared accounts, especially with friends, but she recommends using individual sinking funds. This budgeting strategy involves putting aside small amounts of money regularly to save money in the future.
“When it’s time to book, everyone pays their share from their fund,” Price said. “You get the same results without risking your friendship or money.”
But Kim Brindel said having a shared account will help a group of Australian friends pay for everything from flights to hotels and meals on their trips. They also managed to avoid disputes over the cost of division, she said.
“Even with apps that track recent spending, this is another easy tier, and you don’t have to think about writing things down when you grab your phone and buy a round of drinks.
Their group started by setting up automatic transfers for just $10 a week on shared accounts.
“We’ve been traveling with girls for three years each year. This is the first time in our group, and most of us have been friends for over 20 years,” she said. “It definitely influenced the way we prioritize quality time together as friends.”
