A novel way to maintain strong friendships? Creating a joint bank account.
That’s the advice Madison Machen received last year while chatting with her seat-mate on a flight to New York. The woman was on her way to meet her best friend on one of their periodic trips. The trip, she told Machen, was funded by her joint account with the 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.
Six months later, the Austin, Texas, resident and her friend Kim had saved over $1,000 in their joint Cash App account. Next up: A trip celebrating their 20th friendship anniversary next May, Machen said, hopefully in the south of France.
“It’s fun for us, because we can do little wagers, almost like a swear jar,” Machen said. “I’m training for a marathon right now, and one of my goals was, if I skip my long run, or if I skip any of my runs, I have to put in $5.”
Machen is among the handful of people on TikTok who have gone viral after posting videos about how this money-saving strategy has also been a friendship saver.
The trend is a sharp contrast from the popularity of “Buy Now, Pay Later” incentives, which allow consumers to delay paying for their purchases. But BNPL loans can lead to people falling behind on their repayments, The Associated Press reported last month.
In a world where most people tend to make financial decisions in isolation, practicing “financial intimacy” with friends can also help strengthen those relationships, according to Alyssa Davies, author of the book “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 pricelessstay 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.”