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Emergency funds: Have joint savings accounts.

Tuesday, September 9, 2014

Someone wrote to me and said,

"Even with passive income, your representative will have to wrestle to get your affairs settled.  This takes both time, effort and even some muscle power.  My greatest fear is being poor and going to bed hungry. My next greatest fear is being half-dead.  Sigh.  .  . I worry a lot."

I have a simple solution to this. What is it?

Have joint savings accounts with our loved ones. I have two such accounts, one with my mother and one with my sister. In case I were to be incapacitated in any way one day, they have access to the money in these accounts.

As adults, we naturally want to have a clear line separating "my" money from "your" money. After all, we have our own lives to build and our own dreams to chase. However, having at least one joint account with someone we love and trust really makes sense.

For example, I know that many couples, married or not, have joint savings accounts to which they contribute equally on a regular basis. Such joint accounts could serve many purposes including paying for regular household expenses.

However, the joint accounts I am thinking of hold emergency funds. They come in an imaginary glass case that has the words


written on the outside in bright red colour.

Having said this, for married couples, a joint account to hold emergency funds makes sense. For couples yet to be married and for singles, it would make sense to have such a joint account with a trustworthy immediate family member even if the money is all yours. (At this point, I hope no one asks me the question which I think someone might ask.)

Yes, we need to have people we can trust to hold keys to these funds. We trust ourselves (I think) but if anything untoward should happen to us, someone else we trust should be able unlock these funds on our behalf.

Still having second thoughts? Hey, this someone we trust and love will be taking on additional responsibilities (with thanks and only thanks), you know?

What's the next thing to do after this?

Keep our fingers crossed and hope that we are the ones who might have to break the glass case and not them.

P.S. There are many ways to make sure that our loved ones have access to our money on short notice, I am sure, and I am just sharing one way here. (See related post #3)

Related posts:
1. Why a meaningful emergency fund is important?
2. Emergency fund: How much is enough?
3. Emergency and convenience cash.


Unknown said...


Do you see the need to have a lasting power of attorney besides joint account?

Thank you.


AK71 said...

Hi Phyllis,

Actually, the person who wrote to me also suggested this.

" Lasting Power of Attorney ("LPA") is a legal document which allows a person who is at least 21 years of age ('donor'), to voluntarily appoint one or more persons ('donee(s)'), to make decisions and act on his behalf as his proxy decision maker if he should lose mental capacity one day. A donee(s) can be appointed to act in two broad areas: personal welfare as well as property & affairs matters."
Office of the Public Guardian.

I think this is a good thing to have if our finances are somewhat more complicated.

There is a good article when I did a search online:
Why a lasting power of attorney is not just for the elderly?

"You may choose anyone you trust as your attorney, provided they are over 18, not bankrupt and they are willing to take on the role, which is a serious responsibility."

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