Joint unmarried couples face unique monetary challenges and solutions when it comes to Personal Finance for Unmarried Couples management.
The count of unmarried couples, living together has increased by 88% between 1990 and 2018, and the number continues to grow with only 12% of couples who live together today, unmarried, and most couples who are married, deciding to live together first. Perhaps the most interesting is how diverse the population of non-residential couples living in the family is. But even with their diversity, these couples tend to share at least one common habit: they are less likely to plan their financial future than married couples.
Here are the three main questions about Personal Finance for Unmarried Couples:
Joint or separate accounts and asset problems
Most financial professionals suggest that in the beginning stages of a relationship when unmarried couples first decide to live together, it is better to keep the assets separate in order to evade property disputes in the future. Separate accounts happen to be perhaps important even more for debts such as loans or credit cards. After all, if both names are in the account, both of these people have a legal right to assets in the account, which may be good or bad depending on the situation. This also applies to jointly named assets, such as cars or homes. It can be especially tempting to combine your assets and open a joint account when an unmarried couple has shared expenses such as rent, utilities, or products, but until you have reached that level of commitment to the relationship.
Creating a family or starting a relationship is not only about love. It is equally important to be able to negotiate and solve many issues together, including monetary ones. Over time, when love falls and euphoria disappears, the future of the whole family depends on how competently the couple can build their financial relationships and distribute responsibilities and resources. For some reason, almost no one talks about this. And in general, financial literacy is not about us. At every step, you can find stories about how, after many years of civil marriage, a wife was left without an apartment for which she gave half the money, or about how a young guy took a loan at fabulous interest for his lover, and she “screwed up” the money in the sunset.
Many couples cannot just sit down and explain who pays for what, not to mention the creation of some legal guarantees for each other in the form of a marriage contract or testament. Even more, problems arise for those couples who simply live together without entering into a legal marriage. Legally, their property and investments are not protected, and the reluctance to understand the laws exacerbates the situation. However, this problem is not only. Even trained American couples who are familiar with the concepts of separate budgets and financial independence have many difficulties.
So what to do to prevent this?
Everything needs to be discussed and decided in advance. This is really important.
The book has many recommendations, but not all of them are suitable due to differences in legislation. But here’s what you should know for sure: there are 4 big topics in the book, and it is precisely their points that need to be carefully discussed with your soulmate. And, perhaps, not only to discuss but also to fix some aspects legally.
This means that it’s important to go beyond discussing who will pay the bills this month. Couples should discuss their money plans, and they should plan their future together.
There are various ways to merge home finances. Will you keep the budget in half, or all family expenses will be spent by one. You may have completely separate finances. This must be discussed in advance to avoid money scandals.
3. Real estate planning
Single couples can face big problems when one (or both) of their partner dies. It is very important to document the property rights in full and correctly so that the wishes are respected. Authors examine wills, trusts, directives, and more.
4. Other issues
In addition to direct monetary issues, couples should discuss all the costs associated with children and the establishment of paternity. There is another important point – whether the partner will be able to make decisions on your behalf for medical reasons. For example, give permission for the operation.
By the way, it is precisely the creation of an extramarital contract that the authors especially emphasize. For starters, it is proposed to simply evaluate how much you spend per month on life and divide these costs in half. If someone earns much more than others, it is proposed to proportionally increase their costs. The authors note that it is necessary to keep track of all payments and expenses, and at the same time make sure that the other partner agrees with them.