Couples come in all shapes and sizes, and not everyone opts for marriage to solidify their relationship. Whether you’re childfree and living with your partner, or simply choosing to skip the legal paperwork, your financial approach will look a bit different. Let’s explore what it means to manage money as a committed, but unmarried, duo.
The Perks of Marriage—Without the Ring
Marriage comes with a host of legal and financial benefits: tax breaks, Social Security benefits, easier insurance sharing, and decision-making rights for your partner. But what if marriage isn’t your thing?
As an unmarried couple, you can still enjoy some of these perks, but you’ll need to do a bit of extra legwork. For instance, legal documents like powers of attorney, health care proxies, and financial agreements can fill the gaps. Want to share assets without worrying about tax penalties? Setting up the right legal framework is key.
One of the biggest benefits of legal marriage is the automatic right to make decisions for your partner, especially in situations like medical emergencies. Without marriage, this responsibility falls to the person you appoint as a legal agent in documents. Whether it’s managing finances or healthcare decisions, these documents can give you that same power—just with a bit more paperwork.
Financial Planning: Together or Separate?
How you approach finances as an unmarried couple depends on your shared goals. Are you planning for retirement together, or keeping your financial lives completely separate?
Working with a CERTIFIED FINANCIAL PLANNER™ can help you navigate these conversations. A professional can guide you on how to manage joint expenses, align your savings strategies, and even plan for taxes. Whether you’re combining everything or just a few things, having a clear plan is crucial for peace of mind.
When one partner earns more than the other, how you split finances can be tricky. A common approach is to divide shared expenses based on income percentages, so each partner’s financial load feels balanced. Be sure to communicate openly and set clear boundaries about what you expect financially.
Buying a Home Together: Protecting Both Partners
Buying a house together as an unmarried couple adds another layer of complexity. Without legal marriage, you’ll need a partnership agreement to spell out the terms of ownership, who pays for what, and what happens if one of you wants out or passes away.
If incomes differ, you might choose to split costs proportionally, with the higher earner covering a larger percentage. Whatever the arrangement, consulting an attorney to formalize the agreement is a smart move. This ensures you’re both protected, no matter what life throws your way.
You’ll also need to consider how your home is titled. Joint tenancy means both partners have equal rights to the property, and if one partner passes, ownership automatically transfers to the other. But with tenancy in common, each partner owns a specific share of the property, which could be important if you ever decide to sell. Understanding the difference is vital when making long-term commitments like homeownership.
Communication is Key
The cornerstone of managing finances as an unmarried couple is communication. Discuss everything—from daily expenses to long-term goals—and make sure you’re aligned. If disagreements arise, it’s better to address them early before they grow into larger issues.
It’s also important to revisit your financial plan regularly. As your careers and lives evolve, so too will your financial circumstances. Reassess how you’re managing money together and make adjustments as needed. This might mean reevaluating your joint savings goals or exploring how changes in tax laws could affect your finances.
And remember, you’re not alone. Legal and financial professionals can help you bridge the gaps and set up systems that work for your unique situation. It may take more effort than signing a marriage certificate, but the extra planning can pay off by providing security and clarity for you both.