Personal Finance And Couples

Love. For the past twenty years, the number of unmarried couples living together has grown by leaps and bounds. Today, more and more single couples are faced with unique situations with personal finances. These figures are in the range of over four million and counting. These couples are less likely to have a set budget, much less have set goals together with their love...

In these days of inflation, high food and gas prices, and other financial setbacks, couples today that aren't married have different issues when it comes to financing. It's no secret that many relationships don't work out due to finance issues alone. Besides the oblivious things such as house payments, insurance, and utility bills, these couples have many other things to worry about. Questions such as whether to have joint or separate accounts and who pays for what are waiting to be answered as unmarried couples face an uphill battle. Here are some of the personal finance issues unmarried couples must face when living together.

• Financial experts have studied the early stages of relationships and have concluded that unmarried couples that are living together must keep their assets separate. This can create problems for some couples because of other setbacks such as having a child together or if they are both struggling to pay bills. However, having separate identities can help tremendously if the relationship doesn't work. If the relationship works out fine, then there's really no harm. Either way, having separate personal finances such as checking accounts will help to sort out where money should be flowing. For instance, with a joint account, both parties can dip into the account without the other person knowing and thereby take money from something that the mate may have been saving for. It's so embarrassing to have to hear the words, "I'm sorry but your debit card has been denied. Trust me, its no laughing matter.
• Not setting a budget is a main killer of money down the drain. How will you know where your financial situation is headed if you don't know where the money is headed in the first place? This should be the first step when deciding on personal finance issues. Having a budget will allow you the opportunity to set guidelines as far as where to put what at.
• Owning as little property between the two can also help to avoid property disputes later on down the road. It wouldn't be wise to go half on a house when the house is held only in the name of one party. This sort of purchase is best suited if the couple is legally married and committed towards each other or if both names are on the contract. Purchasing a car together is a no-no because the car can't be split into two working parts if a break up occurs. Questions such as who gets to own it and who will have to buy a new one will come into play. Even the little things such as who will pay for gas, which will pay for property tax on a home and other expenditures, will really tax a relationship.
• Contributing equally to a shared checking account that's been created only to pay bills will help keep arguments down to a minimum when it comes to finances. This is where having a budget can really help. A budget can help determine who pays for what and how much money will be needed to pay for everything. Contributing to this account must be done proportionately and will depend on what the salaries are for both individuals. For instance, if one person is making $2000 a month yet the other is making $1200, it wouldn't be fair to have the person with the lower income pay the lion's share of the bills.
• As the relationship becomes closer, incomes rise, and assets begin to increase, consider having a lawyer draw up an agreement that addresses the issues associated if the relationship ends. It can be a stressful experience trying to decide who gets what. If 50% of relationships end by financial problems, then you can bet your last dollar that if there's a lot of money tied up in the relationship, there will be demands. Having a lawyer to sum up what happens to the money if this happens will ease tension and frustration later on down the path towards commitment.
• If a decision is made together to purchase a house, make sure to decide whether to classify your status under "joint ownership with rights of survivorship" or tenants in common." Joint ownership means if one person dies, then the other person shall inherit the property. Make sure to keep accurate and proper records as this may come back to haunt you later down the line. Tenants in common simply mean you both own half of the home. If one person dies, the open half will transfer to the person they specify in their will or to the next of kin if there's no will.
• Don't get so caught up in a relationship that you literally sign everything over to your partner. This can cause complications down the road, especially if the other person decides to leave you. Being so financially dependent on the other person can be devastating once a relationship is over. It's not uncommon for one person to commit towards the other however, make sure that a legally written agreement is in place before doing so. Quitting a job to be with someone is very serious and will need to be taken with the severity of the consequences if the relationship doesn't work out.
• Taxes can be another hidden issue for unmarried couples living together. While it's true that single couples have it a little better than married couples, this doesn't mean that thins will run smoothly. Single couples can avoid having a "marriage tax penalty" assessed to them but this will soon phase out in the coming years. If you're living as a unmarried couple, filing "head of household" can be beneficial if you support a dependent. This allows for that person to claim earned income credit if the income is under the threshold. It also allows you to take child and dependent care credits. Pooling your money in order to share the household expenses is regularly regarded as a non-taxable share of resources.
• Other money issues for single couples include having an ironclad power of attorney. What this will do is make financial decisions easier for your partner if you re not able to make the decisions yourself. It will protect the valuables both of you have put money into and allow for the financial picture to continue moving forward. This power of attorney can also be implemented under health care also. If you are not able to make sound decisions regarding your health, this clause will give your partner full power to make final decisions as far as health concerns. At all costs, having a will drawn up will clear up any confusion if the person dies.

All of these things play an important role when living together as an unmarried couple. Keeping the issues illustrated above in mind will help with keeping arguments that start because of financial reasons to a minimum. In any case, it's really using common sense and judgment. If there's something that you don't agree with, it's best to talk things over with your mate before making any hasty changes.