Living Together But Not Married—How to Handle Your Finances

  • Couples living together, either before marriage or with no intention of marriage, is now quite commonplace; there are virtually no financial protections for cohabitating couples
  • Be sure to talk honestly about your own financial situation and your expectations before determining how you would like to split expenses
  • Be careful with your credit and consider a cohabitation agreement

Living together for a substantial amount of time before marriage—or even without considering marriage—is common and unremarkable these days.

Couples have different ideas about how to split expenses and handle finances in general, but it’s important for each person to be on the same page. It can be especially important when at least one half of the couple is in a high-paying profession, like being a lawyer.

Regardless of how long the relationship lasts, unmarried couples don’t have the legal and financial protections that married couples do. You’ll need to become aware of your rights and what extra things you need to do to strengthen and exercise them.

Talk, Then Talk Some More

Ideally, all discussions about finances should take place before a couple actually moves in together. Each person should lay out their expectations about how finances will be split and how decisions will be made. We all grew up in different financial circumstances and received different messages about what money means and how it should be managed; simply growing up in a disadvantaged household or a very privileged one will affect your attitude towards money for life.

It might feel uncomfortable, but you need to be honest with each other about your financial situation. Openly discuss your debts, your credit history, and how you generally spend your money. You’ll do yourself and your significant other no favors if you’re not completely honest.

Have you discussed money and your financial situation with partners before? What went well, and how would you approach the conversation differently?

Determine How You’ll Split Expenses

If the two of you make roughly the same salary and neither of you have any serious debt commitments, splitting everything down the middle is the simplest way to pay the bills. That’s not the case for many, possibly even most couples, though, so you’re going to have to go over your bills and make a fair and realistic plan for who will pay what. Each person contributing the same percentage of their income to major bills is a fair way to approach your bills.

You should also set some short-term and long-term joint financial goals. You want to take two vacations a year, get excellent Broadway seats four times a year, and keep up a monthly over-the-top-fancy dinner out tradition? You’ll both need to set aside money from every pay check to make those things happen. A joint checking and/or savings account can be a good idea—as long as you both have separate personal accounts. Funds should only be comingled if the money will be going to joint expenses. It is never a good idea for an unmarried couple to put all their money together without having separate personal accounts; remember that either party on a joint account can empty that account at any time.

Make an agreement on how much you’ll save every month for both emergencies and regular household purchases such as furniture and home décor. You can employ the income percentage strategy here, as well. Always remember though, that you still need to put a substantial amount towards your own personal savings.

What Not to Do

Making large joint purchases that are meant to be paid off over several years, like a house or a car, is a bad idea for unmarried couples unless you are willing to get additional, specific documents drawn up as well. You don’t want to think about the possibility of breaking up, but it happens, and if you have a 30-year mortgage together, a heartbreak becomes a nightmare. Saving for a future house is great, but actually buying it with someone you’re not married to is another story. If you can’t help yourself from buying a home with your significant other, it is imperative to sign a pre-purchase contract.

You must also be careful with your credit when cohabitating. Don’t co-sign on a loan—unless you’re able and willing to pay 100% of that loan should your partner not be willing or able to. In addition, it is imperative that you keep your credit cards separate. Don’t be tempted to “make it easier” to make purchases by adding your boyfriend or girlfriend to your current card or by getting a new card together.

Consider Putting it in Writing

One or both of you are lawyers; you like written agreements and it never hurts to be prepared. Consider signing a cohabitation agreement, which is somewhat like a prenup for unmarried couples. A cohabitation agreement will spell out what each person is willing to be responsible for and how things will be handled should a breakup occur.