Financial considerations for cohabiting couples

As the marriage rate falls and more couples choose to move in together, how can you manage your money, whilst maintaining relationship harmony?

Before cohabiting, you should know what you are getting into. Be aware of your partner’s attitude to risk, to debt, and be aware of their credit history. Even couples who maintain separate bank accounts, may be jointly affected in the event of a poor credit score. Be aware of your partner’s finances and financial behaviour.

Think carefully before opening a joint bank account, as this will result in joint and several liabilities and if your partner becomes disgruntled and empties the account, you will have no legal recourse. As a solution you could open an account to dedicate to shared expenses but with joint signatories. This could allow each of you to fund the account monthly to deal with ongoing expenses, maintain a record of expenses and maintain a record of financial contributions and ensuring transparency throughout.

Living together does not make you responsible for your partner’s debts unless you signed a Joint Purchase Agreement, guaranteed your partner’s loan, your partner’s debt is charged to a shared or joint account, or you have otherwise agreed to take responsibility for your partner’s debt. Consider having accounts at the same bank to enable easy money transfers. Once you decide on a system, make sure you both fully understand it and enter into a Living Together Agreement to set out your roles and responsibilities towards each other and in relating to financial matters, whilst you are cohabiting. It is essential that you continue to communicate regarding your attitude in respect of risk, spending and financial matters. Discuss any large purchases and always be prepared to talk about money. Consider keeping his and hers emergency funds.

Merging lifestyles can be a challenge for your finances. Enter into a Living Together Agreement, communicate about money and prepare for set backs. Whilst this may appear unromantic at first, in the long run this will take some of the financial stress out of cohabiting.