Financial Planning for Unmarried Couples

Financial Planning for Unmarried Couples

When two people live together, they might earn separately but they spend together, distribute and share expenses amongst themselves and have short term and long term goals that needs financial planning. If you are in a committed relationship for a long time, even if you are not married, you and your partner are bound to have the same financial concerns like any other married couple.

However, the only difference being that you would lack the various legal protections that the institution of marriage offers to married couples. So here goes a brief guide for unmarried couples to live a happy and financially secured life.

Financial Planning:

The first crucial step as an unmarried couple is to sit down with your partner and talk about your finances in order to first decide whether the management or handling of finances would be done jointly or separately. To arrive at this decision, both of you need to discuss your financial goals, priorities, principles and values with each other so that the decision is a well informed and consensual one that would not give rise to any money related issues later on.

Secondly, discuss about whether all the day-to-day household expenses will be shared or distributed amongst yourself to be paid separately. In case of expense sharing, whether to have a joint account or whether one person pays all bills and the other pays him his/her share in it. Even if you have a joint account together, you can always have a separate bank account for your personal expenses.

Retirement Planning:

Being unmarried should not stop you from planning for your and your partner’s retirement. However, you have to keep in mind that the spousal benefits from aspects like insurance, pension, etc will not be applicable in your case, hence financial planning is crucial and needs to be well planned. Some tips would be to:

  • Research which financial investment/savings plans, policies, etc can designate your partner as a beneficiary
  • Increase your savings so that it can replace the spousal benefit gap that you wouldn’t receive otherwise from financial institutions
  • Plan retirement separately so that in case your relationship ends before you retire, the joint retirement savings doesn’t go to one person keeping the other high and dry

Property Planning:

Property Planning should be one of the top priorities for unmarried couples since property laws that protect married couples are not applicable in this case. If you do not work towards this, then in your or your partner’s death, the family of the deceased could well order the surviving partner out and dispose of the property in any way they desire. Also, in times when you or your partner is seriously ill or incapacitated, the other partner might well be left out of any insurance or medical decision making process. Hence, proper property planning is essential for you. Some financial tips regarding this would be to:

  • Consult a legal expert to help you plan your property and create necessary documents to protect your and your partner’s assets and interests
  • Consult a legal expert to analyze power of attorney decision options that gives your partner the right to make decisions in case of insurance/medical situations when you are incapacitated.
  • Create a will if you or your partner wants to leave certain property to each other in the event of your death.

Remember, marriage in only a man-made institution. It never was, is or could be more important than the bond of the relationship between two people. In matters of the heart and soul, legal papers do not much make sense. However, in order to not let the brutal society take you for a ride, a little financial planning would essentially protect you and your partner towards a happy and secured life!