Millennial couples are choosing to live together before marriage more than any other generation in the past, according to the Pew Research Center. While becoming more and more commonplace, couples need to have a plan to successfully manage their finances under these circumstances. It’s critical for couples to be mindful of both their individual and combined financial situation. Below are tips for cohabitating couples to ensure they are on a secure financial path together.
Open communication – It’s imperative to be open and honest about finances before you start to live with someone. Discuss your “money type.” What are your spending habits, income, debt obligations? Once all of the facts are on the table, you can gain an understanding of how you will need to compromise with one another in terms of your finances.
Put it in writing – Once you and your significant other have all of the facts about your money out in the open, it is very important for couples to discuss the division of expenses. Determine in advance how bills will be paid and by whom. While it may seem extreme, putting your plans in writing can help prevent major issues in the future.
Use joint accounts wisely – Some couples opt to open a joint bank account. This can be a good way to track and pay combined expenses. One good approach is to use a joint account to pay for certain expenses such as the mortgage and cable bill, while keeping individual accounts as well for savings, discretionary spending and personal debts such as student loans. Make sure to create ground rules for the joint account such as how much each person will contribute to the account and for what purposes the money in the account can be used.
Remember, each party has equal rights to a joint bank account which means either one, at any time, could clean out the entire bank account. One partner may be more prone to bounce checks causing fees and even negative effects on your credit.
Prepare for the unexpected – Even if you don’t have a lot of assets, you should have a basic will in place that dictates where your assets should pass if something were to happen to you. Having your wishes in writing can help avoid conflicts between your partner and your family about your wishes for certain assets.
Moving in together can be a huge, positive step in a relationship. Just make sure you’re honest, open, and have a plan for managing your finances when taking this step.
Financial advisors, like those at Univest Wealth Management, are available to help you navigate planning for life’s pivotal moments. To have a conversation about the customized solutions we can provide, contact us at 877-723-5571.
Univest Corporation of Pennsylvania uses the marketing name Univest Wealth Management to provide (1) investment and wealth management, fiduciary services and trust services through its subsidiary Univest Bank and Trust Co., (2) specific fiduciary and investment advisory services through Girard Partners, Ltd., (3) securities products, insurance products and brokerage services through Univest Investments, Inc., a registered broker-dealer and member of FINRA and SIPC, and (4) investment management and related products and services to Pennsylvania municipal entities through TCG Advisory, Inc. Investment products and services are not FDIC insured, and are not a deposit of Univest Bank and Trust Co. or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.