Money tips for couples living together

15 AUGUST 2023

Moving in with your better half is a major choice, so take some time to think about what it truly means for you financially.Couple sitting on the floor next to boxes and laughingMoving in with your better half is a major choice, so take some time to think about what it truly means for you financially.

Start with a cohabitation agreement

A cohabitation agreement is a legally binding document which serves to prevent complex litigation in the event that a long-term relationship comes to an end. It must be signed and dated, as well as updated to reflect any lifestyle altering events, such as the birth of a child.

This type of contract does not imply that you want to break up. Treat it like home insurance: no one expects their home to be broken into, but you'll be protected if it is. This agreement might encourage you to consider how you manage your money as well as your financial objectives.

Are you basically married?

When it comes to breakups and death, living together without being married or in a civil partnership means you don't have as many rights in terms of cash, property, and children. If one partner dies without leaving a will, the other will have no automatic claim on the deceased's inheritance. Therefore, obtaining a cohabitation agreement and drafting a will is a wise decision.

Some of the things the contract should include are:

  • How will you share expenditures and pay bills while you live together?
  • The amount everyone pays toward rent or a bond.
  • Should the relationship end, how will the property and contents, as well as personal items, money, debts, and shared purchases, such as a car, be divided?
  • It can also cover child support if there are children involved.

Determine your shared expenses

Determine the expenditures that you and your partner will split. In most cases, you'll have to share rent, utilities, and basic food. If you have pets, you may want to budget for their care as well. You and your partner should agree on what you believe should be included under home expenditures.

Is a clean 50/50 advisable?

To figure out how much you individually contribute, put your gross salary amounts together. After that, divide your gross pay by your monthly family budget. When constructing a fair cohabitation budget, it makes the most sense to pay expenditures like rent, electricity, and groceries depending on a proportion of what you and your spouse make rather than a flat 50%.

Don’t forget about agency

Give yourself certain freedoms within reason, maybe buy your own clothing, hairstyles, and personal care products. If you go out to eat alone or with friends without your partner, pay for it with your own money.

To what extent do you remain financially separate entities?

When you create a joint account, you become financially connected to the other person.

The importance of this isn't often clear, but it may have an influence on your credit rating, which can impair your capacity to borrow. For example, if your partner has a low credit score or misses payments on the account, it may have an impact on your own credit score.

One of the risks of joint accounts is that if the couple breaks up, there is nothing to prevent either partner from withdrawing all of the money from the account. There would be little you could do to recover the funds.

Similarly, if your ex withdraws money from your joint account or uses a credit card held in both of your names, you’ll both be liable for the repayments.

What about the children?

The cohabitation agreement should contain provisions for child care. Consider adding the father if he is not identified on your child's birth certificate. He does not automatically have parental responsibility without his name attached.

If you and your ex-partner cannot agree on the best route, try mediation before going to court, as it is often less expensive and faster.

Create a will, create a will - Did we say create a will?

Creating wills adds another degree of clarity for couples who live together. They deal with practical concerns such as:

  • Who should be the executor of my will and carry out its instructions?
  • Is it possible to pay off my mortgage?
  • Who will get my house?
  • Should I leave my vehicle to my brother or my partner?
  • Who gets my beloved vinyl collection?

If you remember nothing else, remember to draw up a will.