How to Tackle Money Issues between Unmarried Partners

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Money Issues in an Unmarried Relationship

By: Rick Kahler, CFP®

It used to be called “living in sin.” To Dr. Laura Schlessinger, it’s still “shacking up.” Living together without being married was once seen as defying society’s conventions. It was daring, rebellious and simply not done by “respectable people.” Now, this living arrangement has become common enough to be given its own box to check on the 2010 U.S. Census form, where it was simply described as “unmarried partner.”

Increasing numbers of adults are sharing their lives without being legally married.

As a financial planner, I have several clients who live with unmarried partners. Far from being unconventional young people who don’t care if they shock their grandparents, most of the unmarried couples I see are middle-aged and older adults. Their reasons for not marrying are almost always financial.

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Someone receiving a pension, Social Security payments based on a late spouse’s earnings or insurance compensation benefits might lose their income if they remarry. For couples with children and grandchildren from previous marriages, it sometimes seems cleaner to keep their legal identities and their finances separate to avoid potential family conflicts and simplify estate planning.

Someone who has built up a respectable net worth might be reluctant to share legal control or ownership of those funds with a partner who has little or nothing. This is particularly true if the partner has a history of unwise financial choices. While this could be addressed with a prenuptial agreement, there is no guarantee a court will enforce it. Many couples find it simpler and more predictable just to remain unmarried.

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Money is a huge coupleship issue and one of the factors in a great many fights between spouses. Would it make sense, then, for a single young adult who has money problems such as a lot of debt to delay marrying or getting into a serious relationship?

Not necessarily. Simply having a significant amount of debt isn’t by itself a reason to avoid a relationship. It might be a reason to postpone getting married, in order to protect the spouse from legal responsibility for the debt.

The more important concern is the reason for accumulating the debt in the first place. A pattern of dysfunctional money behavior, such as being addicted to spending or gambling, certainly would be a strong reason not to get involved in a relationship. Of course, so would being addicted to alcohol or other drugs, and we all know how often that stops anyone.

My advice for couples would be to focus first on healing money issues that are creating problems. In my experience, conflict isn’t usually about money directly. It’s about the conflicting beliefs underlying the money behavior, each person’s “money scripts.” Premarital financial therapy could be a big help. Having a clear understanding, before marriage, about a plan to pay off debt or deal with other financial consequences is essential.

Ideally, both spouses would take care of their money baggage first, so such baggage doesn’t become a burden on the relationship. It’s one more way to increase the odds of building a happy and lasting marriage.

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Rick Kahler is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a flat fee. He is an author of four books on financial psychology and recognized by BusinessWeek magazine as one of the 15 most experienced financial planners in the nation. Contact Rick for help with virtually any financial need.

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