3 tips for managing money as an unmarried couple

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managing money as an unmarried couple

managing money as an unmarried coupleWith the marriage age rising, and with many partners living together for years (and even having kids together) before deciding to tie the knot (if the knot is ever tied at all), it’s increasingly important to talk about money, and to figure out how to manage money as an unmarried couple. Here are 3 things to think about as you manage your money as an unmarried couple:

  1. Keep Some Finances Separate

You need to set up a banking system that works well for your situation, but it makes sense to keep some aspects of your finances completely separate — especially if you don’t live together full-time.

Remember that a joint account belongs to both of you, and can be accessed equally. If you don’t live together, there probably isn’t a reason to have a joint account. If you do live together, it can be easier to have a joint account for household expenses.

However, a joint account isn’t even necessary if you divide up the bills and your partner can be relied on to pay his or her share on time. Carefully consider the ramifications of merging some of your accounts without the legal protection (as limited as it can be sometimes) of marriage.

Each partner should have his or her own credit cards, retirement accounts, and bank accounts if you are an unmarried couple (and this can even be a good idea for married couples). Even if you decide that a joint account is necessary, keep the bulk of your assets separate, and limit the joint account to shared expenses and needs.

  1. Run the Numbers for Tax Purposes

Next, make sure you run the numbers for tax purposes. In some cases, especially if one of you makes significantly more than the other, it can make sense to get married. If you are both high-earners, though, getting married might actually come with a penalty. You might be better off staying single in the eyes of the IRS.

Also, make sure you consider the tax implications of deductions and dependents. If you have children, you will need to decide who can claim them as dependents, since you both can’t. It can be a good idea to sit down with a tax professional and consider different scenarios. You might not be filing taxes jointly, but that doesn’t mean you shouldn’t think about your overall tax situation.

  1. Do Some Estate Planning

Long-term unmarried couples need to think about estate planning issues. Who will take care of children and pets after you are gone? Do you want your partner to be the beneficiary of life insurance policies and retirement accounts? If you’ve bought a home together, you also need to figure out how that will be taken care of. Visit with an estate planning specialist about your options, and what you can do as a couple to make sure that the future is assured — especially if you have other dependents.

Even if you aren’t married, the longer you are with someone, the more important finances become. Make sure you work out a money management system that works for your relationship, and secures your futures — individually and together.

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Miranda is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds.