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5 Financial Tips for Unmarried Couples

unmarried couple discussing finances on couch
July 17 2020 • by Deirdre Jannerelli • Credit, Home Ownership, Money Management, Retirement, Saving


Unmarried couples who live together typically have the same financial concerns as married couples. However, they don’t have the same legal protections and advantages that married couples do. If you are part of a committed relationship and plan to stay unmarried for the foreseeable future, you should consider the tips below to help you and your partner achieve financial security together.

1.) Determine Whether to Pool Your Finances, or Keep Them Separate
The biggest decision most unmarried couples face is whether to combine their finances or keep their bank accounts separate. There’s no right or wrong answer here, but it’s smart to weigh the pros and cons of each option. While having joint bank accounts can make it easier to handle shared expenses and can increase financial transparency between couples, there are some potential downsides to consider. Some unmarried couples may view a joint account as a surrender of each partner’s financial independence, and a joint account could become challenging in the event of a breakup, as both you and your partner would have legal access to the money in the account. It’s also important to remember that with a joint account, you and your partner would each assume a legal liability for the actions the other takes with the account.

2.) Discuss Your Finances Early and Often
You should never assume that you and your significant other are on the same page with financial goals and responsibilities without sitting down to discuss it first. What is most important to each of you from a financial standpoint? What goals do you each hope to achieve with your money? Although finances can sometimes be a touchy subject for couples, setting expectations for your financial future together will help each of you understand the other’s perspective and allow you to set common goals.

3.) Decide as a Couple How You Will Handle Household Expenses
Running a household isn’t cheap, whether you’re married or not. There are rent or mortgage expenses, utilities, internet costs, grocery bills, and much more. It’s important to choose how you will handle these shared expenses as soon as possible – ideally before you move in together. Will you both be splitting all household bills, or will you each be responsible for certain ones? What will you do with any money left over after all household expenses are paid?

4.) Retirement Planning
Like married couples, unmarried couples should work together when planning for retirement. Before doing so, you should be aware that neither of you or your partner will be able to receive survivors benefits from Social Security if the other passes away. Fortunately, that doesn’t mean you’re out of luck. These are some possible options for unmarried couples to consider:
  • You can each take out a life insurance policy and designate the other as the policy’s primary beneficiary. This will provide retirement income to the other partner in the event that one of you passes away.
  • You could each regularly contribute to a joint savings account to build a shared retirement nest egg. If you’re aggressive about saving, the amount of funds available to your partner after you pass away could come close to what he or she would have received from Social Security survivors benefits. Just remember that a breakup could potentially impact any retirement savings you build jointly as a couple. Unmarried couples don’t have the same legal recourse regarding finances as married couples do in the event of a separation.
  • You can each list your partner as the primary beneficiary on your 401(k), 403(b), Individual Retirement Account (IRA), or other type of retirement account. Just be sure to check with the plan manager first to make sure you can designate an unmarried partner as the primary beneficiary.
5.) Don’t Forget About Estate Planning
As an unmarried couple, you don’t have the same protection when it comes to housing and medical decision-making. Say that you and your partner co-own your home and he or she passes away. Depending on the form of co-ownership you both entered into, it’s possible for the property (or a portion of the property) to fall to their next of kin, and if so, you could legally be forced to move out. The same could happen if the property was never in your name. And if you’re unmarried and your partner becomes seriously ill and is unable to make their own medical decisions, you won’t legally be able to step in unless your partner previously designated you as their power of attorney. Luckily, with a little careful planning you can help avoid these types of scenarios. Here are some tips to consider:
  • Create a durable power of attorney agreement that names your partner as your personal representative in the event that you are ever unable to make your own medical decisions.
  • Create a will that indicates what you would like your partner to have.
  • Draw up a domestic partnership agreement to support the declarations in your will and declare that your partner has the legal right to co-owned property.
  • Work with an estate planning attorney to develop a plan to protect joint and individual assets.
As you can see, unmarried couples don’t automatically have the same rights and legal recourse as married couples do, and for this reason it’s extremely important to not only get on the same page as your partner financially, but to thoroughly plan for various circumstances that could impact your financial future – whether it be together or apart. And don’t forget that it’s always wise to consult with a tax advisor or an investment professional before making any major financial decisions.