Moving in before marriage: what it means for your money

Around 80 per cent of Australian couples will live together before they get married.

Back in our courting days the quaintly termed “living in sin” had a stigma about it. Not today, where it’s seen as the sensible thing to do. A sort of test drive strategy.

Yes it’s practical but it also comes with financial consequences.

As a general rule of thumb, if a couple live together for longer than 2 years then they have a claim over the assets of the relationship similar to as if they were married.

You are co-mingling your money which means you need to prepare for what happens if you don’t end up buying after you’ve tried.

Even if it doesn’t work out romantically, house sharing with someone else still involves working out the financial practicalities.

Protect the assets you bring with you. The key here is good record keeping. List all the assets you bring, get them valued at the time the relationship starts as a base level and clearly valuing any assets from inheritances and windfalls is important.

Add your name to the lease. In the unfortunate event that you break up with your partner and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, both people have a more equal opportunity to remain in the apartment and renew the lease.

Create a personal budget. Before you agree to rent a new apartment or pay a removalist, stop and create a budget for your new monthly bills that includes rent, utilities, and anything else that you may now be paying for as a couple. Don’t forget to include your moving expenses, security deposit, new furniture, etc. Make sure it stays within your budget and you can cope financially.

Purchase items individually. That way, in the unfortunate event of a breakup, the person who paid for the TV or bed is entitled to it, and the person who bought the sofa can take it or swap it with their partner for something else.

If you want to contribute equally, then build the shopping list, value them and then each pay for individual items up to the agreed amount.

Keep good financial records. Keep receipts, bank statements, credit card statements, or a journal of shared expenses and purchases to make it easier to divide things up later. If things go pear-shaped it’s good to have the right records to sort out any claims of one contributing more than the other.

Be very careful of joint debt. Whether it be credit cards or home loans, if they are jointly held then you are liable for your partner’s responsibilities as well as your own. If they skip out without paying, you could be liable for paying their debt commitments.

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Make time for regular talks. The majority of money problems can be traced back to a lack of communication between partners about their finances. That’s why in a serious relationship it’s a good idea to regularly set aside time to talk about money together.

Even 15 minutes a month can make a world of difference. We don’t mean paying bills and checking credit card statements but actually talking about the big financial issues… goals and dreams for your money, setting a plan to realise those dreams and monitor how you’re tracking.

Work as a team. Couples who manage their money successfully know that you have to work as a team to avoid potential problems. A good option to help the camaraderie is to set savings goals that you both have to contribute towards, and build a budget together to ensure that you’re both spending consistently. We’ve said it before, and we’ll say it again, couples that save together stay together.

Don’t keep secrets. Our feeling is that if you’re together in love, you’re together in money, so we’ve always made a point of being open about finances in our relationship.

If you don’t trust your partner enough to be transparent, at some stage you have to question what you’re doing with them in the first place.

Let them know about hidden bank accounts or inheritances, and make sure to be candid about any debts lurking in your closet.

And don’t fall into the trap where one partner controls all the finances; make money matters a joint decision. If your partner uses the old “don’t you trust me” line, respond with “don’t you care for me because what will happen if you suddenly get hit by a bus.”

If they still want to control the finances by themselves… get rid of them.

Open a joint account. Joint accounts are a handy way of fairly dividing household bills and also a great way to reinforce trust in a relationship. If you do go down this path, it’s important to set some ground rules around what the joint account will be used for.

Our view is that just because you may earn more than your partner doesn’t give you the right to have a different spending pattern… it’s a partnership of equals both emotionally and financially.

Get smart about couples finance. Once you’ve got the basics right, there are plenty of more advanced ways you can take advantage of being in a healthy financial relationship.

For example, saving money by taking out insurance as a couple, looking into consolidating your reward and credit card benefits to get results more quickly, and salary sacrificing options if one partner isn’t working or earns significantly less.


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Kochie’s tips for managing money together

Nothing can tear a relationship apart more than financial issues. It can set couples against each other and fester into something incredibly destructive.

We’ve been married almost 39 years and, at different times, endured significant financial hardship. We’ve found that it is so much easier to cope with these strains if you have a relationship built on strong financial foundations and values.

Here are our strategies for managing money as a couple;

1. Have no money secrets

As soon as a couple is in a committed relationship they will declare their entire financial world to each other. That means coming clean about their salaries, credit card debt, university debt, credit score, betting accounts and anything else that might affect their financial future as a couple.

It can be a tough discussion to confess all your money secrets but it is crucial to your future as a couple. It really is the first place to start to build a household budget and set goals.

No financial skeletons in the cupboard.

2. Talk a lot about money

It doesn’t matter so much what couples do with their cash, but that they make decisions together and respect each other’s opinions.

We recommend you set aside atleast 15 minutes a month to just talk about your money. Not paying bills or checking credit cards statements but talking about the parameters of managing your finances.

Be open and be honest and don’t be afraid to disagree. Just as each relationship is unique, each couple’s financial situation is as well. It’s a time to look at the big picture financial situation and whether you’re comfortable with where you’re at.

3. Set specific goals

Successful couples come up with goals together and check in frequently to make sure they’re on the same page… as part of their 15 minute catch-ups. They break them down to short, medium and long term goals and constantly refine them.

Do you want to purchase a home together? Are you saving up for kids? Do you want to add extra superannuation? Or plan a big trip to finance? Successful couples talk about where every dollar is being spent and reset their goals regularly.

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4. Divide up responsibilities

One partner should never have sole responsibility for a couple’s finances. That is a recipe for relationship disaster which can lead to financial infidelity and abuse of power.

Whether it’s opening joint accounts, paying the rent or mortgage, the power bill, superannuation contributions or other expenses, it’s the responsibility of both parties. Successful couples don’t assume their partner will take care of certain aspects, they work together to divvy up financial responsibilities.

There is no right answer on who looks after what, but it’s important to be on the same page and not let it default to one person or the other without having a conversation about it.

Partners should discuss joint bank accounts, who’s paying which bill, and how they want to use any discretionary income as a team. At the end of the day, it’s all about clear communication.

5. Protect what you have

When couples bind their lives together, it doesn’t just create an emotional bond, but a financial one as well. If something were to happen to either spouse, it’s better to be safe than sorry and know the other person is taken care of.

That means adequate insurance cover. The greater the financial responsibilities (home loan, consumer debt, children, expenses) the larger the cover to protect against losing an income stream from a partner.

Life, income and trauma insurance is essential depending on your circumstances plus adequate coverage for major assets such as house, cars and valuables.

6. Plan for the unthinkable

Though often overlooked estate planning, such as wills, are key factors in a successful financial future. As soon as they walk down the aisle, couples should think about naming beneficiaries, executors, and powers of attorney. When kids come into play, it’s important to name guardians for them as well.

Not only that, but couples should update these documents at least every five years, as goals and circumstances can drastically change over time.

7. Never judge your partner

Everyone has different priorities, and part of operating within a partnership is to respect your partner’s choices. That includes keeping an open mind, for example, if your spouse’s spending habits differ from your own.

If you truly think your partner has a spending (or thrift) problem, then it’s time to have an honest and loving conversation with them. If you’re just annoyed that they spent money on something that you would never spend money on, give your partner the benefit of the doubt.

And pick your battles. A small purchase that doesn’t impact on your financial goals and plans is nothing to get annoyed about.

8. Live within your means

Spend less than you think that you need to, or earn. It’s that simple.

It all starts with that age-old family budget which tracks expenses and income to make sure the former doesn’t exceed the latter. Then it’s the personal discipline to stick with it. To forgo when necessary and cut back when it’s right.

The reward is having money left over to achieve a goal like investing or taking that dream holiday.

9. Set strong ground rules

Your spending habits are no longer purely your own; they affect someone else as well. That’s why it’s crucial to decide how and when you’ll spend, and create a set of ground rules for handling money that works for both you and your partner.

Don’t forget every relationship needs a bit of individual independence to flourish… and that includes money. Each person needs a level of discretionary spending for which they’re unaccountable to support hobbies, gifts and passions.

10. And finally… have fun!

Saving or investing just for the sake of making more money is boring. Life is for living and a good financial relationship will help you to live better… and have fun.

Money can be a point of contention, but successful couples don’t let it run their relationship. They don’t make it the ultimate goal, they use it to fuel other goals.

How to protect yourself financially when you move in with your partner

Around 80 per cent of Australian couples will live together before they get married.

Back in our courting days (yes we’re old enough use a quaint term like that) “living in sin” had a stigma about it. Not today, where it’s seen as the sensible thing to do. A try-before-you-buy sort of strategy.

Yes it’s practical but it also comes with financial consequences. Sorry to put a dampener on the romance, but that’s the reality.

As a general rule of thumb, if a couple live together for longer than 2 years then they have a claim over the assets of the relationship similar to as if they were married.

So “try before you buy” can end up costing you half your assets. You are co-mingling your money which means you need to prepare for what happens if you don’t end up buying after you’ve tried.

How to protect yourself before moving in

According to lawyers, protecting assets you brought to a relationship starts with good record keeping. Getting assets valued at the time the relationship starts as a base level and clearly valuing any assets from inheritances and windfalls is important.

Co-habitation agreements are basically like pre-nuptial agreements for couples that aren’t married. If you don’t plan to marry your partner any time soon, and it would make you feel more financially secure, then it is worth looking into. An agreement such as this would protect both parties and their assets. It also defines the relationship, property rights and liabilities between the two of you.

If you decide that, yes, you would like to draw up such an agreement between you and your partner, then you would need to engage legal counsel. The cost of this is all dependent on the lawyer and firm you use, the complexity of the situation, the amount of assets or points that you want covered, but mostly how much of the lawyer’s time you take up.

We would advise you to research as much as you can before you get to this step to avoid any unnecessary time or costs.

Ongoing financial housekeeping can also keep some sort of financial independence in a relationship. There may be reasons for each of the partners to continue with separate bank accounts into which their wages are deposited and specific expenses are paid. A household budget should be completed as soon as you move in together, particularly if separate bank accounts are to be maintained and each partner is responsible for separate expenses.

It’s also a good test of whether you are both financially compatible. There is nothing more horrifying than finding you’re in a relationship with a compulsive shopper if you’re a spendthrift. Such incompatibility can ruin a relationship.

Formal agreements (renting and buying)

How to own a property is also an interesting decision. There are two choices; ‘tenancy in common’ or ‘joint tenancy’. Tenancy in common assigns each of the partners direct ownership of a nominated portion of the property. It means each is responsible for their own mortgage and share of the property.

A joint tenancy agreement means each is jointly and severably responsible for the entire property and the mortgage. If you’re renting add your name to the lease. In the unfortunate event that you break up with your partner and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, both people have a more equal opportunity to remain in the apartment and renew the lease.

Quick couple tips for moving in together

. Create a personal budget. Before you agree to rent a new apartment or pay a mover, stop and create a budget for your new monthly bills that includes rent, utilities, and anything else that you may now be paying for on your own. Don’t forget to include your moving expenses, such as moving supplies, security deposit, new furniture, etc.

. Purchase items individually. That way, in the unfortunate event of a breakup, the person who paid for the TV or bed is entitled to it, and the person who bought the sofa can take it or swap it with their partner for something else.

. Communicate. The majority of money problems can be traced back to a lack of communication between partners about their finances. That’s why in a serious relationship it’s a good idea to regularly set aside time to talk about money together.

Even 15 minutes a month can make a world of difference. We don’t mean paying bills and checking credit card statements but actually talking about the big financial issues… goals and dreams for your money, setting a plan to realise those dreams and monitor how you’re tracking. Just a regular 15 minutes a month will not only ensure you’re both on the same page, it will also allow either partner to raise any issues that might be bubbling away under the surface.

. Be open. Our feeling is that if you’re together in love, you’re together in money, so we’ve always made a point of being open about finances in our relationship.

If you don’t trust your partner enough to be transparent, at some stage you have to question what you’re doing with them in the first place.

. Work as a team. Finally, don’t fall into the trap where one partner controls all the finances; make money matters a joint decision. Financial bullying, where one partner controls the finances at the exclusion of the other, is incredibly dangerous for the victim.

If your partner uses the old “don’t you trust me” line, respond with “don’t you care for me because what will happen if you suddenly get hit by a bus.”

If they still want to control the finances by themselves… get rid of them. We’re serious. If you have a partner who refuses to share financial information your entire relationship is in trouble.