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.