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Discuss Financial Goals Before Living Together

Young diverse couple taking a break from moving in to check on their finances.

Sharing a place with someone you love is exciting and romantic — but straight and same-sex partners who live together without getting married have some key money management decisions to consider.

Talk About Money Matters First

Discuss your respective budgets, bills, financial goals and income. What can you each afford? What does each of you want in regard to amenities? If one of you is moving into the other’s home consider redecorating, renovating, or reorganizing to make it feel less like “your place” and more like “our place.”

Share Your Secrets

As uncomfortable as it might be to air your dirty financial laundry, a frank conversation about your debts, credit history, spending habits and pitfalls is essential part of living together. It could save you an even harder conversation down the road if your financial past comes back to bite you.

Understand Your Cash Flow as a Couple

Develop a plan for paying bills together and splitting household expenses evenly or proportionate to each partner’s income. Many unmarried couples prefer to hold separate credit cards and bank accounts. Doing so allows each partner to establish and maintain credit in his or her name without the accountability for their partner's financial decisions that comes with joining finances.

Set Joint Financial Goals

Want to retire together? Discuss how much each of you will contribute to retirement accounts and start saving. Want to buy a house? Plan on having or adopting kids? Getting these long-term financial goals out on the table will help you develop a realistic plan. Follow the same strategy for short-term goals such as saving for a vacation or buying new furniture.

Split Living Expenses Fairly

Discuss how you will handle splitting expenses such as internet, cable, utilities and groceries. Check out the many apps that make it easy to divvy up bills. You may also consider joining finances in one checking account that holds money exclusively for joint, recurring monthly expenses.

Build Your Own Credit

You may be living together now, but it’s important to maintain a separate credit history. Nothing's wrong with joining finances on some level, but keep a few bills in your name only and pay them on time each month. Automating regular monthly bills such as utilities and cable are a good way to ensure on-time payments. It is important in any relationship to protect your credit score. Be sure that any bills in your name get paid on time.

Be Aware of Gift Taxes

The Internal Revenue Service treats an unmarried couple as two single taxpayers. While spouses can transfer assets to each other tax-free, unmarried partners, like all single individuals, can generally make gifts to another person only up to the annual gift tax exclusion amount without incurring federal gift tax.

Be Smart About Insurance

Many private and public companies extend health insurance and other benefits to unmarried partners of employees when they are living together. Ask your employer about any “domestic partner” insurance benefits offered by the company. Name your partner as a beneficiary on any life insurance policies that you hold.

Name Your Partner in Your Will

Draft a will detailing the assets that you would like your partner and other beneficiaries to receive after you die. Also name your partner as beneficiary on your retirement accounts and investment accounts.

Give Your Partner Power of Attorney

Have an attorney draft a health care proxy for medical decisions (along with a living will) and a durable power of attorney for financial decisions. These documents allow your partner to act on your behalf in the event of an incapacitating accident or illness.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]