6 Must-Dos When You Merge Money With Your Partner

couple taking a selfieUsed to be that girl met boy, fell in love, got married, had babies, and they lived happily after after. Now, girl meets boy (or girl), falls in love, moves in, and then maybe they get married. So, if you are one of the 7.8 million couples who live together outside of marriage, how does combining finances work?


More and more couples are deciding to share a life -- including money -- together without taking a formal vow. According to a recent survey by Credit Karma, half of millennials (aka 20- to 34-year-olds) will combine finances with someone else before marriage. While combining finances can be a sign of commitment and financial intimacy, it's obviously not a decision to be made lightly, as there are some very real risks to sharing money when you don't share a last name.

According to financial experts, here are six key points to consider before you merge money with the one you love.

1. Realize the risks of sharing finances. When a married couple gets divorced, both sides have some legal rights to share finances and a process to seek child support or alimony. For this reason, David Weliver, founding editor of MoneyUnder30.com, advises, "Keep mostly separate accounts until you're married. Even though you might be living together, splitting the bills, and even sharing health insurance, if you're not married, you don't have the legal rights of marriage, which can protect your individual financial interests."

2. Don't go "all in." Say you want to test the waters before pooling all of your money. Weliver recommends you open a joint checking account to pay joint bills. Give yourself time to see how well this works and ask questions. Are you communicating? Is anyone bouncing checks or spending too much money? Then, as long as things are going well, you can move on to perhaps a shared credit card. There's one caveat: "Putting all of your savings in a joint account or cosigning for a car loan or mortgage could be a big headache in the event of an ugly split," Weliver cautions. "Awful as it is to image, your partner could clean out the account or stick you with an unpaid debt."

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3. Consider protecting yourself. Paul Archambeau, a financial adviser in St. Paul, Minnesota, advises couples who are planning on combining finances before tying the knot to consider talking to a family law attorney to draft up a cohabiting agreement. Much like a prenuptial agreement, this can spell out the terms of how assets would be separated in the event of a breakup. This is especially important for those who have children or significant assets prior to the relationship, he notes.

4. Take care of the kids. If you and your partner have children, a will and a health-care directive are "a must," says Archambeu. You will also want to make sure that both partners have appropriate levels of life insurance and have each other as the beneficiary (NOT the kids) in the event that something terrible happens. 

5. Communicate. All couples who share money, married or not, need to be able to talk about debt, financial goals, and spending habits. Ann B. Hutchins, a financial coach in Santa Barbara, California, says couples need to "form an agreement for how [they're] going to talk about money. When couples do that, they actually take a lot of pressure off each other." So, set a regular time and place to discuss your finances.

6. Go over the financial "Full Monty." Archambeau is a "big believer in full disclosure." In other words, couples who are thinking about sharing money need to make sure that they take that step with eyes wide open.

Before you merge money, make sure you know: how much debt your partner has, what their credit score is, how much their net monthly income is, the cost of any ongoing financial commitments like child support, which bills are going to be shared and which aren't, and if they are covered in terms of health insurance, life insurance, and car insurance.


Image via Giorgio Magini/iStock

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