How Should Unmarried Couples Share Finances: 3 Ways + Tips
Do you find yourself wondering ‘how should unmarried couples share finances?’
It's a fine line to walk because by default there aren't any legal protections for you if you end things (unless you make a cohabitation agreement), but joining accounts may help you feel closer and could even bring you one step closer to marriage as you build trust and make more decisions together.
Importance of Financial Planning for Unmarried Couples
Unmarried partners don't have the same legal protection as married couples regarding their finances. Financial planning for unmarried couples can put things in place if the relationship ends or one partner dies prematurely.
Is It a Common Practice for Unmarried Couples To Share Their Finances?
There isn't a law or rule stating whether unmarried partners should or shouldn't share finances. What works for one couple may not work for another.
What's important is that both partners are on the same page and agree on how you should handle finances, including bank accounts, household expenses, and financial goals.
How Should Unmarried Couples Share Finances: 3 Options
Because there isn't a specific rule or law stating how unmarried or even married couples should manage their finances, here are some common ways couples go about their financial matters.
Option 1: Maintaining Separate Finances
Of course, you always have the option to keep your finances separate. This means you have your bank account, and he has his; you don't have a joint account and handle your finances separately.
This can get complicated if you live together or have shared expenses because you must determine which partner is responsible for each expense.
The key to making this work is to discuss your financial lives, determine who should pay which expenses, and ensure both partners feel the sharing is equal.
Just because you keep your money separate doesn't mean you shouldn't share details or communicate about money, bills, and financial goals.
Option 2: Creating a Joint Bank Account
If keeping money separate doesn't sit right with you or it feels challenging to split the bills, you may consider opening a joint account.
When you have joint bank accounts for unmarried couples, both partners have equal access to the money. This may make it easier to see how much each partner earns and contributes to the household expenses, but be careful.
Because you aren't married, there's nothing in the law stating who gets the money if you separate. While you can close the account at the bank, you must decide how you split the funds between the two of you.
This is when a cohabitation agreement is a good idea. It helps ensure all assets are properly divided if you go your separate ways.
Option 3: Combining Finances Completely
The final option is acting like most married couples and completely combining your finances. This, again, can be risky because, unlike married couples, you don't have any built-in legal protections if the relationship ends.
This option may be best only after getting engaged or committing to one another so that you know this is a long-term deal.
Once you combine your finances, you must still create a budget and decide how to handle the funds. This includes paying housing and utility bills, saving money for financial goals, and covering the daily cost of living.
Common Methods That Unmarried Couples Can Consider for Splitting Finances
You have many options when deciding how to handle splitting separate and joint expenses.
Equal Contribution (50/50)
If you and your partner make equal amounts, or it's close enough, you may consider an equal contribution. For example, if your monthly bills are $4,000, you each contribute $2,000 to cover the expenses.
Proportional Contribution
Not all partners make the same amount of money. In that case, you can set a percentage of each person's income to contribute to the shared expenses.
For example, you may each contribute 40% of your income. If you make $5,000 and your partner makes $10,000 monthly, you'd contribute $2,000 and $4,000 respectively.
Income-Adjusted Contribution
Some couples prefer to split expenses based on the proportion of income each partner brings to the relationship.
For example, if you make $60,000 and your partner makes $75,000, you might contribute 45% of the expenses, and your partner contributes 55% to cover the monthly bills.
Expense-Based Split
If each partner brings different expenses to the relationship, you may consider splitting them according to who they belong to and then splitting the shared expenses.
For example, you both live in the house, so the mortgage and utility bills are shared expenses. However, if you bring a credit card bill to the table, that is yours to cover and doesn't benefit your partner.
Hybrid Approach
You can mix and match any of the methods discussed here to help you learn how unmarried couples should share finances.
For example, you may split some expenses and pay them from a joint account but keep separate expenses out of the mix and handle them yourself. There's no right or wrong way to handle joint accounts with your domestic partner.
Does Having a Joint Bank Account Make Financial Management Easier for Unmarried Couples?
Some couples believe having joint assets makes handling money with their unmarried partner easier.
The key is to understand your partner's propensity for financial management and to determine your thoughts on whether the relationship will last.
If it ends, you must divide assets based on your agreement, as no laws will back you up unless you get married.
Factors To Consider When Choosing a Bank for Our Joint Account
Like any big financial decision, there are certain factors to consider when choosing a joint account with your partner:
Balance requirements: Some banks require a certain balance, or they'll charge you a monthly fee. Make sure you can meet the bank's requirements to avoid the fee.
ATM access: If you need ATM access, ensure the bank's network is convenient for you and your partner to avoid unnecessary ATM fees.
Interest rate: If you carry a large balance, consider finding an account that will pay you interest so you can grow your money together.
Minimum opening deposit: Some bank accounts have a minimum opening deposit requirement, so ensure you can meet the requirements to open the account.
Access: Ensure both partners can access the funds and the account activity, such as online or mobile app access to watch the account.
Best Joint Bank Account For Unmarried Couples
Any joint account works for unmarried couples since there aren't any financial benefits when you aren't married, but one of the best is the Capital One 360 Checking Account.
This online account is easy to manage, has a user-friendly app that both partners can download and use, and doesn't have minimum balance requirements or charge monthly fees.
Pros and Cons of Using a Joint Account as an Unmarried Couple
Like any financial decision, consider the pros and cons when deciding how should unmarried couples share finances.
Pros
Easier to share expenses.
You can see how your partner handles money.
It may help you save money for longer-term goals, such as getting married or making a down payment on a house.
Cons
You risk losing any money you put into the account.
If you break up, there aren't any laws protecting your money.
It can be hard to determine how to handle the funds.
Should We Consider a Legal Agreement or Cohabitation Agreement When Opening a Joint Account?
Creating a domestic partnership agreement is a good idea if you decide to share assets with your unmarried partner. This guides how the funds should be handled and what rights each partner has should you not make it to the altar.
Are There Any Tax Implications for Unmarried Couples Who Share Finances?
Both partners are responsible for any taxes due on interest earned or if one partner gifted the other more than the gift tax exclusions allow.
Shared accounts can make determining who is responsible for the tax payments more difficult , possibly leaving the burden on one partner and not the other. Consider speaking with a tax advisor to help navigate this kind of situation.
Should We Consider Seeking Couples’ Financial Planning or Therapy?
Before opening a joint account or joining assets, it's a good idea to talk to a financial therapist to determine the best way to join money.
Working with a professional, you can determine your financial rights and understand the consequences of joining finances as an unmarried couple.
When you're ready for financial counseling, schedule a consultation today!
FAQs
Can You Open a Joint Bank Account Without Being Married?
You can open a joint bank account without being married. The key is to have an agreement in place to determine how you'll handle the funds if you break up and how you will handle the funds in the account when you are together.
What Happens if One Partner Wants to Close the Joint Account?
Both partners must agree to close a bank account, as most banks require both account holders to sign the agreement to close the account.
What if One Person Wants To Move Out or Dies?
When joining finances, it's important to have legal documents or agreements in place to protect each partner if you break up or a partner dies. Without any legal documentation, domestic partnerships aren't protected when handling finances, even after death.
What Happens if You Break Up?
Unlike married couples, unmarried couples don't have any legal benefits. If you break up without any legal agreement created, nothing protects either party. What the two of you work out when handling your finances is up to you.
What if Our Income Levels Are Significantly Different?
It's difficult to share expenses when your income levels differ. You may consider splitting expenses based on the percentage of income each partner brings to make it feel fair.
Can We Maintain Separate Savings Accounts While Sharing Expenses?
You can have separate checking and savings accounts while sharing expenses. There isn't a rule stating how you must handle your assets. The key is to find what works for you and your partner so you pay the bills and feel supported.
When Should You Get a Joint Bank Account? When in a Relationship, Do You Talk About Finances?
If and when you should get a joint bank account depends on your relationship. Some partners never get a joint bank account, even after getting married.
Others do it immediately to make sharing expenses easier. The key is to be open and honest with one another, talking about finances when you think the relationship is getting serious and you're ready to take the next step.
Even Unmarried Partners Can Have Financial Peace
Financial peace is something all couples should strive for, married or not! Knowing how unmarried couples should handle finances is important, especially if you're talking about marriage in the future.
The key is open and honest communication and working out the kinks before you get married so you achieve financial harmony even before saying, 'I do.'
If you're ready to take the next step with your partner but aren't sure how to handle things financially, contact me for a consultation. I'll help you and your partner achieve financial harmony.
Want to level up your game around money in your relationship? My free quiz will help you learn your Couple’s Money Personality Type AND how you can grow from there!
Adam Kol is The Couples Financial Coach. He helps couples go from financial overwhelm or fighting to clarity, teamwork, and peace of mind.
Adam is a Certified Financial Therapist-I™, Certified Mediator, and Tax Attorney with a Duke Law degree and a Master's in Tax Law from NYU. He is a husband, dad, and musician, as well.
Adam's wisdom has been shared with The Wall Street Journal, the Baltimore Ravens, CNBC, NewsNation, and more.
