Marion Syverson was in for this week’s Finance is Fun, talking about the finances of togetherness.
Legalities- no way for joint property to be separated should YOU get separated without a document of some kind. Either own things individually, get married or invest in a domestic partnership agreement so you aren’t financially ruined. Not romantic? I think strong fences make good neighbors. Being financially ruined is also not romantic.
Day-to-day expenses – There are several ways to manage expenses: keep them entirely separate- which is hard when it comes to food and cable, Put all money into one joint pot- which is hard if we disagree on hobbies or shoe shopping, or the ‘pick your bill’/percentage of income to percentage of expenses method- which is hard for saving jointly. Each method has pros and cons and there may be times in your lives together where you use several methods as things evolve in your relationship or jobs change.
Big purchases – Assuming you have a legal agreement, buying a car or expensive item together is easy as distributing proceeds in the event of a breakup is already spelled out,. But titling expensive purchases, like property, is very important without a legal agreement. So please consult an attorney or legal advisor in such cases.
Red flags- You may want to NOT join your finances together if your intended partner owes money and doesn’t pay bills, if they spend beyond their means regularly, if you are the source of money because getting work is ‘hard.’ These and other red flags should be a wake-up call that this person you think you love may not be the adult of your dreams. You want a real, responsible – and fun- adult with whom you share financial goals.
I’m a planner. I think of the worst case scenario. When you’re in love…you don’t. But bad things happen to people in love and we don’t want your heart broken at all. But if it must break, we certainly don’t also want you to find yourself financial ruined as well. Be safe. Be in love, but be safe. That’s how smart adults do things.