Reason at romance’s heart
‘Try before you buy’ is the norm, but plan in case a relationship sours
ABOUT 80 per cent of Australian couples will live together before they get married: 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 two years, then they have a claim over the assets of the relationship, similar to the situation if they were married.
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.
PROTECT YOUR ASSETS
According to lawyers, protecting assets you brought to a relationship starts with good record keeping.
This involves 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 who 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. The cost of this depends 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 independence in a relationship.
There may be reasons for each partner to continue with separate bank accounts into which their wages are deposited and specific expenses are paid.
HOUSEKEEPING
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 financially compatible. It would be horrifying to find you’re in a relationship with a compulsive shopper if you inclined to be frugal. Such incompatibility can ruin a relationship.
PROPERTY
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 severally responsible for the entire property and the mortgage. If you’re renting, add your name to the lease. In the unfortunate event 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.
CREATE A PERSONAL BUDGET
Before you agree to rent a new apartment, stop and create a budget for your new monthly bills, including rent, utilities, and anything that you may be 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 bought the sofa can take it or swap it with their partner for something else.
AND TALK IT OVER
The majority of money problems can be traced back to a lack of communication between partners about their finances. That’s why it’s a good idea to regularly set aside time to talk about money.
Even 15 minutes a month can make a world of difference.
We don’t mean paying bills, but talking about big financial issues … goals and dreams for your money, setting a plan and monitor how you’re tracking.
Just a regular 15 minutes a month will ensure you’re both on the same page, and allow either partner to raise any issues that might be bubbling away.
Finally, don’t fall into the trap where one partner controls all the finances. Make money matters a joint decision.
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