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Published : May 30, 2019

The Ultimate Guide to Financial Planning for Couples

We must first start off by understanding that there are many definitions of couples. For the purposes of this article we will take a look at the two most common form of coupling being Unmarried Couples and Married Couples. Each category (if you will) of couple has its own set of unique perspectives and legal challenges so dividing this was necessary in order to get a better sense of how to best deal with the positives and negatives that come with planning your finances as a couple, in whatever shape or form that may take.


young couple

Unmarried Couples


The number of unmarried couples has been on the rise in Canada in the last two decades. This is partially due to the number of couples living together before marriage but also due to the decline in the number of marriages overall. The institution of marriage does not seem to have the same cache that it once had as many governments around the world are affording the same legal and financial rights to common law couples as married couples. That said given the less legally binding contract you have entered into with your partner there are different considerations to make.


Failure to plan


Most unmarried couples fail to plan. Marriage has a way of forcing couples to understand that planning long term not only makes sense but is part of an essential building block of long term couples. Being unmarried many couples do not see that long term plan in the works so fail to come together to work out their finances. Financial planning then takes on the case by case format. In reality unmarried couples that live together face a unique set of money issues and decisions when it comes to managing their personal finances.


The Early Days


In the early days, any financial planner worth their salt will tell you it is best to keep most financial decisions separate as the nature of relationships at the early stage can be volatile. Imagine the legal and financial headaches that would come around if couples were joining accounts after three months of dating! Separating accounts and major financial purchases are very important at the beginning to avoid legal issues down the line. This is especially true when it comes to personal debt and credit. Debt is one of the biggest problems that can arise financially between a couple unmarried or not, however beginning a relationship with debt is a certain recipe for disaster. Having a frank financial discussion early on in the relationship is incredibly important so that both parties understand where they stand in their finances to avoid surprises as time goes on and they begin to mix financially.


As things progress in the relationship it might be tempting to mix and mingle bigger and bigger financial decision like cars or dwellings but my advice it to keep it separate. It is very easy to mix your monies when it comes to rent, utilities, groceries or your Netflix account but until you have made an honest commitment in the relationship (whether it is through the holy institute of marriage or a personal deep commitment) its best to keep things private.


The best way to get yourselves into that wonderful mixed financial world is to start slowly. Maintain your separate accounts but you can open a joint account to pay for utilities to which you both contribute regular amounts.


Never and I repeat never make major purchases like a home or a car together. It might seem like a great idea but if the relationship ends then it could lead to a nasty legal battle depending on how items were purchased.


The goal with unmarried couples is to remain as financially independent as possible given the nature of relationships. The worst thing to occur is that if one party were to become financially dependent on the other and the relationship were to end it could leave that other person in financial and legal trouble that is very difficult to get out of. The idea is to best protect your individual financial security as you slowly work toward moving your finances and your relationship together.


young couple

Married Couples


Why is it so difficult to talk about money? What is it in the human psyche that keeps people from discussing money in a rational and systematic way? Study after study shows that most couples would rather sit down and discuss their innermost sexual desire rather than discuss a monthly budget.


Hopefully though as you and your partnered moved through the process of unmarried to married you both have been moving your financial goals in the same direction. Planning for forever might seem like a distant thing but it is a gradual thing that married couples must keep an eye on if they want to get it right and protect themselves personally. We all go into a marriage assuming that it will turn out perfect and that we will be together forever but life can throw us for a loop so it is best to move toward a perfect duet but to always protect yourself in case the worst happens. It might seem completely unromantic and your partner might question your commitment to the union but as a financial planner I have seen too many couples burned for not taking the proper precautions when it comes to money. Money is after all the leading grounds for divorce still.


Budget, Budget, Budget


One of the leading causes of financial rifts in a marriage is the lack of understanding of how much money is coming into the house and how much money is going out. The inability to track spending can lead to many nasty surprises when the bill collector comes knocking. Knowing how much is coming and what is owed is the base essential task all married couples MUST perform. Because your finances are so intertwined you need to know if at the end of the month you will be able to make your mortgage payments and that you are not left owing because your partner thought it would be super cool to buy a jet ski.


Let face it, in every couple someone is better at something than the other. Cooking, cleaning, and paying the bills on time. This simple task is often overlooked but can lead to many overcharges and penalties that can slowly start to sink a couple. Another tip for married couples is to keep credit separate. It might seem like a good idea to join together on one credit card but in case of divorce or death, it makes it incredibly hard for the remaining partner to get a credit in the future. Have a joint if you need but always and I repeat always have your own plastic.


No matter the situation you are in, with proper planning and advice you can set yourself and your partner up for financial success in the future. Be open, be honest and be willing to listen and the world is yours. What couples must understand is this is not about control, financial planning is about doing what is best for your new partnership. Think of it like a business. Would you invest in a business without proper planning? Take this advice and talk with your partner or with a trusted financial advisor to set you on the right path.

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