Financial decisions to make as an unmarried couple
As one half of an unmarried couple, you might not think about your financial decisions as seriously as someone who is married. But you should. Because your commitment to each other and to your financial health as a couple is as important as if you were married.
You will need to carefully consider all of your financial decisions, such as choosing affordable medical aid schemes to best suit your needs, and discuss each one thoroughly. Below are just some of the financial decisions you will need to make as an unmarried couple.
Come up with a system
This is important if you are planning to, or already do, live together and share daily expenses. You will need to come up with a system of who will deal with key financial responsibilities. One example is that each of you might send a portion of the rent to your landlord, or you could open a joint bank account to do this.
Creating a system like this will involve both of you being open and honest about your finances. In addition to this, you will need to be sure that you draw up a legal document stating all of your contributions in detail. This way, if you were to break off the relationship, you will avoid misunderstandings and costly disagreements later. If your relationship is seen as a common-law marriage, then this document will be enforceable in a court of law.
Plan for the unexpected
Life is full of unexpected moments, both good and bad. Financially, planning for the unexpected means taking into account that bad things can happen suddenly and without warning.
You and your partner should look into affordable medical aid schemes in case something were to happen, and decide who will be the primary member and who will be the beneficiary. Another way to plan for unexpected circumstances is to renew your will once you have decided on the seriousness of your relationship. Your partner might be living with you for years, but if you die and are still unmarried and their name is not on the estate, there is no guarantee that they will be allowed to continue living there after your passing.
Ready yourselves for retirement
If you are a young couple and are planning on staying together for many years, planning for the future is essential. This is especially true if you do not plan on getting married during this time. You do not have to give up on retiring together, but it might be more difficult for you than it would be for married couples.
Neither of you will be eligible for spousal benefits when you retire, so you will need to be sure that you are both financially stable and covered before this time. While it might not sound like the most romantic idea, you should both plan for retirement separately, so that neither of you is financially reliant on the other in your old age. This will save you from having to battle when you reach old age.
Consider the emotional impact of financial decisions
Any financial decision has an emotional component to it. It can be as frivolous as the happiness you feel when buying a brand new pair of shoes or the intense sense of accomplishment that comes with buying your first home. However, the emotional impact can affect your relationship too.
For some people, buying a house together means that marriage is imminent, while, for others, it is simply a smart life decision. Getting a handle on the emotional impact and thoughts behind your financial decisions will save you from any future financial discord. It can also help in the event of a breakup, as you will be able to easily remove your emotional attachment to the purchase.
Designate them as beneficiaries
If you have a medical aid or life insurance policy, you will need to designate your partner as a beneficiary, otherwise they will not receive any benefits. You should ask them to do the same so that you are both covered for any eventuality.
However, you will have to be sure that your life insurance extends to unmarried partners, as some have different policies regarding the matter. You will need to have an open conversation with your children, if either of you have any, and tell them that your partner will also be named as a beneficiary. Designating someone as a life insurance beneficiary is a serious decision and should not be taken lightly.
Always be honest
You might feel that your finances are your own business, but, in a serious relationship, you need to be open with your partner about the state of your financial affairs. Come up with a system and try to plan for the unexpected, as you do not know what life will throw at you. Make sure you are both ready for retirement and carefully consider the emotional impact behind any joint financial decisions you might make.