Not Getting Married? Cohabitation Still Requires Financial Planning

Couples that plan to live together and not marry don’t really get the same kind of financial planning advice that couples that plan to marry do, but this is changing. Some people used to call it “shacking up” but as finance columnist Dee Lee of CBS Boston observes “the PC term is cohabitation.” Whatever you call it, more and more couples are living together but they are not considering the financial implications of this move.

No matter your age, if you live with your romantic partner, you need to talk about money. Some cohabitating couples are being advised to create a cohabitation agreement. Lee wrote why this is especially important for women:

“According to a recent study when unmarried couples who have been living together part company, women are substantially worse off economically than the men. A man’s household income drops by 10%, a woman’s by 33%. Sounds a lot like the statistics of a divorce.”

One of the reasons couples eschew marriage is that they don’t see the need for the formality. This is fine, but you still need to protect yourself financially—sound financial planning is not a formality; it’s a necessity.

Lee advises:

Clearly outlining who is responsible for what. Figuring out which expenses will be joint and which will be individual ahead of time can prevent arguments later. We tend to assume another person will see things as we do and we are often mistaken. While you should both pay for rent/mortgage and utilities, you should discuss paying for things like groceries and household items.

Each renter should get his/her own renter’s insurance. You will each need coverage for your own belongings and cannot rely on the other person’s insurance.

Being clear about the ownership for items purchased jointly. This includes appliances, furniture and in some cases, even pets. It may not feel romantic to discuss who would get what in the event of a split; however, tensions may escalate at the time of a breakup so it is better to discuss these matters to prevent problems later.

About the author

Claire Emory, MBA, CFA, CFP®


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  • It is interesting to see how people look at money how they act. As a Financial
    for seventeen years I have learned several things one of them is that it is hard to help a couple if they are not willing to have a financial plan prepared for them. Also the financial business is really not about money it is about the relationship people have with money. Money is a a topic that many couple find difficult to talk about. There is a lot of past beliefs that each person brings into the relation ship. The way to work it out is to talk about it. The unfortunate thing is that women will be in a disadvantage if they don learn how to manage money.

  • “women are substantially worse off economically than the men. A man’s household income drops by 10%, a woman’s by 33%. Sounds a lot like the statistics of a divorce.”
    Boo hoo hoo. Women portrayed as victims, what a shock!
    Hmmm. Let’s think about this: They both make the same money immediately AFTER the split as they did just before the split…so if HIS lifestyle went up, and hers went down, doesn’t that mean that when they were together HE was paying a disproportionate share of her bills?? Now, she has to pay her own cell phone bill, buy her own shoes, make her own car payment etc. No wonder her lifestyle went down and his went up! No wonder men are avoiding marriage like never before.
    You ladies wanted to be “equal”…now be equal!

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