According to the most recent research of the U.S. Census Bureau Housing and Household Economic Statistics Division, there’s an increase in cohabiting couples from 2009 to 2010. It means more unmarried couples are living together. Couples who were not living together in 2009 were moving in together in 2010, according to the research they are known as “newly formed couples.” There could be a number of reasons for this increase. Since more couples are moving in together, I suspect a strong reason for this is a precipitating economic environment. Factors such as job loss or consolidating to living in one home could conveniently entice a couple to move in together. It’s cost-effective to pay for one residency than two. Another reason could be that financially couples may not be prepared for all the financial responsibilities of marriage. In addition, some couples may believe in the value of a committed relationship without marriage. Marriage is more than living under the same roof, it’s a union. Not just a spiritual, physical union, but a financial union. His money is your money and her money is his money no matter how you slice it or dice it. If one partner loses their job, then the other partner will have to pick up the extra work. Theoretically speaking, your monies are not really separate. If one partner brought into the marriage bad debt it will affect the way money is to be managed in that marriage. However, I do believe married couples should have their own separate accounts, too. Mismanaged money in a marriage can dismantle its union causing headaches, stress, and financial friction.Due to the trend of increasing couples living together today’s blog will be focused on unmarried couples and married couples financial responsibilities. Here are 3 basic steps to prepare you to evaluate your financial responsibilities:Step 1: What’s in the baggage? Did you happen to take a peak at the baggage that was brought into the relationship? It doesn’t matter if you are living together as a married or unmarried couple, you must know what type of financial situation your partner is in. Do both of you have baggage that you are claiming or is it only one of you that is carrying baggage? How much debt is being brought into the relationship? Do you and/or your partner have any delinquencies? Are there any expenses to consider associated with you and/or your partner’s kid(s)?  In addition, what kind of baggage are you bringing into the relationship: a heavy, medium, or light bag(s)?  How will it affect your finances as a couple? Step 2: Reaching a common ground. Money problems are inevitable. Discuss with your partner how their parents dealt with money issues. This will give you an inside peak to understanding how your partner handles their own money issues. Were those practices copied or avoided? Within your relationship how will you discuss and handle any money issues should they come arise? It’s important you reach a common ground on how you will work things out.  In addition, how will you handle the baggage that was brought into the relationship? On the other hand, money discussion should not only be about problems, but, about goals you want to achieve. What are you short-term, medium-term, and long-term goals? Do you want credit card debt paid off in one year, 8 months of expenses saved in two years, down payment for a home in three or five years? Or maybe it’s to take a vacation to the Caribbean?Step 3: Planning: How will you manage your financial affairs? Now that you know what baggage is being brought into the relationship and goals you would like to accomplish the last step is to come up with a plan. This will require uninterrupted time. The following is the minimum that should be discussed:Bank accounts—Setting up two separate accounts for your household would be ideal. One account will be for household expenses and the second account will be an emergency fund for household expenses. In addition, each partner should have their own accounts, too. As I mentioned earlier, theoretically speaking you don’t have “your own money” but it’s a smart idea to set up separate accounts so you can do what you want with it and it will not affect the household accounts.Paying off debt – When will the debt be erased? What’s the payoff plan?Estate Issues—A estate planning attorney can offer advice on how to probably set up your estate. You don’t need to be wealthy. At times, a simple will may suffice. However, in the event of an unexpected death, who will take care of the kids? How should your assets be distributed?Allocating money— What portion of your income will be allocated towards the household accounts? Unemployment rates are still high, so you will need at least eight months of household expenses saved in your household emergency fund? How will that be accomplished? How much will be allocated towards paying off debt? Have a plan on the amount of money that will be contributed to your retirement account and other obligatory expenses. This will require setting up a budget. Beneficiaries— Who are the designated beneficiaries on your life insurance policies, IRA and other retirement plans? Are they the correct beneficiaries on file? You must make sure your beneficiaries are updated correctly.

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