Each household will have different financial situations as the family unit within it moves through life. Families headed by married couples are barely in the majority of United States households. Unmarried couples, same-sex partners, or singles are the heads of more and more households that may either have children or be childless. These are some financial strategies that can work for each different type of household.
Marriage
If you can manage the financial issues of marriage, you can truly benefit from the positive financial effects of getting married.
Financial compatibility: Couples can determine how to create financial compatibility with each other. There are certain financial personalities who may have problems living with each other, like a "high roller" who likes to take risks living with a hoarder. Perfectionists – those who overanalyze every financial step – may also have problems with producers – those who feel that their income is a reflection of their hard work, but who have a lack of confidence in making financial decisions. It may be easier to make financial decisions with your partner if you've found someone who is a good financial match for you, and if you've talked together about your personalities.
Communication: Good communication is important for having a happy marriage, no matter what your finances look like. Some of the top financial advisors are most successful because they help communication between partners about financial stress and issues.
Character: You should stop any financial action that you are taking with a partner if one partner doesn't disclose financial problems that are discovered during a routine credit or background check. Each partner should give an acceptable explanation for those problems and both should be able to review the others' finances without worrying about accusations and anger from the other partner. You should not complete the financial act until both partners feel comfortable about their financial goals being in line with each other.
Yours and Mine: It may be a good idea to keep financial assets and accounts separate. Any gifts that either spouse receives separately should also go into those separate accounts. Doing this will protect each spouse's share of their assets and their future capacity for earning an income.
Ours: A good way to handle a percentage split of financial responsibilities is through joint accounts for paychecks and income. Each spouse could supplement the joint accounts with any individual account. This would allow the outside income to not be considered a joint asset if there is a divorce. Note that family law in most states considers any accounts that were established during a marriage as joint asset.s
Future Plans: It may make sense to evaluate your financial situation and future projects periodically. This will let you know where you and your spouse would stand if you were to separate or divorce. You should look at how each spouse would provide for themselves, family members, and retirement. It would probably be a good idea to have a financial planner help you with this evaluation.
Joint Management and Vigilance: Both spouses must be involved in making financial decisions. They should ideally be active and equal participants, but should at least understand what the couple has, what income is available, what expenses are being made, and any other investments the couple has or is involved in. Both spouses should know where financial documents are kept, including any computer files.
Singles and Other Relationships
Being unmarried can present some additional challenges.
Singles: Tax rates for singles are higher than those on married couples. Singles who are paid well should put higher amounts of their income in retirement plans to take advantage of any tax deductions available to them. You may also want to consider pursuing strategies to repair poor credit and other tax deductions like homeownership. Owning a home has other challenges, and you should weigh those challenges against the tax deductions. Don't consider a home unless you can really afford it, debt and poor credit ruins many mortgage and home dreams.
Unmarried Partners: This arrangement may feel like it brings you a lot of freedom, but that doesn't always translate to financial decisions. You should use a CPA to help you manage your joint tax liability. It's also possible for divorced or surviving spouses to avoid lousing various benefits that stop when they remarry.
Unmarried couples can't receive estate tax-free gifts or inheritances, and they don't qualify for Social Security or survivor pension benefits. Unmarried couples may also have attorney fees for having to arrange financial and healthcare powers of attorney. It's important to get the advice from legal and financial advisors to make sure that both people in the relationship will be covered in case of divorce, accident, or death.
