Guide to Sharing Finances as an Unmarried Couple

Highlights:

• As an unmarried couple, you can still access many of the same financial benefits available to married couples, provided you plan ahead.
• Unmarried partners can open joint bank accounts and finance large purchases together by co-signing loans.
• Your partner's credit history and debt won't impact your individual credit information, whether you're married or not.

Marriage provides spouses with access to certain financial benefits that are unavailable to unmarried partners. However, plenty of couples have long, fulfilling relationships without ever tying the knot.

If you're managing your finances as part of an unmarried couple, be sure to understand the options available to you and your partner.

Can unmarried couples open joint accounts?

One of the most common ways for couples to combine finances is by opening a joint bank account where both parties can deposit and withdraw funds. You can open a joint bank account regardless of your marital status.

Although keeping joint accounts works well for some couples, it can be risky for others.

First, both account holders can spend from joint accounts without limit, regardless of how much each has contributed. This can create tension in couples where one partner earns more than the other, or where partners disagree about when to save vs. when to spend.

Second, both partners are equally responsible for account activity. This might include bounced checks, overdrafts and other fees. So, it's important to stay on the same page about the way the joint account is managed. It's also wise to create a plan for withdrawing individual funds in the event the two of you go your separate ways.

Some couples choose to open a joint account to cover monthly household expenses but keep their individual checking accounts separate. This can be a great way to handle shared expenses without completely merging your finances.

Does my partner's credit have any impact on mine?

Your credit reports and credit scores are tied to your personal credit history. So, your partner's credit won't automatically impact yours just because the two of you are together. This is true of both married and unmarried couples.

However, your partner's credit history could come into play if you choose to open a joint credit account, such as a credit card for household expenses, an auto loan or a mortgage.

When you apply for a joint credit account, the lender reviews the credit information for both you and your partner. If one of you has a poor credit score, it could make it harder to secure approval for the account. If approved, both of you will have access to the joint account, and the account history may be reflected on each of your credit reports.

You might also consider adding your partner as an authorized user on an existing credit card account. An authorized user is someone who's been added to an account by the primary cardholder and who can make purchases with the credit card as if it were their own.

Adding your partner as an authorized user is one way to help them establish a positive credit history, especially if they have a low credit score or have struggled with using credit in the past. However, the history of that shared account will be reflected on both of your credit reports. So, it is important that you both monitor your spending closely and keep up to date with any payments.

Will my partner's debt impact me?

Like credit, debt is also tied to your individual credit history. So, whether you're married or unmarried, you aren't automatically responsible for your partner's debts. Additionally, any bankruptcies that you or your partner experienced in the past will generally not impact the other person's credit reports or scores.

One exception to this rule is if you signed up for a joint credit account with your partner. If both of you assumed responsibility for an account, this information shows up in both credit histories. For example, if your partner uses a joint credit card to accumulate debt, that debt becomes your responsibility as well.

Talk about how to split shared expenses with your partner and aim to avoid spending beyond your individual and collective means.

What other financial benefits can we access as an unmarried couple?

Unmarried couples don't have many of the legal protections that married couples do. However, there are still financial benefits available to unmarried couples.

Tax returns. Filing taxes together is one well-known financial benefit for married couples. However, it's not possible to file tax returns jointly when you are unmarried, even if your significant other is a registered domestic partner. It's important to note that in some cases filing separately may save you money in the long run. For example, a married couple earning similar salaries may find themselves paying more in taxes if they file jointly, because their combined income may push them into a much higher tax bracket.

Health insurance. In some cases, you may be able to share health benefits with your unmarried partner. Some companies offer the same benefits to domestic partners as they do to spouses, provided the two of you have lived together for a certain period of time. Check with your employer and health insurance provider to learn the qualifications required for unmarried couples in your state.

Auto insurance. Many car insurers allow you to add a partner to your insurance policy, provided the two of you share a residence. Some insurers may also allow unmarried couples with separate vehicles to apply for a joint insurance policy, as long as both cars are kept at the same residence. Combining auto insurance policies may help you save money, so check with your insurer to determine the specific benefits they offer.

It's a good idea for all couples, married and unmarried alike, to talk about financial goals. Be sure to check in with your partner regularly to ensure that you stay on the same financial page.