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Couples Living Together Need A Plan For Finances

BOSTON (CBS) - The PC term is cohabitation. Many more couples are trying this approach before marriage and in some instances instead of marriage. Over 8 million couples live together. That number may be low due to the fact people often lie to the census taker.

So how does what's yours, mine and ours work here? This is not going to be a romantic segment! Grab a pad, pencil and your calculator to help.

You need to treat the finances just as if you were two strangers about to become roommates. Talk about the expenses upfront before your friends start carrying the boxes in and if you are willing take it one step further; put everything in writing. Create a cohabitation agreement. You're dealing with a roommate, one you're romantically involved with, but they're still a roommate.

  • Keep your finances separate. Do not open a joint checking account and do not put each other's names on your credit cards as a user. And do not co-sign loans for each other. Share the basic household expenses like the rent, mortgage and utilities. Forget the landline here.
  • You need to have a clear understanding about what's expected of each of you. Make a list of the joint expenses and who will be responsible for them. Whose name will be on the electric bill? The water bill? When you sign a lease you may have to do that jointly unless one of you moves into an established situation. Who is going to be responsible for paying the bills?
  • Credit Cards:  Don't mess with each other's credit. It could come back to bite you in the butt. Each of you is responsible for your own credit card bills. You want to keep your credit histories separate.
  • Insurance:  If you are renting you both should have renter's insurance to cover your belongings.
  • Discretionary Expenses:  Food and alcohol. Gets sticky here and again communication is key. Is one of you a gourmet cook and the other content with a can of tomato soup and a grilled cheese? If he likes beer while he watches the game on the weekend then that falls under his expenses. If you drink beer with him or your friends do then that is a joint expense. If his friends come over for a party and you are away it's his expense.
  • If you buy any large pieces of furniture together who gets them if you split up? Does one of you buy the washer and the other the dryer? Discuss ownership issues before you need to.

One more thing:  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.

According to the Census Bureau, more than 40% of American women under the age of 45 have lived unmarried with a male partner at some point in their lives.

You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee's Money Matters newsletter here.

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