Historically, combining finances typically involved getting married and a woman giving up control over her assets and income to a spouse. Nowadays, however, the merging of a couple's finances has become vastly different than it was in the past. Not all Pennsylvania couples who share their financial resources and burdens get married. Some of those couples may want to consider the merits that cohabitation agreements can provide. Others may find different approaches that work equally well for them.
Some couples choose to retain their own individual financial accounts while sharing a joint banking account that is used for household expenses and the paying of bills. Each partner will generally contribute a set amount each month and share equally in the expenses. For many of these couples, it may become appropriate to enter into a cohabitation agreement in order to protect their individual interests. This would involve establishing a formalized contract between the two which would set the financial responsibilities for each party going forward.
For other couples--usually where one spouse earns a significantly higher income than the other--it may be preferable to agree that the higher earner will handle all the bills. This approach can cause special considerations if the couple later splits. Will the paying partner want to be paid back for the other partner's portion of bills while they were a couple? This is another instance when a cohabitation agreement could clearly set out the expectations and responsibilities for each party.
Some cohabiting partners may choose to divvy up the bills, with each person selecting certain bills to pay each month. Still others may choose to mingle their finances wholesale, especially couples where neither partner has significant assets or debts. Those Pennsylvania couples may still find it beneficial to look into establishing cohabitation agreements in order to make sure that each partner has a clear understanding of how finances will be handled. Communication is often the key for success between couples who decide to mingle their lives--and finances.
Source: Huffington Post, "LearnVest: Looking to Combine Finances With a Partner? Here Are 6 Ways to Do It Right," Sept. 10, 2012