Managing your money as a couple
It’s important to discuss money with your partner. This will help you make better financial decisions together, especially if you’re moving in together or getting married. Get a full understanding of each other’s financial situation and approaches to money.
Sharing financial responsibilities
Discuss the pros and cons of each option before you decide how you’ll manage your money as a couple. Here are some examples of how some couples share financial responsibilities:
Use a joint account for all individual and shared expenses
In this arrangement, couples pool their incomes. They pay all their expenses from a shared account. This makes it simple to track expenses as a couple.
If you choose this method, make sure you understand the benefits and risks of using a joint account.
Use a joint account for household expenses only
With this arrangement, couples keep personal accounts for individual expenses, such as clothing or haircuts. They open a joint account for shared expenses.
Example of shared expenses may include:
- rent or mortgage payments
- property taxes
- utility bills
This option allows couples to split shared expenses easily.
Use separate accounts
In this arrangement, couples maintain separate finances. They split shared expenses and pay for individual expenses on their own. This may work well for couples who value financial independence. However, it may be harder to divide the payments to different lenders or companies you owe money to.
No matter which method you choose to share your financial responsibilities, you’ll need to consider the following:
- what will be the frequency of your transfers based on your payments and pay periods
- what amount will you each contribute to shared expenses, for example, 50/50 or different percentages based on your incomes
- what will you do if you go down to one income due to job loss or illness
Borrowing money as a couple
If you borrow money together, make sure you know your responsibilities as a joint borrower. For example, if you co-sign a loan, you become equally responsible for repaying the loan.
You can borrow money as a couple using a joint line of credit, loan, mortgage or credit card.
Before you do so, discuss the following:
- how will you use that credit product
- what type of product best suits both your needs
- how will you share the payments
Saving as a couple
You may decide to set savings goals together for a purchase and a project.
Common examples may include:
- an emergency fund
- a trip or a vacation
- a home
- a car
- your retirement
To reach these goals, consider what type of investment will work best for you as a couple. Talk to your financial institution to find savings products you are both comfortable with.
Legal matters when living as a couple
Getting married or moving in together can have legal implications that may affect your finances. If you break up, different laws may apply when dividing shared property and assets for common law and married couples. Try discussing these issues with your partner if you’re thinking about living as a couple.
You may decide to sign an agreement with your partner. A lawyer (or notary in Quebec and British Columbia) can prepare agreements for you. Each partner should get their own legal advice before signing these agreements. Your provincial or territorial law society can help you find a lawyer.
Couples and taxes
Living as a married or common-law couple can affect the amount of federal tax you pay. This includes tax on both your income and investments. Learning about different income tax options may save you a lot of money. For example, you may be eligible for non-refundable tax credits.
Consider the following information when you do your taxes as a couple:
Spousal tax credit
You may be eligible for a non-refundable tax credit if your spouse or common-law partner has a lower income. This may reduce the amount of income tax you’ll need to pay.
Family tax cut
Prior to the 2016 taxation year, you may have been eligible for a non-refundable tax credit if you and your spouse or common-law partner had at least one child. It allowed you to transfer up to $50,000 of your income to your eligible spouse or common-law partner.
Pool your charitable donations
You may get a non-refundable tax credit when you donate to registered charities. Consider pooling your charitable donations with your spouse or common-law partner to get a larger tax credit. To do this, one partner claims all of the couple’s donations on his or her income tax return.
Pool medical expenses
You may claim medical expenses for your spouse or common-law partner when you file your tax return. You may get a bigger tax credit if the partner with the lower income claims all of the medical expenses for the couple. This is because the tax credit for medical expenses is based on a percentage of your income.
Child care expenses
You may be able to deduct some of your child care expenses when you file your tax return. Usually, the spouse or common-law partner with the lower income must claim child care expenses.
Pension income splitting
You and your spouse or common-law partner may be able to split your eligible pension income to lower the amount of tax you must pay.
Living as a married or common-law couple may also affect the amount of provincial or territorial tax you pay. You may also be entitled to provincial or territorial credits in addition to the federal credits.
Insurance when living as a couple
Your insurance needs may change as you and your partner marry or move in together. You may need to update your existing policies (home, car, health) to make sure they cover your partner.
Situations where you need to update your different policies may include the following:
- you now share and use a car
- you now share a house or apartment and need to cover all belongings
- your workplace offers a family dental or health insurance plan
Contact your insurance company, agent or broker for more information on making changes to your insurance policies.
A wedding can be one of the biggest expenses that a couple may have. Making a budget for your wedding can help you avoid spending more than you planned. A budget can help you make sure you have money left over for other financial goals.
You’ll need to decide together how much you’re comfortable spending on your wedding. Talk about what you think are the most important parts of your wedding. If you need to lower your costs, discuss what you could change or leave out. You can also look at options you can make yourself or with the help of your family.
Examples may include the following tasks:
Make sure you track all your expenses when planning your wedding day. To make sure you don’t forget any expense, use a wedding budget tracker. Many wedding expenses tracker templates are available online and can help you stay on budget.
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