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Road to money management: cohabitating and merging finances

In our five-part series, Road to Money Management, we share stories about Canadians to help you make the most of your financial situation at key stages of your life.

Gina and Greta* are a middle-aged Vancouver couple who have been in a long-term relationship for seven years and have decided to make the leap and move in together. They know their relationship is stable, they don’t have any dependents to worry about, and they want to be a support system for one another as they get older. They also want to save money by not paying for two residences.

While they are confident about the long-term success of their partnership, they know that cohabitation will have considerable legal and financial implications. In British Columbia, where they live, they will be considered in a common-law relationship after living together for two years.

They sat down together one rainy afternoon to build a financial plan for the future. They know there are many steps they will have to take that will take some time, but they wanted to have a basic checklist of things they need to do going forward.

Gina has owned her condo in downtown Vancouver for quite a few years, and her mortgage was on track to be paid off in 10 years when she turns 58. It’s a small condo suitable only for a single person, so the couple knows it’s not the best place to live together. Gina has an appointment to speak to her financial advisor to help her decide whether she should sell the condo or keep it as an investment property. She and Greta have not fully determined yet how much of their money might eventually be pooled – and so for now, the plan is that any money from the sale or rental income would continue to be part of Gina’s financial portfolio.

Greta, 52, owns a three-bedroom bungalow and the mortgage is paid off. While the couple considered moving somewhere new, they are both attached to Greta’s house and garden and have decided that’s where they will live. Because there are no mortgage payments, the plan is to split all their expenses 50/50 and, for now, they have decided to keep Greta as the sole owner on the deed. They plan to go to the bank soon and set up one joint account that they will draw upon for their household expenses.

They are starting to build a budget for what their combined expenses might look like as they’ve always budgeted separately. However, they expect to periodically adjust it as they see how different their expenses will be when they’re cohabitating. 

Big priorities for them coming up will be assessing their insurance, retirement goals, wills and estate planning, and taxes. Once they are officially common-law in two years, there will be significant implications from a legal, tax and financial perspective – all of which require advance planning and consideration. Their immediate plan is to consult with their individual lawyers, financial advisors, accountants and insurance companies and then compare notes on the next best steps.

After a few coffees and many pages of a to-do list made out, Greta and Gina feel more confident about taking this journey together and having a money management plan. While many couples argue about money, Greta and Gina feel their financial styles are similar and feel lucky that they don’t have extra financial obligations such as former spouses or children. They laugh that their biggest battles while living together will be meshing their very different decorating styles!

Are you and your partner thinking about cohabitating? Start by learning what common-law means.

Next in our series: Nadia is a young professional in Toronto who is dealing with a sudden loss of income after her latest work contract as a social media strategist was not renewed.

*Gina and Greta are not actual people, but their story is indicative of what many couples are facing when it comes to finances and money management. It should not be construed as financial advice. Reach out to a financial advisor to discuss your situation and help determine what you need to achieve your financial goals.

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