Two might be able to live as cheaply as one, but cohabitation can play merry hell with your finances in countless ways. Financial counsellors agree that romance often blinds couples to the importance of sorting out nitty-gritty fiscal issues such as budgeting, insurance and bank accounts before they make the move to live together.

"Many couples go into it without talking things through," says Michelle Duby, a learning and development consultant with Zurich Financial Services. "But these things don't just handle themselves down the track."

Sheila Freeman, a financial counsellor and co-author of Money Management for Women (UNSW Press), agrees: "Love is always in bloom when you first get together, and you think there won't be anything you can't handle. But that can all fly out the window when the bills come in or there's work to be done."

Resentment created over who left the lid off the toothpaste, or whose turn it is to take out the garbage, pale into insignificance against the magnitude of problems that can emerge from disagreements about money.

Cleaned-out bank accounts, blown-out credit cards, property ownership wrangles, jointly created debts that one person is lumbered with after their partner shoots through, and even bitter custody disputes over pets: Ms Freeman has seen it all, many times over, during a 10-year career as a financial counsellor.

If you're madly in love, how can you make sure financial chaos doesn't happen to you?

Ms Duby says it is essential for couples to sit down and talk about their finances sooner rather than later. Look at the financial resources each person will be bringing to the relationship, the ongoing contribution each one intends to make, and any future plans or goals.

For example, further down the track one person might want to go back to school to continue their studies, which would mean a reduction in working hours and, possibly, the need for their partner to assume the mantle of sole breadwinner. "Don't just assume that because you're in love, you'll have the same ideas," Ms Duby says.

You'll need to discuss whether to combine your finances, keep them separate or find some middle ground. Consumer Credit Legal Service manager Carolyn Bond says some couples initially live as "housemates", sharing bills and other expenses while keeping all other money separate. "However, this becomes more difficult, if not impossible, once children arrive, especially if one partner takes time from work to stay home with children," she says.

Yet Ms Bond cautions that the solution is not necessarily a joint bank account. "Think about this first," she says. "In general, joint accounts allow either party to withdraw all the funds, so a joint account is no protection unless both have to sign, which is impractical - people think it protects them, that it shows 'it's my money as well'. But if there are problems, your (partner) can take it all out."

According to Ms Freeman, it's safer to maintain separate credit-card accounts too. Accounts that offer a supplementary card for partners can be a trap because the primary card holder can't always stop the use of the supplementary card. Ms Freeman says she has witnessed in many cases, particularly gamblers and shopaholics, of people running credit cards out to their limits.

A common scenario is for one person to be drawing lots of money from ATMs and making sure their partner doesn't see the bank statements. "Some women have also come to me after they've seen a credit-card statement, which lists a purchase from a bra shop - and it wasn't for them," Ms Freeman adds. "It's important to check your credit card statements every month. Are they correct? Tick them off."

Other issues to consider relate to joint purchases, says Ms Freeman. For example, a couple moving in together might agree they must buy a new double bed on credit, in which case they need to decide who will make the payments and who officially owns the bed. They also need to agree on who gets the bed - and the bill for it - if they separate before the payments are complete.

"It sounds a bit businesslike but it can save a lot of hassles if the relationship ends," says Ms Freeman. She adds that when these questions aren't agreed to upfront, she has seen cases in which, by default, "he takes the bed and she gets the bill".

On the issue of joint purchases, Consumer Credit Legal Service principal solicitor Lesley McKenzie offers even more stark advice: "Don't buy anything together if you think it will come into dispute."

There are other ways to ensure you're protected from the scourge of sexually transmitted debt. Going guarantor on a partner's loan, or signing up for a joint loan, has led many people into severe financial strife and even bankruptcy, so think long and hard before entering into arrangements like this.

Insurance is another issue that is often overlooked. If your partner is moving into your place, ensure you have adequate house and contents insurance to cover their possessions; likewise adjust your vehicle insurance if they'll be driving your car. Ms Duby says income protection insurance is another must, even for young couples struggling at the beginning who think they can't afford it. "What if one of you can't work? What will happen?" she asks.

However, Ms Duby adds that no matter what approach couples take to the serious stuff, it is still important to allocate enough money for pleasure. "Even if you want to save for a car or a house, make sure there's money set aside for fun. Any goal needs to have rewards along the way or it all gets too hard."

Ten love tips

1. Formalise an agreement on your finances before you cut that extra set of keys.
2. Even if one person assumes the status of bill payer, treasurer and bookkeeper, regularly review your financial affairs together.
   
3. Maintain your own bank and credit-card accounts.
   
4. Be wary of acting as guarantor for your partner's loan.
   
5. Ditto when it comes to taking out a joint loan together.
   
6. Keep records about all financial matters.
   
7. If you're renting, ensure both names are on the lease and the utility bills.
   
8. If you stay at home to raise children, try to keep your hand in professionally through part-time work or further study.
   
9. Make a will to clarify your wishes in the event of death.
10. For guidance on issues confronting you before the big move, click on "For Richer or Poorer" at the Zurich Financial Services website located at www.zurich.com.au.
    

Relationships on the rocks

Assuming it will all end in tears might sound like a pessimistic way to embark upon a live-in relationship, but experts say protecting your interests in case things fall apart is simply the smart thing to do.

According to Slater & Gordon partner and accredited family law specialist Rebecca Badenoch, there are significant differences in how the law treats de facto versus married couples.

When married couples split, spousal maintenance can be payable, "if you can prove the other person can pay and that you have a need", she says.

However, there is no such entitlement for de facto couples (although child support is payable in either case).

Ms Badenoch points out that the legislation governing property disputes is also different. The Property Law Act covers de facto couples who have been in a relationship for two years or who have had a child together, and disputes are heard in the Magistrates, County or Supreme courts. But disputes between married couples go to the Family Court, which is the only court able to make orders about superannuation or other retirement benefits.

Both sets of legislation claim to take into account financial and non-financial (such as homemaker) contributions, but Ms Badenoch says different courts produce dramatically different results. In practical terms, de facto settlements focus far more on financial contributions, which is bad news for those who managed the house while their partner brought home the bacon.

One of Ms Badenoch's clients who had lived with a wealthy man recently felt this sting. "She gave up her career to support his - she travelled with him, attended functions and worked in his business," she says. "But his lawyers argued that she had not been contributing financially. We eventually negotiated a settlement for her that was infinitely better than zero, but given the promises made to her in the relationship, it was less than half of what she might have expected."

Ms Badenoch advises people to ensure their name is on any property title and suggests drawing up a cohabitation agreement (the equivalent of a pre-nuptial agreement). These aren't binding but they at least provide a statement of intention. "A document is better than no document," she says.

Taken for a ride

Take great care when it comes to purchasing property or personal assets such as a car together, particularly when a joint loan is involved.

Consumer Credit Legal Service manager Carolyn Bond says many people make the mistake of thinking, 'OK, I owe half and he owes half', but the reality is that loans are not divisible in the same way we commonly assume that assets are.

If one person skips town in the wake of a relationship breakdown, the lender is not going to waste resources trying to track them down, particularly when they're legally entitled to extract full payment from the remaining partner.

"A lender goes to whomever they think they'll get the money from," Ms Bond says. "That makes the debts of the relationship more important than the property in a relationship.

"When people are in a relationship, they often don't think through this stuff, but it's very common."

For example, "Ms Y" owed $10,000, which she had borrowed from a bank to buy a car. Around the same time, her de facto partner of 12 months sought a $10,000 loan from the same bank to bolster his business.

His loan wasn't approved, however, so he suggested Ms Y approach her bank again about a joint loan. This was approved and both of them signed for a total amount of $20,000, half of which paid out Ms Y's car loan.

"Given that they received about a $10,000 benefit each, and the loan was in joint names, Ms Y felt this was a reasonably safe thing to do," says Ms Bond.

"However, when the relationship broke up 12 months later, the bank couldn't locate her de facto and pursued her for the total amount owing."