Moving in together is an exciting step in a relationship, but it can also have a serious impact on your finances. Here are the items to discuss to ensure the experience will be smooth sailing.
Disagreements over finances is the cause for many relationship problems. If you are planning to move in with your partner, there are many items you should discuss ahead of time to reduce these problems.
These are the items you should discuss.
1How Will You Divide the Bills
You should start by having a serious discussion with your partner, about how your household bills will be handled.
Make a chart, create a spreadsheet, and find the method that works best for organizing your household finances and financial responsibility.
Perhaps you should even consider putting together a Cohabitation Agreement that you both sign prior to moving in together. Click here for a sample form and add it to your moving check list!
Options
Some people decide that each person will pay 50% of the household bills, regardless of their income.
Others decide that each person will pay a percentage of the household bills depending upon how much income they have relative to the other.
Questions to Discuss
There are several important questions that you both need to discuss in a non-confrontational manner.
- Who will pay the mortgage?
- Who will pay the utilities?
- Who will pay for household repairs and appliance replacements?
- If one of you makes a significant amount more money than the other, how will you handle that disparity when paying bills?
- Will he take on responsibility for a few bills or simply provide you with the money to pay them every month?
2Talk About a Joint Checking Account
You will have to decide whether you want to open a joint checking account with your partner. This can provide an easy way to pay household bills, but if you don't outline how the account will be funded and used, it can cause significant problems.
- Will both of your paychecks go into the joint account or only a percentage of them?
- How will you handle unexpected household or vehicle expenses?
- How will you handle the situation if one of you purchases something that your budget can't handle?
- What if your relationship falls apart?
3Joint and Individual Checking Accounts
One of the most popular options is to open a joint checking account, but have both parties also continue to maintain their individual accounts.
Each party will automatically deposit their share of the monthly expenses (as previously discussed) into the joint account. The remainder of their money will be deposited into their own account.
You can then schedule automatic payments via online checking for the household bills. This will reduce any potential fights about who was supposed to pay a bill if it doesn't get paid on time.
This will ensure your household bills all get paid, but will reduce fights about how to best manage your excess money. That way if your partner wants to spend $150 at an electronics store then he can do so without having to justify the expense to you.4The Upside of Moving in Together
If your financial matters are handled correctly then there can be a major financial upside to you and your significant other moving in together.
Shared BillsBy splitting costs like mortgage/rent, utilities, groceries, etc, you and your partner may find yourselves with extra money left over at the end of the month.
That extra money could be put towards a down payment on a larger home, towards a wedding, or even towards a romantic vacation together!
5Items To Keep In Mind
No matter how stable your relationship is at the moment, the unfortunate reality is that not all relationships last for the long-run. To ensure that your financial security is not compromised if your does not last there are several items for you to keep in mind:
Household Income BoostVery often, with a boost to the overall household income, people find themselves signing on for more than just a joint checking account with their partners.
They take on mortgages and car payments that are only realistically possible if their household income does not shift.
Before taking out a large mortgage or new car payment you should ask yourself if it would still be an affordable option for you should your household income drop down to just one income.
In today’s rocky economy, with so many people losing their jobs, the affect on the household budget can be significant with the loss of an income. Try to keep your expenses reasonable and possible for a one-income-household.
Credit CardsAs a general rule of thumb you should avoid the impulse to add your significant other on to your credit card accounts. Should the account be defaulted upon due to excessive spending by your partner, you are still be held liable. Keep credit card accounts separate to avoid arguments.
No matter how much each of you make, you and your partner should still establish a household budget for things like cable television, internet services, household phone lines, and food. Doing so will help to keep costs within an anticipated and reasonable level.
