Thinking about cohabiting? Here’s what you two should talk about before taking this major step.
So you and your partner are starting to get serious, and setting up house together is next on your list of relationship milestones. But before you start browsing real estate listings, there are a few important discussions you should have—namely, about how you'll handle finances once you're sharing a roof. It's likely you already have your own ways of dealing with money (as in, one of you pays bills the second they arrive; the other, not so much), and figuring out how to make one spending-and-saving system work for two people takes compromise. Here are the five financial conversations every ready-to-cohabitate couple should have.
1. The “share your numbers" convo.
If your money discussions haven't gone beyond who's paying on date night, now's the time to get financially vulnerable. Set aside an evening for a candid talk about where each of you stack up in terms of income, expenses, savings and debt and bring up any issues regarding credit, since it's one of the first things a potential landlord will look at. Also discuss any bigger-picture money concerns either of you have. Maybe your partner is shouldering way more debt than you are, or you aren't on the same page when it comes to long-term saving goals. Hashing out how each of you thinks about money will help prevent conflict down the road.
Make a list: Create a shared spreadsheet where you can both easily itemize your numbers. Seeing them side by side will paint a clear picture of the state of your finances, and help you create a blueprint for future planning. Plus it can feel a little less scary to put them in writing, rather than say it out loud.
2. The “how we'll budget" convo.
After you have an understanding of each other's big-picture finances, it's time to take a closer look at your monthly obligations, like student loan payments and Internet service, as well as expenses that fluctuate, such as eating out and gassing up your car. Then come up with a system to stay on track. For those new to budgeting, what's known as the 50/30/20 rule is a good place to start: Allocate 50 percent of your income toward necessities (housing costs and utilities), 30 percent toward fun things (work together to determine what falls in this category) and 20 percent toward financial goals, like paying down debt or saving for retirement.
Monitor your money: Use a budgeting app that can help track your expenses in real time. Clarity Money does that while also recommending ways to help you save by negotiating to lower your bills, canceling unused subscriptions and more.
3. The “how we'll split the bills" convo.
To make sure the rent gets paid and the lights stay on, you'll need to divide up common expenses. The most straightforward way is to split them 50-50, or have each person contribute a percentage of what he or she makes (an app like Splitwise can do the math for you). Next, talk about who will actually pay the bills—will one partner be “household CFO" and handle everything, or will you divvy up accounts? Also worth discussing: Will you pool your money for big-ticket items when you move in together, or will one of you shell out for the sectional sofa, while the other picks up a new dining set? After all, new furniture doesn't come cheap. Timing is everything: If one partner gets paid semimonthly and the other gets paid biweekly, consider dividing up the bills based on how the due dates line up with your paychecks. (But know that for most bills, you can ask to change the due dates to coincide with payday.)
4. The “joint bank accounts" convo.
When it comes to banking, you basically have three choices: merge your funds into joint accounts; keep your accounts completely separate; or embrace an in-between option by opening a joint account for shared expenses and goals, and separate accounts for personal spending. If you decide opening a joint account isn't your thing, you'll need a system for covering shared expenses—whether that means setting up automatic payments, using mobile payment apps to transfer money, or keeping it old school and writing the other a check when necessary.
Set boundaries: If you do open a joint account, establish from the get-go what it can—and can't—be used for. While you're at it, update your billing info on websites you frequently order shared expenses from (like toiletries or food delivery) to this one to reduce the number of bills you're reconciling each month.
5. The “should we buy a house together?" convo.
You may feel ready to take the leap and buy a house before you're married, but know there's a lot to consider when it comes to joint homeownership. Purchasing a house is a major step—one that comes with a commitment to the tune of a 15- or 30-year mortgage. If you're both in good financial standing, you can take out a loan together, but if one partner has poor credit or an overwhelming amount of debt, it may not make sense for you both to be on it.
No matter if you're shopping for furniture or a fixed-rate mortgage, holding regular money talks gives you the opportunity to air any grievances before they become grudges. But the bigger upside? Keeping the lines of communication open can go a long way toward strengthening your overall relationship. And that's a win-win by anyone's definition.
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