- Moving in with your significant other is a big step emotionally, but also financially.
- But you may not think about what will happen if your partner stops paying rent or decides to break up with you.
- You should talk about the future of your relationship, how you'll split the bills, and — although it won't be much fun — what happens if you the relationship ends.
Moving in with your significant other is a big step. Not just emotionally, but financially. Most couples, however, don't give the financial part enough thought.
"Typically, when two people meet and we say, 'Hey, we really like each other [so] let's live together,' it's very emotional," Sheryl Garrett, founder of Garrett Planning Network and author of "Money Without Matrimony: The Unmarried Couple's Guide to Financial Security," told INSIDER. "There is very minimal practical type of things being thought about. We may think, 'OK, you're paying rent, I'm paying rent... By moving in together, it will save us both money.' That's about as far as the financial practicality discussion goes."
But the practical conversations about money need to happen early on in order to avoid disaster down the road, Garrett said.
Here are the money questions you should answer before taking the leap.
1. What does this step mean to each of you?
It's important to establish what moving in together actually means for your future as a couple — and make sure your visions line up.
"If you've both decided that moving in together is a preliminary step to living together forever then you'll need to develop a financial plan together, soup to nuts," Jennifer Lane a certified financial planner at Compass Planning Associates, told INSIDER. "Start with income and career prospects. Are you planning to work until retirement or do you expect to take time off for kids?"
The relationship needs to be ready for real life misfortunes such as job losses or disability. When these things happen, your partner will be looking to you for support, Lane said.
"If moving in together is not a step on the way to merging financially, that needs to be communicated up front so everyone knows the ground rules," Lane said.
2. Do you have any debt or harmful spending habits?
It may be uncomfortable, but the time to disclose what you owe is before moving in together — not after, when it could affect your partner.
"Put all your debt on the table — student loans, credit card debt, personal loans, auto loans, items in collections — everything needs to be discussed," Pamela Capalad, a certified financial planner and founder of Brunch & Budget, told INSIDER. "If you're getting an apartment together, you're going to find out what each other's credit scores are, so no need for unnecessary surprises."
You may think you know how your partner spends his or her money, but you don't really know until you live together — or ideally, if you're honest with each other beforehand.
"Everyone has things they spend money on that they haven't had to tell someone about... until you decide to move in with someone," Capalad said. "If you have expenses that are non-negotiable, bring them up with your partner before they find out some other way."
Talking through each other's day-to-day spending habits can help you avoid misunderstandings and conflict once your finances — and lives — are more intertwined.
3. How will you split the bills?
One of you may think it's best to split everything down the middle, while the other might think it's more fair to divide expenses based on income.
Whether you happen to be on the same page or need to find a compromise, this is one of the key topics to cover before signing a lease.
"Are the bills split 50/50 or are they based on income?" Elle Martinez, a financial counselor and host of Couple Money, told INSIDER. "With roommates, it's typically split evenly as it is a more objective arrangement, but when you're involved you may change things up especially if one makes much more than the other."
Many couples start out dividing everything 50/50, according to Lane.
"But very few people have exactly the same income and the same financial situation," she said. "Or what starts as equal doesn't remain that way. Someone may end up stretching to meet their half of the expenses."
Capalad said you will also need to consider the logistics of actually paying the bills.
"Who will put which bill in their name?" she said. "Will you open a joint checking account or take care of them separately? You don't necessarily need to rush into merging finances as soon as you sign the lease, just figure out how it's going to happen."
4. What will happen if you break up?
Neither of you wants to think about the prospect of your relationship ending, especially when things are going well enough that you're talking about moving in together. But planning for the worst might not be a bad idea when so much is at stake.
"An ugly break-up can become a financial disaster," Martinez said.
This is why Martinez strongly advises against unmarried couples buying a home together, she said.
Garrett agreed that couples need to prepare themselves for the possibility that their relationship won't work out.
"What we typically don't talk about during that early stage of a relationship when we're saying 'things are great' is what happens if or when they discontinue being great," Garrett said.
Garrett suggests actually writing up a document so that expectations are clear for each person in the case of a break-up.
"I think a 'living together' agreement — also known as a domestic partnership agreement — is a very worthwhile legal document," she said. "It can be done by the couple, the parties themselves working together on it and then you can take it to an attorney to find out if there's anything you might've missed out on."
The agreement should cover specifics such as who will move out in the event of a break-up and how soon.
5. How often will you talk about finances?
Occasionally checking in with each other about money is essential, Martinez said, so you should decide how often you want that to be.
"You might want to do it every month, week, pay period," she said. "It's a chance to review that everything is squared away and if you need to make any adjustments."
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