Don’t let the rush of making the decision to live together cloud your ability to make some tough but common sense decisions about how to manage your money as a cohabiting couple. Make certain that you protect yourself from moving too fast with financial mergers and that you take the time to research a bit about ways to keep your personal fiscal boat afloat. Here are some tips to keep everyone sane and solvent.
Resist An Instant Money Commingling
Even if you believe this is “the one,” be aware, the experts recommend you keep your finances separate when starting out in a home together. You have few legal remedies if your beloved decides to raid the joint account so be sure the majority of your earnings and other money stays in your name only.
Avoid Consolidating Credit
For the same reasons, keep your credit cards in your name and do not sign a line of credit or loan together in the beginning. Especially if one of you is a spendthrift and the other a money hoarder, know that your credit scores will reflect the actions of your opposite if you hold joint debt.
Have “The Talk”
Not the one you had with your parents before your first date, but the one where you discuss money issues from A to Z and how you are going to proceed at the inception of your life together. Both of you must be honest and forthcoming about your financial habits and must disclose information about both debt and savings. Discuss your comfort level concerning living spaces and how much you are able and willing to pay towards rent. If one of you makes much more money than the other or carries a debt load that is onerous, this will affect your cost-sharing decisions. If you are uncomfortable after communicating your needs and information, take care as you move toward living together. Money, the lack of it, and the demands one of you makes on the other can make your love nest feel like a den of thieves.
Come To An Agreement
All joking aside, you and your partner need to draft a written contract that spells out both expenses permitted and payments expected from each of you. Similar to any experience you have had with roommates, reducing understandings to writing is crucial to avoid misunderstandings. Rent, food, insurance, car expenses, entertainment, job costs, and much more all need to be in agreement. Not very romantic you say? Way better to have it sorted than to break up over a lack of clarity and communication.
One “Commingling” Exception
Leases need to have both your names on them. Or if one of you owns the home, the other should enter into a legally binding rental agreement. These actions protect both of you from the lapses of the other. Consider a shorter-term lease, in either event, to give you an escape pod if the relationship tanks.
Make Major Expenditures Separately (Mostly)
Buying a car, financing a graduate degree, purchasing a new stove — all of these things seem easier when both of you chip in, but what happens when the relationship frays? As a general rule, try to keep each other’s names off of big purchases, or set out in writing the proportion each “owns” if you must combine resources.