4 Financial Tips When Moving In Together
Having open, honest conversations about finances before taking the leap is crucial. This means laying everything out on the table – your income, debts, spending habits, financial goals, and more.
It may feel awkward at first, but creating a safe space to share financial information will set you up for success. Here are four key money talks to have and financial steps to take when moving in together.
#1 Create a Joint Budget
One of the most important things to do when cohabitating is to create a budget that combines your income, expenses, debts, and financial priorities. Make a list of all sources of income you and your partner each bring in every month.
Then, track your individual monthly expenses as well as new shared expenses like rent, utilities, groceries, streaming services, etc. Tools like Google Spreadsheets can help you get organized.
When crafting your joint budget, be sure to factor in:
- Housing costs like rent, utilities, maintenance fees, repairs
- Groceries and household items
- Transportation like gas, insurance, public transit
- Loan/debt payments
- Entertainment and dining out
- Travel and vacations
- Gifts for others
- Personal care like clothing, toiletries
- Pet care, including food, vet visits
- Technology like cell phone plans, WiFi
- Health insurance and medical costs
- Retirement and investment contributions
- Emergency fund savings
Ideally, your combined monthly take-home income should be more than your total monthly expenses. Having a budget surplus will allow you to tackle debt, build savings, and prepare for unexpected expenses that pop up.
Revisit your shared budget every month or quarter. Life changes like job shifts or pay increases can impact your finances. Maintain open communication around sticking to your budget and adjusting it as needed.
#2 Decide on Banking Arrangements
Once you’ve created a budget, decide how to arrange your banking and credit. Some options for managing money together include:
- Keeping completely separate accounts and splitting shared expenses
- Opening a new joint account for common expenses
- Maintaining your own accounts and adding authorized user access
- Combining everything into one joint account
There’s no one right way to manage money as a couple. Pick the approach that aligns best with your relationship dynamic and level of financial interdependence. Have ongoing discussions about how you’ll contribute to and withdraw from any shared accounts.
Be sure to talk through who will be responsible for which expenses. For costs unique to one person, like student loans or credit card debt, determine how you’ll handle those payments individually.
#3 Plan for Future Expenses
While budgeting for monthly expenses is crucial, don’t forget the importance of planning and saving for future financial goals as well. As a couple, you may be looking ahead to things like:
- Buying a home
- Getting married
- Having children
- Buying a car
- Returning to school
- Family vacations
- Home repairs and improvements
Make a list of your shared short and long-term money goals. Then, build a savings plan to help turn those goals into realities. Having separate ‘fun money’ accounts in your budget can also allow each partner discretionary spending for things like hobbies or personal trips.
Saving and investing regularly through workplace retirement plans, IRAs, high-yield savings accounts, CDs, and other vehicles can help you grow your money for the future. Even small, consistent contributions add up exponentially over time, thanks to compound interest.
#4 Protect Your Financial Future
While it may seem unromantic, protect your financial future as a couple by.
- Discussing end-of-life plans and estate planning
- Reviewing insurance needs and beneficiaries
- Creating wills and advanced directives
- Establishing powers of attorney
- Holding adequate life, health, home, auto, and disability insurance
No one likes to think about worst-case scenarios. However, being prepared for unexpected life events can save you immense heartache and financial stress. Ensure you both understand what would happen if one partner died or became seriously ill or disabled.
Also, discuss how you’d handle finances if you were to break up down the road. A solid contingency plan can make untangling your money matters less messy if your romantic relationship ends. But the goal is to avoid needing backup plans at all by building shared money habits that can go the distance.
Moving in together marks an exciting new phase in your romance. But it also brings new financial considerations. Avoid money clashes by having candid conversations about your full financial picture before combining homes.
Create a reasonable budget that sets you up for savings and success. Pick banking and credit arrangements that fit your relationship. Have a plan and contribute regularly to future financial goals. Finally, protect yourselves by discussing worst-case scenarios no one wants to think about.