Choosing to cohabitate with your significant other is a major move — physically, emotionally and financially. Aside from sharing physical space, it requires transparency of your emotions, bad habits, and your finances.
Whether you intend to collaboratively share expenses or split them down the middle, financial compatibility is an important factor in any lasting relationship. (According to a GfK Custom Research poll, money is the second most cited reason behind divorce).
Here are four things you must discuss before you schedule the moving truck.
What is your monthly budget?
You may think you know someone, but until you know your partner’s monthly income, spending habits, and financial obligations, you don’t. Before you decide to share a living space, you’ll each need to share your budgets to understand what your new financial plan will entail.
Note what each of you currently brings in each month, and spends on recurring costs like food, technology, debts, as well as medical expenses, beauty services, toiletries, and gym memberships.
You may not be merging bank accounts, but if one of you has a different perception of how much money is appropriate to spend and save, it will impact your ability to work as a successful financial team.
What are the expectations?
Belinda Rosenblum, CPA, founder of OwnYourMoney.com and author of Self-Worth To Net Worth, says many people initially move in together with anticipations of greater convenience and more opportunities to save money.
After all, theoretically, splitting bills and rent should take less out of each other’s paychecks than going it alone. The trouble is, many couples assume the savings will simply fall into place without devising any kind of structured plan.
“When couples fail to track their money and consciously use it for a specific purpose, whether it’s building emergency savings, paying down debt, or funding a future major purchase, they save nothing,” says Rosenblum.
Before you assume that both of you have the same financial goals, honestly communicate about your expectations for your new living arrangement before issues arise.
If one of you hopes to build savings for a future home purchase, but the other believes in working hard—and spending even harder, talk about it up front, and identify how you can each compromise your money management so both parties win.
How will we divide and conquer?
Some couples prefer to designate a “financial head of household,” while others keep the sharing of expenses informal. Choose the system that works best for you, but work out a mutually beneficial balance before fights for financial control arise.
“Additionally,” says Rosenblum, “set who is responsible for which expenses — particularly if one person makes significantly more income than the other or is accustomed to a different lifestyle.”
She advises couples to discuss all the pertinent details, including how much each person will contribute to security deposits and rent, how ongoing expenses like utilities and groceries will be divided, who will handle the actual paying of bills and deposits into savings and, ideally, who will manage the overall household budget.
Beyond money, establish who will do what around the house and what will happen to the apartment and lease if the relationship ends. Rosenblum says honesty (with yourself and your partner) is key: What are you able– and willing–to contribute without triggering the “resentment factor,” where one of you feels you are over-compensating for the other?
“If left unaddressed,” she warns, “every bill paid serves to exacerbate the issue and will put a rift in the relationship.
Which two non-essential expenses are you NOT willing to change?
Your boyfriend’s house is so wonderfully clean—but do you know if it’s by his own accord? Discuss what each partner currently spends for any non-essential convenience or lifestyle expense, like a housekeeper, dry cleaning service, landscaper, manicurist, hair stylist, and fitness, and establish what each person is unwilling to live without.
Appropriate spending and determination of value on hobbies and conveniences is a matter of personal preference. Though you may not agree with all of your partner’s spending decisions in this category, having a frank conversation early will prevent later arguments when, for example, one partner wants to purchase new furniture but the other is unwilling to cancel a yoga studio membership in order to save the necessary funds.
Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of Wellness On Less, she also writes on small business, consumer interest, wellness, career and personal finance topics.