Living Together

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Polariod photo of a man carrying boxes with a woman adding a box to the top

You both love The Office, are early risers and do laundry on Tuesday nights. So, with all the similarities, your transition from two living arrangements to one should be effortless, right? Hopefully so, but if you want to save yourself from numerous headaches and fights, there’s one more topic you’ll want to discuss before becoming roomies—money.

Many couples make the mistake of jumping into this next step without giving it much thought. Sometimes it starts with a toothbrush or your own drawer in the other’s dresser, and before you know it, you’re making decisions as a couple, many of which revolve around your finances.

So, before you have extra keys made, consider the following tips to help ensure blissful cohabitation.

Talk it up.

Discuss responsibilities and living expenses before move-in day. Talk about rent and utilities, and how much each person is responsible for. Typically 50/50 is a good rule, but if there’s a large difference in each person’s salary, you may want to consider 60/40 or 70/30. Discuss this with your partner to determine what you’re both comfortable with and each use this budget worksheet (PDF) to help you chart your spending on paper.

Also, discuss what you are and aren’t willing to pay for. Will you contribute to home improvements if you don’t have any financial stake in the house? Do you want to pay for a landline if you only plan to use your cellphone? Be sure your boyfriend or girlfriend knows beforehand what you will or won’t help purchase.

Make a plan.

You’ve probably heard the saying, “If you fail to plan, you plan to fail.” The same is true with your living arrangement. You should have a written plan in place that clearly identifies each party’s financial responsibilities. This will help you avoid misunderstandings and arguments, if they arise, and help you avoid a messy financial break-up if the relationship goes south.

This agreement should include how much each partner is contributing to down payments, rent and utilities, like gas, cable and electric. You’ll also want to document which jointly used items, such as the washer/dryer set, dining room table, couch and bedroom set, belong to whom. Consider having an attorney or lawyer draw up the paperwork for you to insure it’s legally binding.

Keep your money separate.

It may seem easier to pool your money together, but it’s best for you to remain in control of your own finances. Think about it. You wouldn’t let a roommate have access to your account, would you? Then why would you let your significant other? Keeping separate bank accounts will protect your assets, making it nearly impossible for your partner to leave and drain your stash in the process.

If you do want to have a joint account to pay for household expenses, contribute only what will be used to pay for costs outlined in your living plan. Keep a personal checking and savings account for additional expenses and savings goals.

Document big purchases.

Now that you’re living together, you may need to make a few big purchases. When you make these purchases, be sure to keep the purchase receipt and write down how much each person contributed. Take it one step further and jot down what will happen to the item if you break-up. Will you sell it and split the money? Will one person buy out the other for full ownership? You can avoid these questions if each person fully pays for an item of equal value. You may own the refrigerator, but he owns the TV. This makes it easier to know what belongs to whom. Consider completing a tracking form to document purchases (PDF).

Keep in mind, small items like a toaster, sheets, towels and silverware add up over time. Make sure you document these purchases, too.

Think about housing.

Whether you’re moving into an apartment or house currently occupied by your honey or you’re finding a new place to live, be sure both names are on the lease. Having both names listed makes it harder for your boyfriend or girlfriend to stiff you for their share. You may want to consider signing a short-term lease, say six months, to test the water.

Resist the urge to buy a home together unless you know you’re ready to commit for the long-haul. If that’s the case, seek the help of a real estate attorney to work out the details. An attorney can help you develop a fair selling agreement should your relationship fizzle.

If your boyfriend or girlfriend owns the home you’re living in, understand that you have no rights to that property … you’re just a renter. On the other hand, you’re not necessarily obligated to pitch in for home repairs and remodeling since the home holds no value for you.

If you decide to purchase a home that will be shared jointly, make sure you can afford the mortgage and all utilities solely on your income. Of course the burden will be shared, but you need to be able to make payments on your own if the relationship ends.

No joint credit cards or cosigning.

Avoid the temptation to have joint credit cards or to co-sign for your partner’s loan. You can be held responsible for any credit debt, even if it’s in both of your names, and any delinquent payments would also affect your credit score. Building good credit takes time, but it’s easy to ruin your good name, especially if someone has nothing to lose. If you’re in a committed, long-term relationship, proceed with caution.

Estate planning.

Have children together or jointly own property? Make sure you have documents like a will and power of attorney in place to protect each other’s future.

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