You and your significant other have decided to take your relationship to the next level and purchase your first home together—now what? More than any other generation, millennials are cohabitating, but this rite of passage comes with a sizable gray area concerning how to handle it emotionally and financially.
There are obvious practicalities to consider, such as the size of the house and its location, but there are also many more questions you need to raise, especially when it comes to the financial implications. Signing a mortgage is one of the largest responsibilities you’ll undertake in your lifetime, and it’s important to know that you and your partner are on the same page—especially when it comes to equal repayments, debt, bills, and more. Ready to take that next step? Arm yourself with the right money questions so that you and your S.O. can pass this pivotal relationship milestone, stress-free. Here's everything you need to do before moving in with your partner.
Ask Tough Questions First
Holly Johnson, one-half of the husband-wife duo behind Club Thrifty, says that broaching the topic of money isn’t always easy but is necessary before you sign on the dotted line. “It’s important to negotiate who is going to pay for regular bills—rent, utilities, etc. By getting this issue squared away before you move in together, you can avoid arguments over who pays for what.” She also says to look for hidden costs that might spark arguments later: “What ‘extra’ expenses does each partner prioritize? Does one partner want a $200 cable package, but expects the other to pay for it?”
Know Your Partner's Debt Situation
Before moving in with your partner, it’s time to come clean about debt. “A large debt load might be a deal-breaker, and you should find out these details before you invest more time into a potential partner—and especially before you move in with them. Certain types of people are prone to overspending and can land in debt easily; they’re the people who tend to have a lot of ‘stuff’ but not a lot of money in the bank.”
She stresses to make sure you both have equal expectations when entering this monumental stage in your life. “From experience, I can say that living with someone who is bad with money is extremely difficult if you’re frugal and responsible. Finding someone you are compatible with financially makes a huge difference when it comes to forging a happy relationship.”
Set the Rules for a Shared Account
Johnson says that sharing bank accounts before the legality of marriage kicks in may not be the best idea. “It all depends on the couple and how each individual handles their money,” she says. “A joint bank account for shared bills might work if both partners contribute regularly and stay committed to using the funds only for bills that they share. For example, each partner could deposit a few hundred dollars per payday into a joint account to cover the groceries and utility bills.” Again, she emphasizes how important it is to have a similar financial personality so that one partner does not take advantage of shared funds.
Decide What's Fair for Your Situation
Every situation is different, and deciding who pays for each expense can be a really hard conversation to navigate, especially if you have salary discrepancies, as many couples do. “This can be tricky since both partners may not earn the same,” says Johnson. “If one partner makes considerably more than the other, both need to decide what’s fair and reasonable. If the higher-earning partner decides it’s fair to pay a large share of the bills, they shouldn’t hold it over their partner’s head, either.”
Plan for Hidden Costs
Johnson says there can be all sorts of hidden homeownership costs that first-time buyers or even first-time renters don’t know about. “Don’t forget to plan for the hidden costs—things like insurance, trash pickup, water and sewage bills, cable, internet, and any cleaning fees.” Sort out as much as you can before you actually move in with your partner. Johnson reminds couples, “Living together isn’t always easy and marriage can be downright hard, but getting on the same page financially does make things easier. If you can agree on money with your partner, you’ll have a lot less to argue about.”
Follow Johnson’s advice and make sure you have these necessary—albeit difficult—conversations before moving in with your partner.
This post was originally published on November 16, 2016, and has since been updated.