Many couples are nowadays moving in together than ever. Particularly, in the metro cities. In India, it is estimated that less than a million adults are living with an unmarried partner. It’s a big number considering the culture of India.
If you are planning to do the same, you are perhaps feeling a mix of ecstasy and fear. On one hand, you will get to spend more quality time with each other. On the other, you will be faced with their irritating and gross habits on a daily basis.
Though your partner’s snoring or dubious taste in home décor or food habit probably would not be relationship deal-breakers, their financial habits might. This is why it’s important to get on the same page with each other about finances before moving in together.
Renowned psychologist, relationship expert and marriage counselor Shivani Misri Sadhoo shares 5 Financial Rules Every Couple Should Follow When Moving In Together.
1. Talk About Your Goals
The first and foremost things you should discuss is your objective as a couple. Do you want to move to a bigger place? Do you eventually want to buy a house together? Or get married?
You are moving in, and that’s a big next step, but in order for this to really feel like a partnership, you should be working toward something. So identify that something which could be a part of your objective.
2. Know Each Other’s Credit Score
Knowing each other’s financial conditions such as exact salaries, credit scores, savings, and debts would feel like TMI (Too Much Information) in the initial stages of a relationship. But now that your lives are about to become much more intertwined, it’s critical to get transparent and reveal each of your financial profiles.
As you take the initial steps of applying for homes, whether that’s to rent or buy, your financial profiles will play a big impact. The least you want is to catch each other off guard.
Starting off by sharing your credit scores with each other. If you find that your future partner has less than desirable credit, don’t assume. For example, is this somebody who is just not knowledgeable about finances? It is fine you can both get educated. If it was someone who was willfully making poor financial choices over and over, you’re going to want to be careful.
You may find that it makes sense to wait 6 to 12 months while both of you each get your credit in shape, clear off debt and save money rather than to jump into a moving situation with an unstable foundation.
3. Devise A Plan For Dividing Expenses
Certainly, all the things would be easy if you and your partner earned the same amount of money and had equal breathing room in your budgets. But that is scarcely the case, and dividing expenses 50-50 may or may not work. The lesser earner might be stretched beyond their means, which can create burden and acrimony.
There are ways the person paying less can make up for that. Like it’s cooking more of the dinners or breakfast or doing more of the household work.
There’s no right or wrong formula to how you go about dividing expenses and household duties, and it doesn’t have to be perfect. For instance, before he and she get married, she used to pay all the household bills like as electricity, gas, and cable while he used to cover the rent. They went half in on groceries together. It wasn’t an exact science, but it was an equal arrangement that worked for them.
Please note, you are a couple, not roommates. You don’t need to remind each other as long as you are both putting in your agreed-upon fair share.
One thing you probably shouldn’t do is combine finances or jointly sign a loan. It’s simply too risky, especially if you aren’t married.
However, if you want to give the idea of merging money then you can be set up joint savings account for a shared goal, such as travel. It would make it something for excess money and not necessarily your (primary) account.
4. Schedule Money Dates
Discussing financial spreadsheets and cash flow is probably not your idea of a hot date with your partner. But fighting about money isn’t exactly cool, either. That’s why it’s important to schedule time to sit down with your partner and review your current financial condition.
In fact, try logging into your online banking and credit monitoring accounts together. There’s no such thing as oversharing when it comes to money in your relationship.
Life can be busy, and it’s easy to miss these important check-ins, so put them on your calendar aiming for once a quarter.
In addition to getting in the habit of having these financial meetings, it’s a good idea to work on incorporating money discussions into your everyday lives so that it feels more comfortable and natural.
5. Have An Exit Strategy
While you’re covered up in the excitement of playing house with your partner, the last thing you want to think about is the potential for that relationship to finish. But it’s always a possibility at least you can be prepared.
Keeping important documents and accounts in your name only so it’s safer to cut ties and move on if required. For example, if the electricity bill is in your name, you can simply transfer the service to a new address without much hassle. Develop your life in a way that you can free yourself financially should it not work out. Have a separate financial identity.
It’s important to have a stash of savings for any financial emergency.
At the end of the day, no one cares about your money more than you. Your partner cares about you and hopes the best for you, but because it’s your money, you are going to be more involved and aware of it.