Moving in with your partner is a pretty big deal. It’s a major step in a couple’s relationship and in many cases, it serves as a “trial run” for married life. During this time, you’ll learn a lot about your partner, from their grossest habits to their favorite song to sing in the shower. But most importantly (if you want to keep the household running), you’re going to learn about their money.
Most folks know that when you share a living space with someone, it’s essential to know at least a little about where their money is coming from. They need to know when everyone gets paid and how much money they have to contribute, so you can divvy up costs in a reasonable way. But when it comes to someone you love…people tend to get a little sloppy with the financial decisions. Here are five major money mistakes couples make when they move in together, and what to do about them.
1. Not Talking About Money
When you’re in love, you feel invincible. You and your partner can conquer the world—all you need is each other and the love you share! While this is a beautiful sentiment, it’s also the kind of thinking that leads to reckless decision-making…like moving in together without discussing finances at all.
Before you decide to move in with someone, you need to have a rough idea of their money situation. Do they have bad credit? That can make finding a place to rent difficult. Are they heavily in debt? That can affect their ability to contribute to household expenses. These little things all form a big picture of your partner’s financial health and habits, and that picture can make a big impact on your life together.
Make sure you have an honest conversation with your sweetheart before you decide to move in together. Get a clear understanding of both your finances and speak honestly with each other about how you’d want your finances to look once you’re in the same house.
2. Not Having a Budget
Budgets are just a fact of life. There’s only so much money coming into your household, and you have to make sure you have enough to cover all your expenses. But too often, people try to just “wing it” with their household finances, paying their bills on a wing and a prayer.
The budget-less life is a risky one, and it becomes even more so with more than one salary in the equation. Even if you don’t plan to merge your bank accounts (which I wouldn’t recommend until you’ve officially tied the knot), it’s important to make financial decisions that support both yourself and your partner—and part of that is making a budget and sticking to it.
3. Not Setting Financial Goals
When my husband and I moved in together in 2014, we knew that co-habitating was a temporary situation. We told each other that we were living together only briefly and that we’d get engaged (and subsequently married) “as soon as we can afford it.”
Our intentions were noble, and our plans were lofty (traveling the world, having an extravagant wedding), but we forgot one major detail: we didn’t set a goal for our wedding date. You can probably guess what happened—four years passed, we hadn’t saved anything, and it seemed like getting married was never going to happen.
Luckily, our parents were willing to support us when we did decide to get married (and we scaled back our nuptial plans considerably to save on costs), but this could have been avoided if we’d just decided to set some goals. Talk with your partner about things you want to achieve (buying a house, getting out of debt, taking a vacation to a far-off place) and plan to make it happen!
4. Not Having an Exit Plan
No one wants to talk about the possibility of a break-up. It’s not fun, it’s often messy, and when you live together it can be a real headache. But here’s the thing: if you set up an exit plan from the start, you can avoid the logistical hassle of decoupling from your live-in partner.
What exactly does an “exit plan” entail? That depends on you and your partner. Maybe you want to keep your bank accounts separate for a while to ensure your income stays your own. Maybe you want to draft up a “relationship agreement” (sort of a pre-prenup) that details what happens should you break up. Planning for these scenarios in advance (before the emotional rollercoaster of a break-up) can help you calmly manage the logistics of moving out and splitting finances. Unfortunately, healing the heartache is all on you.
5. Pinching TOO MANY Pennies
The final financial mistake couples make is one that plagues nearly everyone. It doesn’t discriminate by class, age, or income level. It doesn’t care if this is your first live-in relationship or your fifth. And no matter where you are in your life, how much money you have or how in love you are, this mistake ALWAYS sows seeds of discontent.
At first glance, it may seem like saving every cent you can is a great idea when you first start cohabitating. After all, you don’t yet have a rhythm with this person or your new household yet—why wouldn’t you want to set up a little nest egg? The problem comes when this saving mentality is taken to the extreme: you two never go out, and you never splurge on anything (not even groceries for a nice meal at home)! This ultra frugal behavior will suck the fun right out of your relationship.
Now, obviously, I’m not saying that you need money to have fun. But putting yourself on a strict financial diet can be stifling, and too often couples will lash out at each other if they don’t have a little wiggle room for fun in the budget. So, make sure you have some money to spend on each other and use it on activities or things you’ll both enjoy!