There are few rites of passage into adulthood as exciting (and equally nerve-racking) as moving in with a significant other. But before investing in ‘his’ and ‘hers’ bath towels and deciding what time to set the automatic coffee maker for, there are a few essential topics that you should discuss. Among the most important of these is finances — and saving.
Step 1: “Show Me the Money.”
You may not ask your partner in such a direct way to talk about money, but you both need to have an idea of what kind of budget each of you is living on prior to moving in together. This can help avoid any big surprises, or even worse, relationship problems caused by the fact that one of you spends far more money than the other. Once you write down your budgets in black and white, you’ll have a strong foundation for combining them into one household financial plan.
Step 2: Create savings goals.
The key perk of moving in together is the chance to save on the rent (or, if you become homeowners, a mortgage) as well as other household expenses, such as utilities, Internet, and telephone service. However, a plan of action will be the only way to make co-habitation pay off in the long run. It is often easy overlook the fact that you are spending more money on miscellaneous expenses than you did before, simply because it is in your wallet (or your bank account). The best way to avoid this is to set aside the money that you are saving on rent.
Step 3: Work out the kinks.
No one wants to spend his or her life constantly making budgets and to-do lists, so create a financial strategy for paying the bills and deciding who buys what, then fine-tune it to perfection. Having a joint checking account that you can both deposit into and withdraw money from makes living together less stressful. But you will also need to decide who will be responsible for which bills at the beginning of each month.
Step 4: Make a conscious effort to think ahead.
Why would you want to save even more money if you’re already putting aside the other half of what you’ve been accustomed to paying for the rent and utilities? The answer is simple. Usually, living together leads to more serious life changes, such as home ownership, tying the knot, or starting a family. (If you’re sceptical, just try out a mortgage calculator to get your head wrapped around the idea of amortization.) These milestones are much easier to adjust to if you meet them with a little money tucked away. Think of it as an investment in a happy future.