Congratulations! You and your significant other (S.O.) are moving in together. Not to burst your bubble, but have you talked about money yet?
While it may not feel romantic, discussing personal finances is essential before moving in together.
How exactly should you split costs when living with your partner? Consider these key tips for successfully managing your money as a cohabitating couple.
How should you split costs after moving in together? Three approaches
Moving in together is a really exciting step. Before you get swept away celebrating, though, you need to address the issue of expenses.
How will you and your S.O. share basic living costs, like rent, utilities, food, and Netflix? Most couples take one of the following three approaches.
#1: The 50/50 split
The simplest way to deal with your finances is to split everything right down the middle. You’ll both pay half the rent, electricity, internet, and other utilities. If you’re sharing food, then you’ll divvy up the grocery bill 50/50, too. Cutting bills in half is easy math, but there can be some complicating factors.
What if your boyfriend wants cable, but you only watch Hulu? What if your girlfriend is a loyal Blue Apron member, but you prefer to buy your own groceries? People have different lifestyles, so you should talk about your expectations. Uncover and resolve any disagreements before they cause a fight.
What about big purchases, like cars? You should probably hold on to your financial independence until you’re sure of a long-term commitment. If you’ve only been dating for six months, then it’s too early to co-sign on a 10-year car loan.
You should also avoid opening a shared bank account or credit card until you’re ready. With money-transferring apps like Venmo, it’s easy to share expenses without risking your credit score.
Take time to talk with your S.O. about which household expenses you’ll share and which ones will remain separate. Don’t assume your partner is willing to reimburse you for every snack run to Trader Joe’s unless you’ve talked about it first.
#2: The income-based approach
Chances are, you and your significant other don’t make the exact same salary. In most relationships, one person makes more than the other one. How can you handle this? Each of you should pay what you can.
If you and your S.O. have a significant income inequality, then you may decide to split rent and utilities proportionally. The old rule of renting says 30 percent of our monthly income should go to rent. Thirty percent could be a very different amount for each of you, but it will affect you in the same way.
Of course, you should only agree on the income-based approach if you feel comfortable doing so. If it creates any feelings of resentment or obligation, then it won’t be a sustainable arrangement.
#3: The total free-for-all
In the free-for-all approach, the two of you respond to expenses as they come up. One person might cover the electric bill one month. The other will handle it next time. You’ll grocery shop separately, but you’re fine with sharing food. Basically, you’re happy to take care of living expenses, but you expect the other person to pitch in equally.
This laid-back approach is not recommended, as it offers zero safety net. Each of you may start to feel like you’re carrying the heavier load, but you’ll have no way of proving it. By proactively discussing an expense-splitting system, you can head off conflicts before they happen. Not only will an open discussion help, but you can also rely on some great cost-splitting apps.
Best apps for making a budget and splitting costs
Once you’ve talked out your arrangement, you can let an app take care of the rest. Below are three of the best apps for sharing expenses and transferring money when living with your partner.
Venmo is an easy, fee-free way to transfer money. Just link up your bank account or debit card and connect with your partner-in-crime.
Splitwise lets you enter rent, utilities, and any other expenses and split them up. If you turn on notifications, you can see right away what you owe each other.
OurGroceries lets you make shared grocery lists. You can cross off what you buy and see how much you’re both spending on food.
If you don’t like apps, then you can always keep it old school and track things on an Excel spreadsheet. There’s really no wrong way to share living expenses, as long as your system makes both of you feel valued and comfortable in your new shared home.
Money talks, and so should you
Moving in with your partner is a big step in a relationship. In terms of finances, you should ask each other a few questions before packing up your boxes:
- How do we plan to split rent and utilities?
- Who will send off the rent and utilities payments every month?
- How do we want to share groceries?
- What monthly subscriptions do you have?
- Should we split furniture or buy our own?
- Are there any other expenses you want to split?
Over time, your finances may become more and more intertwined. Perhaps you’ll even start saving together for a house or a big trip to Japan. By tackling the finance basics first, you’ll be better prepared to talk about bigger money issues in the future. Plus, you’ll set yourselves up for a happy, healthy home.
In the end, discussing personal finances is kind of romantic, after all.
How much should you spend on rent when you’re also paying off student loans? Check out this full guide to picking an apartment that won’t break the bank.
Have you been renting for a while and are wondering if it’s time to buy? This guide fills you in on when to purchase your first home.
Have you been burned by lousy landlords in the past? Read this article to learn how to handle shady situations.
Interested in a personal loan?Here are the top personal loan lenders of 2019!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
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4 Important Disclosures for Citizens Bank.
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5 Important Disclosures for LendingPoint.
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All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
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|5.74% – 16.99%1||$5,000 - $100,000|
|7.54% – 35.99%||$1,000 - $50,000|
|7.99% – 35.89%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|5.99% – 29.99%3||$7,500 - $40,000|
|6.79% – 20.89%4||$5,000 - $50,000|
|9.99% – 35.99%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|