This is a huge moment in your life: You’ve found that special someone, you’ve been with them for quite some time, and you’re planning the next significant step: to share a home with them. Although the notion of your significant other moving in may be a storied, romantic one, it comes with no shortage of practical considerations and new responsibilities. Even if the person you’re sharing a home with is the absolute love of your life, matters as small as choosing the right couch for your living room or as big as splitting the bills can be stressful and exert weight on your relationship.
To counter the potential for financial hiccups, you and your significant other should discuss everything before commingling finances. Here’s how you should budget when your significant other is moving in.
The easiest budget item to consider when moving in with your significant other will be your monthly utility bill. Since you and your significant other will be sharing your home equally, you can simply divide your total utility costs in half. Keep in mind that winter heating costs can potentially drive up your gas bill, hot summer weather can increase your electric bill by one or two hundred dollars, and internet isn’t all that cheap for such a ubiquitous resource.
It might be tempting to split rent costs in half as well, but since rent can be a massive expense for the average person, you and your significant other should discuss paying proportional rent before agreeing to move in together. This means that if one partner makes $30,000 and the other $50,000, the partner who makes $30,000 will pay $30,000/($30,000 + $50,000) of the rent, or 37.5% of the rent, as compared to 50% in a half-and-half arrangement. This math can make a huge difference, as 37.5% of a $1400 one-bedroom apartment is $525 as compared to $700.
Other household expenses
Before your significant other moves in, make sure to talk about whether you’ll split other household expenses, such as renter’s insurance, household supplies, and groceries, evenly or proportionally. Household expenses may seem to only modestly impact a person’s wallet, but spending on even the basics can add up in time. If there’s not an understanding between you and your significant other, household expenses can lead to strife as you both spend more money.
Consider opening a household checking account
Once you’ve budgeted for all the above, you may want to consider opening a joint checking account with your significant other, into which you’ll both deposit a set amount of money each month to cover rent, utilities, and household expenses. You can both use this account to pay for relevant expenses, whereas you can continue using your personal checking account for nights out with friends, meals you eat alone, new clothes, and other things that are yours alone to use.
If you don’t want to open a joint account, discuss in advance who will be paying the bills. Who writes the rent check, who pays for electric, who takes care of the internet bill? How will you pay your significant other — in cash, check, bank transfer, or an online tool? Be sure to have a clear procedure and set date before you unpack your first box.
In keeping your personal checking account, you should also be certain to not combine finances with your significant other unless you are married. Similarly, it is unwise to buy a house or a car with a significant other to whom you are not yet married, because the legal and financial protections on these items, not to mention combined finances, are far fewer and not nearly as strong as for married couples. It might be exciting that your significant other is moving in, but don’t jump the gun – there are plenty of other practical considerations to focus on instead.