More and more Americans are settling down together before deciding to tie the knot. In 1995, only 3% of U.S. adults were living with their partners unmarried, but now 7% are, according to data from Pew Research Center.
While that may seem like a small share of the population, more adults ages 18 to 44 have lived unmarried with their partners (59%) than have ever been married (50%), and society as a whole is becoming increasingly more accepting of cohabitation.
But moving in together requires a similar level of planning and consideration as marriage. You may not be legally bound, but you are uniting your financial lives under one roof and agreeing to share bills, budgets and money headaches.
So before you take the plunge, it is worth discussing the following seven topics to ensure you’re actually ready to make this commitment.
Decide whether you’re going to combine finances or keep them separate
One of the first steps you’ll need to take is deciding whether you want to open a joint bank account or keep your finances separate. There are pros and cons to each, and either choice can be the right one for you and your partner. But it is key you decide together how intermingled you want your funds to be so that everyone is on the same page. And bear in mind, if you share an account, you also have to be OK with your partner’s spending choices and their scrutiny of your own.
Determine who is paying for what expenses
With a joint bank account, you can set up automatic bill pay and handle every bill together, if you chose. But, of course, that means you still have to agree on how it is funded. Will you each contribute 50% of the amount needed to cover your household bills? Will you each contribute the same percentage of your salary, say 40%? Or will you simply keep a set amount, say $500, from each paycheck in your seperate accounts and put the remainder of your earnings in your joint account? And, finally, who will be in charge of making sure all payments have gone through correctly?
By keeping all accounts separate, the job of paying bills becomes a little more complicated as you’ll need to determine who will be responsible for each one and ensure the division feels equitable.
For some couples, one half may take ownership of handling all the bills and choose to have the other party reimburse them for a share of the costs. Other partners may feel better with each half taking charge of a couple bills so that spending on shared expenses evens out naturally or falls in line with the amount of income each brings to the union.
Without a joint bank account, you may lose some transparency into whether the bills have indeed been paid on time and in the correct sum, unless you are also listed as a contact or account holder on each.
Set a threshold for sharing big purchases
Regardless of whether you decide to unite your bank accounts, your partner likely wants to know how you’re spending money and when you make a big purchase.
That’s because 44% of unmarried couples who live together worry their partner spends too much and are more likely to have argued about money within the past month than married couples, a recent survey found.
So spare yourself the drama and fighting by being upfront about how you use your money, even if you keep it in entirely separate accounts, and decide together what dollar figure warrants a discussion.
More than three-quarters of Americans check in with their partners before making a purchase over $500. And 60% of people say they’d be angry if their partner or spouse spent that amount without telling them first.
But for 36% of Americans, the sum they’re OK with their partners spending unchecked is less than $200, so be sure to discuss what spending threshold makes you and your partner uncomfortable.
Open up about your debt
Your debt may be in your name alone, but the impact it has on your budget and ability to contribute to household expenses and savings goals you may share, like that trip to Hawaii, means it is now also your partner’s concern.
If they are unaware of your student loans or credit card debt, they may not understand why you cannot secure a car loan with them or why you were both rejected from that dream apartment. Even worse, your partner may opt for a pricier apartment, buy fancy new furniture or opt for weekly takeout because they falsely believe you can afford it.
They’re expecting you to contribute a certain percentage of your income to the home and joint expenses without knowing that money is already tied up in debt repayment, leaving you with the awkward choice of taking on more debt to hide your inability to pay your share or coming clean after the problem has arisen.
Again, spare yourself the guilt, future money fights and hurt feelings by just stating upfront how much you currently earn and the nonnegotiable expenses you already have, like a fixed monthly student loan bill.
Ask for each other’s credit scores
When you go to rent or buy a home together, lenders and landlords will check up on both of your credit histories to ensure you’re responsible and able to make on-time payments.
One of the biggest indicators of your trustworthiness is your FICO credit score, which ranges from 300-850. A score of 800 or above means you have exceptional credit, a score between 740 and 799 equals very good credit and scores between 670 and 739 mean you have good credit. But those with scores between 580 and 669 only have fair credit, and any score less than that equals poor credit.
The higher your score, the better credit offers you’ll receive. Those with very good or exceptional scores usually qualify for the best loan products at the lowest interest rates since lenders feel secure in their repayment ability. But those with fair or poor credit will typically face the most difficulty qualifying for loans and will likely pay the steepest interest costs as well as other additional fees.
Before you go applying for apartment rentals, shopping for a home mortgage or buying a car together, you’ll need to know both of your credit scores and how your combined score will impact your odds of approval. In some cases, it may make sense to have only the partner with the higher score apply to increase your chances of being accepted. Or, it may be better to wait to apply for credit and improve both of your scores.
Not sharing your credit histories with each other means you risk being rejected for rentals and loans and not fully understanding why or how to fix the problem.
If either you or your partner don’t know your credit score, you can get a free copy of your credit report from each of the three credit reporting companies once every 12 months at annualcreditreport.com.
Split up the household chores
Money isn’t the only topic couples fight frequently about. A survey from Yelp found that 80% of people living with a partner fight about housework and a fifth of them do so often, disagreeing about when to do the housework, how to do it and who should do it.
Cleaning the toilet, doing laundry, taking out the trash, ensuring all bills are paid on time — none of these are fun or enjoyable tasks. So it makes sense that you might be tempted to shirk such duties and leave them to your partner. But people can spend up to 690 hours a year on such jobs, and all that unpaid labor eats into downtime, work time and quality time with you. Not to mention your honey will probably become resentful if they feel you aren’t contributing your fair share to your home’s upkeep.
So take the time to split up common household tasks and assign ownership. Most of us are naturally more interested or gifted at one thing than another. Maybe you’re a great cook and your partner has a good head for numbers, so you decide you’ll handle weekly meal prep and they’ll keep track of the budget and bills.
For onerous tasks that neither of you cares to do, switch off or tackle them together. The important thing is that you hash out a rough plan for when and who will be tackling which jobs around the house so it doesn’t become the burden of one.
Talk about your dreams and goals
You’re likely moving in together because you can see yourself building a future with this person. Lean into that by talking with them about how you envision this new shared life and how you think you’ll get there.
This is especially important if you and your partner view spending and saving differently. For one of you, maxing out your 401(k) may take top priority after paying all necessary bills, while the other may want to save for a dream vacation getaway together.
Both are valid ambitions, but you’re likely to disagree if you don’t understand why your partner wants to use the money that way. Maybe one of you witnessed your own parents fail to adequately prepare for retirement and have to rely on Social Security payments to get by and wants to prevent the same thing happening to you both by saving aggressively. Maybe one of you thinks investing in quality relaxation time together on a tropical beach would strengthen your relationship and prevent career burnout.
Aim to share the deeper root of why you want to achieve the goals you do so your partner can fully understand your reasoning and you can better compromise on how to reach them together.