Living with your significant other is a totally different ballgame than living with a spouse or friend. Moving in with your spouse usually results in having a joint bank account and sharing finances with one another. Moving in with a friend is a simple 50/50 split of rent, utilities, and other costs of living.
Each of these situations have clear, defined strategies when it comes to managing money. However, splitting finances when you are an unmarried couple can get tricky.
There is a lot of gray area when it comes this particular situation. Should you pay for groceries together? Who buys the dog food? What if they don’t pay rent on time? Should you split costs in half?
Let’s break it down.
Step 1: Separate Your Expenses
The first, and most important step, is to get really clear on who is paying for what. You want to nail down the exact payments you both feel comfortable with making every month.
Before you move in with your significant other, fill out this worksheet.
This worksheet will help you:
- List out your finances
- Talk about living preferences
- Divvy up household chores
- Separate who is paying for what
This will get you both on the same page and feel organized when handling your money. It can be extremely challenging for unmarried couples to split their finances down the middle. That is why giving certain financial tasks to different partners often works best in this scenario.
This worksheet allows you to customize your expenses in the way that best works for you. It also gives you a window into each others living styles to know what to expect when the big move comes around.
Step 2: Decide on a Savings Plan
Now that you have laid out who is paying for what, it’s time to discuss savings. As far as savings go, it is a good idea to keep them separate (somewhat).
If you are saving for a personal goal like a new car or going back to school, those are best kept to yourself and your personal bank account. This way you have a sense of independence and you can keep those personal aspirations outside of your relationship goals.
If you are saving for something that you both want, like a vacation or a new washing machine, then you should consider mutually saving for it. Many experts recommend opening a shared checking account. This allows you both the freedom to contribute to the mutual fund to share for goals together.
There are a lot of ways for unmarried couples to save in an efficient and simple way. Whether you are using the Starve & Stack method or a snowball plan, there are highly effective ways to reach your goals both separately and as a couple.
Step 3: Have an Emergency Fund
Now that you have spending and savings covered, it’s time for the dreaded rainy day fund. An emergency fund is something everyone should have, but especially unmarried couples living together for the first time.
Trust us, you don’t want to have the conversation of who is going to pay the $600 surprise vet bill. This is something you should save for as a couple in case of car trouble, apartment issues, or any other spontaneous mishaps that may occur. You can agree to each have a minimum amount in your seperate emergency funds or you can open a checking account together, as discussed in step 2.
Here’s everything you need to know about emergency funds.
Being an unmarried couple who wants to share finances can be a tough thing to navigate without the right tools. With a few money conversations and some proactive budgeting, you and your partner will be handling your finances with ease.