These days, living together as an unmarried couple— also known as cohabitation— is far from unusual. In two decades, the number of unmarried partners living together has nearly tripled, from 6 million people to over 17 million people.
Because many couples move in together partly for economic advantages, it’s wise for would-be cohabiters to have open and honest discussions about how their finances will be handled — especially if that cohabitation is seen as a precursor to marriage.
Money is a leading cause of divorce in married couples, but it can also cause issues for unmarried couples. Many problems can be avoided before you move in with good communication about your financial standing and your expectations for cohabitation.
Just a note before we continue: in this article, we assume you’re renting together. Buying a home is a more complex subject with complicated legal aspects, so we won’t be covering it in this piece.
Eight Questions to Discuss Before Moving in Together with Your Partner
Before packing up the U-Haul, discuss these eight things with your partner.
As you go through these questions, try to approach each one objectively. You’ll see phrases like “in the event of a breakup” throughout this article. It can be easy for our emotions to get in the way and think, “Our relationship is perfect, we will never break up!” and overlook these questions.
But the truth is—it happens. Some estimates show that nearly 40% of couples who cohabitate break up within five years of moving in together. This is why it is always best to have a plan ahead of time. It can save you time, money, and serious stress down the line.
1. What is your financial history?
Now is not the time to hide massive student debt, a past bankruptcy, or a terrible credit rating. While you may think that these things only affect you, they can actually impact both you and your partner’s chances at approval to rent a house or apartment. Additionally, your partner has a right to know about any financial situation that might affect your ability to pay your share of rent, utilities, and more.
Things to discuss include:
- How much debt you have, including student loans, credit cards, auto loans, and personal loans
- How much you have in savings and emergency funds
- Past judgments that may affect your future ability to get credit, such as foreclosure, bankruptcy, etc.
- Your credit history and score
Starting a future together means being transparent about past mistakes and moving forward as partners with a solid financial plan.
2. How will we pay bills?
List all household expenses that affect you both, including rent or mortgage payments, utilities, groceries, veterinary expenses, car repairs and insurance, internet subscriptions, and more. Consider these details:
- Will bills be split equally or pro-rated by your different incomes?
- Will the bill payments be automatic or manual?
- Which of you will be responsible for that payment?
- Whose bank account will be used?
You can have one person in charge of finances, or each take responsibility for certain bills. Either way, it should be talked about. It’s helpful to write all of this down, including any login information, so you both can access accounts.
3. Who will take legal responsibility for the space we share?
Whose name(s) will go on the lease and/or utility agreements? This applies to any and all payments that you share, like joint car ownership and insurance, renter’s insurance, electric bills, and more. Be aware that if you’re the sole signee, you’ll be responsible for 100 percent of costs in the event of a breakup.
Your lease can be particularly tricky to handle if you do break up. The law can vary from state to state and even by city, so be sure to look up your local regulations. In some areas, the person who stays in the space is generally responsible for the entire rent—whether or not your co-signer pays their fair share. If you can’t pay rent, you risk eviction and even a negative mark on your credit history.
4. Will we keep separate accounts or open a joint savings or checking account?
In general, experts recommend maintaining separate accounts until marriage. The exception may be a joint account established for agreed-upon shared expenses, with extra deposits added by both parties to fund household emergencies.
If you do have a joint account, be sure that both you and your partner keep each other accountable and communicate openly about how the money is being used. Just like with everything else, make sure both of you have a login to the account—two individual logins are even better, so you both can have access to the account.
5. How will we fund major purchases?
Moving in together often comes with a number of large purchases like furniture, appliances, lawn equipment, or vehicles. Before you start swiping your debit card, take a look at your must-haves and work out who will pay for what.
A good strategy is to trade off paying for big items. This way, ownership is crystal clear in the event of a breakup.
6. What are your personal financial goals and priorities?
Be open about your plans and dreams and how they’re likely to affect your finances. For example, your significant other should know if you prefer to spend money on travel instead of material goods such as furniture or real estate. Similarly, if you're planning a career change or return to school, your partner should be clear on pending changes in your income. It’s okay to have individual needs— but it’s important that you’re upfront and clear about what those are.
7. What are our long-term financial and life goals?
Now is also a good time to start thinking about your long-term goals as a couple and what you might need to do now to make them happen. While you don’t have to have the total roadmap for these goals ironed out, the important thing is to make sure you’re on the same page about what you’re hoping to accomplish together.
For instance, if you want to purchase a home in the next five years, you can get on the same page about saving a set amount per month for a down payment.
This is where an estate plan might come into play, especially if you’re not planning on ever getting legally married. You may want to update your estate plan, financially protecting your partner and giving them power of attorney. It’s important that both of you understand the full legal implications of an estate plan.
8. What will we do if some aspect of our cohabitation plan goes wrong?
Consider the most likely financial scenarios if some element of your cohabitation plan goes wrong.
- What will happen to your living situation if you break up? Who gets to stay in the home/apartment?
- In a breakup, will one partner pay for the other’s moving expenses? Will the partner that moves out be expected to continue contributing?
- What if one of you loses your job or gets hurt and can’t contribute to expenses? Will your partner expect to be repaid for any portion of your share that they cover?
Be Upfront, Honest, and Understanding
Talking about finances may not always be easy, but they’re important to discuss with the person that you plan on sharing your life with. Be upfront, honest, and understanding with your partner. When you start with good communication and transparency, you set you and your partner up for a positive living environment and success in your relationship.