Most of us go through this. You know, you meet that person who you are infatuated with or in love with and can’t imagine being without them every single day. If you are fortunate enough to find this person, it’s tough to navigate through some of the important financial discussions that you need to have before you decide to move in together. It’s funny how it’s so common to “live together” but yet talking to each other about our finances is so taboo. I make my own money and you make your own money or so it seems. Well, I’m here to help you have that discussion because the infatuation or love can quickly fade due to not being on the same page when it comes to finances.
You Don’t Have Common Goals
There goes that word that we hear so often but don’t practice. “Goal.” Whether you sit down and write down your goals or you just have thought about them, they are still goals. When you say you want a house, kids, a dog, a new car, etc. those are all goals, you just haven’t written down how you will achieve them. Do you and your partner have the same goals? In today’s day in age, we can’t assume our other half wants the same things especially when you calculate how much these things end up costing. My fiancé and I had the perfect relationship before we got engaged. We almost never argued until we began wedding planning. It was almost as if the word “wedding” was a trigger word to start arguing. We had very different goals when it came to the wedding and a very different view of how it would get paid for. We got through it but it was tough for a while.
I suggest you both sit down and plan out common goals. Plan out 1, 3, 5, and 10-year goals. I know it’s hard to think about goals that far down the line but you never know what you may uncover. What if your partner wants to move out of state in 3 years? Are you going to be willing to move also? It’s important to have these discussions so that you avoid disaster and heart ache later on.
You Haven’t Disclosed Your Personal Financial Situation to Each Other
I know that it’s taboo to tell someone what you make or what you have but if you are going to be living together and or getting prepared to possibly get married, being up front and honest will be crucial to your success. There are too many stories of the secret credit cards that have been racked up to thousands of dollars and the spouse finds out. Of course, everyone’s situation is different but if you have had the common goals discussion from above, this next discussion should be easier to have. Being able to identify problems and then helping each other get through them together will place you in a better financial situation. Ultimately, you’ll both be happy because one of you no longer has to carry the burden. I’ll give you a personal example. My fiancé had a balance on a credit card. I found this out because we sat down to have a common goals discussion and then we were honest about our finances with each other. Since we had common goals and we were both working toward their achievement, all of our money was now in the same pot. If she continued to carry this burden it would hinder us as a team from achieving our goals. So we made a plan to pay off the balance because it was the debt with the largest interest rate that we had. The money being spent on paying off the debt and interest was delaying us from achieving our other goals. She had less to contribute to our common goals such as a kitchen remodel. In reality this debt was affecting both of us.
I know some of you are weary about this section but if you discussed your common goals and know where each of you wants to go, this is the next step. You can’t have this discussion without discussing your common goals. Having this discussion without common goals will be awkward and detrimental to your relationship. Make sure you are on the same page before you reveal anything.
You Don’t Have a Budget
It’s very rare where I will come across a couple or an individual who has sat down and written out a budget. We all know we have to pay x for rent or mortgage, x for utilities, x for a car payment, etc. What we don’t plan for is the small coffee purchases we make every day or the gym membership that we never use. All of these things add up. It’s so easy to just swipe the credit card without even knowing how much is being added up at the end of the month. Now imagine your personal financial situation and add another person to it. Are they just as bad as you or are they worse? There will be times when moving in together will benefit both of you financially but only if you sit down and make an actual budget. When one of you is accustom to spending while the other is accustom to saving, trust me you will have problems.
If you have had the common goals discussion and the financial disclosure discussion, then it’s appropriate to set a team budget. You can both still have your own bank accounts, you don’t need to open a joint account. As a matter of fact, I think it would be more difficult to try and manage a joint account than your own personal account. I always suggest having a joint savings for all of your household/common goal expenditures but keep your checking accounts separate. You’ll know how much each of you will have to contribute to the common account each month but you don’t have to manage each other’s income.
Which brings me to my last point. Now that you both have done everything in the above, discuss how items will be paid. I’ve seen over and over again where John will move in with Carol and because Carol owns her own place and has been successful at affording it, John barely contributes. It’s all fun and games until John has 0 expenses but yet has 0 in savings. It will get old to have someone just live off of you. Have a conversation about how things will get split. The breadwinner today may not be the breadwinner tomorrow.