Five Money Rules for Moving in Together

Before you and your significant other make the leap to live together, take these steps to protect your finances just in case things don't work out.

As if making the decision to move in with your boyfriend or girlfriend weren't nerve-wracking enough, once you've opted to merge your two homes, you still face some challenges: Where will you live? What roles will each of you play in running the household? What on earth should you do with that wagon-wheel coffee table?

One topic, however, that couples often overlook in the excitement of their new adventure: money. This is unfortunate because nothing kills the romance faster than arguing about finances. A poorly planned move-in can put tremendous stress on your relationship, so it's best to smooth out the details ahead of time to avoid disagreements and hard feelings later.

And what if your trial at domestic bliss with your sweetheart turns sour? No matter how optimistic you are about your live-in arrangement, it's important for both you and your partner to protect your finances in case things just don't work.

So before you pack any boxes or call the movers, commit yourself to these five rules that will help increase your chances of a successful move-in.

Rule #1: Talk about money

Communication is rule number-one in making a relationship work. And it's important to include money matters in the conversation when you're planning a merger of your lives. Make a date to specifically discuss your finances. You should share your attitudes toward money, your financial priorities, your spending and saving habits, and your short- and long-term goals. (See Ten Questions to Ask Before Saying 'I Do' for more advice on what any committed couple should discuss.)

You also should discuss the nitty-gritty financial details of sharing the same space. When deciding how much each person can afford to pay toward rent and household expenses, you'll need to disclose the amount of your income and your liabilities. If your earnings are on par with each other, a 50-50 split of the financial obligations makes sense. But if one of you brings home a significantly larger paycheck than the other, you might choose to divvy up the responsibility differently, say 70-30, suggest Stacy and Wynne Whitman, authors of Shacking up: The Smart Girl's Guide to Living in Sin Without Getting Burned. You should revisit this agreement whenever one partner's income level changes, such as one person goes back to school or the other gets a major promotion at work.

Something else to address is for what you are willing to pay. No one should feel coerced to live beyond his or her means or pay for an expense with which he or she isn't comfortable. If you have your own cell phone and won't use a landline, for example, let your partner know you aren't willing to pay for one. Or if you're paying your partner rent to live in his or her condo, you shouldn't feel obligated to pay for major repairs or renovations because you legally have no stake in the property value. We're not saying you should nickel and dime, but you don't want to resent your partner because you ended up paying for something you didn't think was fair.

Rule #2: Keep your finances separate

When it comes to controlling your personal finances, you should hold the reins. In this regard, it helps to think of your significant other as you would any other roommate. Never comingle your debt or apply for a joint credit card -- one bad move by your partner could damage your credit report. And don't combine your bank or investment accounts either. In case of a breakup, you could end up in a costly legal battle over the assets. "Or, even worse, your boyfriend could clean out your account and hit the road, leaving you with a broken heart, a mountain of bills, and not a penny to pay them with," warn the Whitmans.

If you are engaged to be married soon, however, you might consider opening a joint checking account to which you both contribute enough money each month to cover rent and other household expenses. Just make sure you keep a separate personal checking account for your individual expenses. That way, you won't have to consult each other every time you want to buy a new video game or a trendy pair of shoes. Plus, having a separate account makes it easier for you to surprise your lover with a birthday gift or romantic weekend getaway. After marriage, you and your spouse can discuss whether to merge your bank accounts completely or keep the separate approach.

Rule #3: Put your arrangement in writing

This isn't an issue unique to live-in boyfriends or girlfriends -- we've discussed the value of a roommate prenup before. This little piece of paper can help keep your trial of domestic bliss from becoming a nightmare. In it, you should detail how much each partner will pay for rent, who will cover what household expenses, when bills are due, and other space-sharing arrangements.

But didn't you opt for a live-in arrangement to forgo paperwork and legalities? Just be aware that without something in writing, you leave your wallet vulnerable. Besides, what's more romantic than committing to the well-being of your partner and your relationship? "The documents proclaim to you, your partner, your family, your community and the legal system that, though you choose not to marry or cannot legally marry, your relationship is important and valid enough that you're willing to put in writing your rights, responsibilities and obligations to that relationship," say Sheryl Garrett and Debra Neiman, authors of Money Without Matrimony. (See a sample live-in agreement.)

Rule #4: Keep major purchases separate and documented

Because you don't have the same legal protections as married couples in case of a split, it's smart to keep track of who paid what toward every major purchase. The easiest way to keep track of this is to make all major purchases separately, write down who paid for what on the receipt, and toss the receipt in a file. For example, when furnishing your new pad, you may find you're short of some essentials. So you might consider springing for the DVD player while your partner covers the cost of a new vacuum. This way, no one bears the full weight of furnishing the apartment, and you'll avoid arguments over ownership later if things don't work.

To afford bigger-ticket items, such as a living room set or washer and dryer, you may not be able to avoid splitting the cost. In this case, write down how much of the purchase each partner paid -- say you divided the cost 60-40 -- and what will happen to the property in case you two split. For example, who would get first dibs on the item? Or would you sell it with each person pocketing their portion of the proceeds?

You also should keep previous property separate. If you make all the payments for a car or a house, for example, don't add your partner's name to the title. Joint purchases, however, should be made in both names. For more information on property and other legal matters, check out Living Together: A Legal Guide for Unmarried Couples from Nolo Press.

Rule #5: Be smart about housing

If you rent an apartment, both partners should put their names on the lease. That won't keep the landlord off your back if your boyfriend or girlfriend doesn't pay, but if you end up in small-claims court trying to collect from a deadbeat, you'll stand a better chance of winning if his or her name appears on the lease. Also, if possible, consider signing a short-term lease, say six months or less. That will give you an out if your relationship doesn't turn out to be as enduring as you had hoped.

Don't even think about buying a home together unless you're both certain you're ready to make a long-term commitment to each other -- and to homeownership. Generally, you need to own a home three to five years to recoup the costs of buying. If you can afford it, it may be easier to buy a home yourself and charge your significant other rent to help you meet your mortgage payments. This way, there is no confusion about who owns the home.

But with house prices sky-high, pooling your resources could bring a purchase within reach and help you both build equity. If you decide to buy together, consult a real estate attorney to help you work out the legalities. The lawyer will also help you work out a fair selling agreement in case of a breakup. (See A Home for One for more information.)

If you are both homeowners already, and you are the one moving into your boyfriend or girlfriend's place, consider renting out your old pad rather than selling it -- at least initially, until you are sure you can stand your partner's quirks in such close quarters. And remember, in the eyes of the law, you would simply be a renter with no claim to the property, so you should not feel obligated to pay for renovations and improvements, say the Whitmans. Make this clear when you're discussing your financial arrangement.

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