Moving in With Your Partner
“Love is blind”, a common phrase and sadly a more common reality particularly when it comes to our finances. Deciding to move in with the person you love is a big step forward in a relationship but have you had the money discussion?
It is one thing to know your partners interests and personality but we avoid asking questions about finances, spending habits and savings as these topics are romance killers. When moving in together it is vital that you have this conversation and understand how each of you manage your finances and the financial commitment that you are both going to make towards your home together.
5 Questions to Ask:
1. Natural Spender or Natural Saver?
Both of you will fall into one of these categories and it is important to understand exactly where you both lie. This is where you need to be completely up front about credit history, debt, assets and income, and discover whether your money habits and goals align. This will also expose any potential inhibitors to attaining a rental property or a mortgage; for example, if one partner has a bad credit rating it will be more difficult to attain a home. As a couple you need to decide how to proceed with these kinds of obstacles. It is difficult to completely change where you naturally fall so rather than asking each other to change being a spender or saver, you can ask the question, “how do we as a couple optimise and maximise our strengths?”
2. Who is Signing the Paperwork?
If you are renting or buying a home you will have to sign paperwork which ultimately gives responsibility. Will you both legally share responsibility or will only one of you sign documents? When buying, if only one of you signs the contract for sale than only that person owns the house. This might suit you both best and might mean that the other partner contributes towards the mortgage privately. When renting you should make sure that both of you are on the lease. This means that you are both liable for rent and damages and have equal rights to the property.
3. Joint Bank Accounts?
If you are going to live together and share expenses it makes sense to create a joint bank account. This does not mean that all your money goes into this account. This could become just the ‘household expenses’ account and contribute towards rent, groceries, the mortgage, electricity, internet, etc. You may decide on a weekly or monthly amount that you both contribute dependent upon your earnings and keep other separate accounts for personal or recreational spending, (or buying surprise presents for your partner). Putting all your money into joint bank accounts can become a risk for the future. If things go sour in the relationship you don’t want to have to spend long hours and big money on a major legal battle.
4. What Are Our Financial Goals?
Sharing your personal financial goals as well as creating joint goals will both help your financial situation and your relationship. Having a common goal to work towards creates an extra sense of unity and excitement. Whether you plan to save for a house or a big holiday, doing this together and seeing the fruits of your joint effort tighten your bond and increase trust and respect. It will also help teach you how to budget as a couple and realign your financial priorities.
5. What Happens if Things go Sour?
No one wants to discuss the worst-case scenario but it is important to have a plan ‘just-in-case’. In a break-up, a plan might include discerning ownership of possessions and / or pets, what becomes of the property (to sell or who would move out), splitting of excess funds in combined accounts, etc. Make sure to have this agreement in writing to refer to should the scenario arise. Couples can sign a legal cohabitation agreement when they first move in together, providing each with some protection should the relationship end. If your property needs to be sold contact one of our experienced sales team at Peter Hunt Real Estate and we will happily help you through the process. In case of death it is important to have included your partner in your Will. If you’re not married than your assets and belongings will not go directly to your partner, you will need to explicitly direct this in your will. You may also want to appoint them as your Power of Attorney. This will give your partner the authority to make decisions in incapacitating accident or illness.
Moving in with your partner is exciting but make sure to create a solid financial plan as it is also a major financial commitment.