At first, moving in with a significant other can seem like an easy way to save some cash. If you're already spending almost all your free time together, why not cut rent payments in half by giving up one of your apartments? There's also the savings on food and other incidentals that came come from sharing one roof (and one kitchen).
Those savings are small potatoes, though, compared with the potential costs of a breakup down the road. If you go your separate ways after sharing a household, disentangling your finances can mean being on the hook for utilities you're no longer using, dealing with a damaged credit score from delayed payments on shared accounts and paying for the extra costs of having to find a new home quickly -- not to mention moving all your things.
In a recent post on the money website The Billfold, an anonymous writer calculated that her recent breakup of a five-year relationship cost her just over $2,000. Her expenses included rent paid to a friend who let her stay in her guest bedroom after she moved out of her formerly shared apartment unit ($350), a U-Haul rental to collect her furniture and other items from the old place ($104.98), a storage unit for her larger items until she finds a permanent place ($488) and having to go from sharing the cost of birth control to paying the full price on her own ($79.80). Smaller incidentals, such as having to repurchase toiletries she left at her old place ($62.40) and gas for driving back and forth between her friend's place and her old place to pick up forgotten items and mail ($25), were also rolled into her tally.
The good news for anyone hoping to avoid this depressing and financially stressful scenario is that there are steps you can take to prevent it from happening. Some breakups are inevitable, but there's no reason they need to be accompanied by the pain of money woes. Here are five tips to keep in mind when you're considering taking your romance to the next level:
1. Think twice before moving in together. As you can see from the example above, moving in together makes a breakup much more complicated and potentially more costly. Even if you live in a pricey urban city where it's tempting to cut costs by splitting rent, you might want to also consider the longer-term impact on your finances should the relationship end.
2. If you do move in together, discuss a potential split in advance. This conversation might not be romantic, but it is practical. If you were to break up, who would get the shared couch? What about the cat? The Netflix membership? Spelling out the protocol in advance can help keep things more amicable if the end does come. Some lawyers even go so far as to recommend that couples write out an explicit agreement, similar to a prenuptial agreement, that details who would get what.
3. Avoid sharing credit cards, loans and other credit score-influencing accounts. Even married couples who get divorced can struggle with the aftermath of a shared credit card. If an account has two people's names on it, but only one person uses it after a breakup and then fails to make payments, the second person listed on the account can find her credit history (and score) damaged. Similarly, if a person moves out of a house or relinquishes a formerly shared car, but her name is still on the loan paperwork, she is typically still considered financially responsible for the payments by the loan provider. The easiest way to avoid this complication is to avoid sharing credit cards and loans.
4. Don't invest in items you can't take with you. If you're living in your partner's house and decide to invest $500 and a weekend of your time updating her kitchen, you're never going to see the payoff if you end up moving out. Similarly, if you buy a large television or bed together, you might not see it again after you move out. It can be easier to clearly delineate ownership of big-ticket items in advance.
5. Maintain your own bank account. If you start sharing bank accounts, each person has access to the other's cash. This method can make it easier to share household expenses, but if you break up, it leaves you at risk for getting cleaned out. Instead, maintain your own bank account so you're the only one who has access to your income and savings. On the same note, avoid sharing passwords to online accounts, or be sure to change them quickly post-breakup.
If you handle moving in together with aplomb, it might be a good sign about the future of your relationship. A recent survey from Experian Consumer Services found that perhaps because of the Great Recession, more couples are talking about credit scores before getting married. Now, almost two in three couples have this conversation, compared with just one in three before 2008. The survey of 1,010 married adults also found that 82 percent of couples now discuss their financial goals on a monthly basis -- a good idea for non-married couples who are living together, too.
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