Whether you’re in your 20’s, 30’s or even 60’s. Moving in with another human is a big thing. It can open doors to new possibilities in that relationship. But it can also get very messy if you’re not careful with your finances.
We put together our top tips for managing money when moving in with someone else.
Be honest from the start
Money isn’t the easiest topic to approach in a relationship but it’s important to get a clear picture from the start.
The best way to make sure that things go smoothly when it comes to managing your money, and making sure you have enough for bills, rent and food is to be honest with each other.
Be honest about your income and what you can and can’t afford so that you’re both on the same page.
This might mean you need to think more realistically about the standard of living you’re able to afford.
Make sure you’re on the same wave length
Moving in together is a big step in any relationship so it’s important to make sure that you both know each other’s goals going forward.
If you’re looking to save for a mortgage, then make sure that the other person is invested in this as well. The same goes for if you want to save up for a holiday together.
Make sure you talk about what your financial goals are so you can work towards them together. You don’t want to book a holiday if the other person can’t afford to pay their half.
Budget before you buy
Whether you’re renting or buying a property make sure that you work out your budget before you commit to anything.
Although you might like the idea of living in a city centre it could increase your outgoings as rent in the centre of a city may be higher. Plus, it can be even more tempting to go out if you leave nearer to bars, restaurants and cafes – which can add to your overall outgoings.
It might be cheaper to live further away from the city center and commute in every day if you work in the city. The added travel costs are outweighed by the lower rent.
Factors like the council tax band you’re in, travel costs and rent can determine how high or low your monthly bills are. Make sure you take these into account when budgeting.
Have an account for rent and bills
When you live with other people who are contributing to bills and rent your bank statements can start to get confusing with all the different transactions and transfers flying around.
You might find it easier to set up a joint account just for the household direct debits. That way you can transfer a set amount over each when you get paid to cover the cost of the shared outgoings.
You could even use this account to add extra money to cover food and other services you both use such as broadband and TV subscription packages.
Seems like a good idea but, it’s important to remember that you’ll both be responsible for any debts or overdrafts – and opening a joint bank account may affect your credit rating, so don’t rush into it.
The Money Advice Service has a great article on things to consider when splitting your finances.
If you decide a joint account isn’t right for you, you could consider opening another account for bills, for yourself. It will be easier to keep your own spending money separate from money you need for bills and rent - and it will make sure you always have enough to cover the bills without having to think about it.
Try and build up a cash buffer
Although when you first move in with someone it might take time to get your ducks in a row, it’s always good to make sure you can put a bit of money aside every month and start to build up a cash buffer.
We recommend people to have at least 3 months’ worth of outgoings saved up in a cash buffer.
This can be used to help pay for any unexpected bills that may come up should you or your partner fall on hard times.
Work out what’s fair for your situation
When moving in with someone it’s important to make sure that you‘re realistic about both of your incomes and what you can both afford to pay.
If you or your partner is on a much higher income, splitting everything right down the middle might not be the fairest option.
Instead maybe consider working out a ratio or percentage you each should pay towards household items and outgoings in relation to the amount of money coming in.
We’ve seen some great examples of how couples, including some of our team, split their finances:
One of our team members lives in Sheffield, she commutes via train everyday which takes a fair chunk out of her salary! As her boyfriend owns their flat, works in Sheffield and doesn’t want to move, he pays the mortgage and she pays her commuting costs.
Some people pay different amounts into joint accounts, for example if someone earns £1,500 and their partner earns £2,500 per month, he pays £750 and she pays £1,250 into their joint account for bills and savings.
Moving in with someone is a big commitment and it can take time to adjust, especially when money is involved. But as long as you’re able to talk about things and work together you will be able to get through it.