August 14, 2013
Let's Talk Cohabitation: The Money Edition
When you move in with a special someone for the first time, there's a lot of excitement and a little nervousness. Here is someone who will see you without makeup on, with whom you will share a bathroom, who will witness your ups and downs. But there are a lot of little logistical things that you don't necessarily even think to get nervous about or make preparations for until they come up, and then they become topics of awkward discussions and possibly arguments. Cohabitation is a lot different than marriage in a lot of ways (unless you're living together with the agreement that you have no desire to get married but will function as a married couple); it's a high commitment relationship (I mean, there is a contract i.e. lease involved) but there is no promise of forever. You pay separate taxes. You're probably not thinking about children yet. So, unlike marriage, where you join assets and start a life together, you plan on forever even if it doesn't work out that way in some cases, cohabitation is more tentative. In order to cover everything related to cohabitation I would have to write a whole book, or at least an extensive series of blog posts, but here's the financial side of things as I see it. Whether you're getting ready to move in with someone, have just moved in with someone, or are simply considering moving in with someone, here are some of the financial things to consider, discuss, and make a plan for (This is designed with a S.O. in mind, but many of these can also apply to platonic roommates. Also, the language is set to his and mine since that's my situation, but please plug in the pronouns that apply to your situation).
1. Rent, bills, and other set finances
This is probably the most obvious one, but I feel it should be mentioned just because there is no one way of doing things and a lot of people think it's impolite to talk about money. It is, and it sucks, but when you live with someone it's a topic that comes up a lot. Andy and I split our bills down the middle--rent, water/sewer/trash, electricity. If one of you makes more money than the other, you may want to split things differently. I know some people take charge of certain bills, like I pay cable and internet and you pay electricity, so you have to decide what you're both comfortable with.
2. Optional monthly fees
Optional expenses like cable, internet, and Netflix should also be considered. I don't feel like I need cable, but Andy really wanted it. We talked about it, and at the price we were able to get it I felt okay paying for half with the caveat that if the price went up we would re-discuss. If one of you absolutely does not want to/have the ability to pay, the other has to consider if they will do without or pay the full amount. Will you each keep your own Netflix subscriptions or share one?
3. How separate do you want to keep your stuff?
Presumably, you are both coming in with things of your own and will be sharing many of these things like furniture and dishes with the other. Presumably, if the relationship were to end you would leave with the things you came in with no argument. But what about the stuff you acquire during the relationship? For example, would you go in together for a big ticket item like a flat screen TV? Or do you want to be able to point to things and clearly say that's his and this is mine? Andy and I have chosen to keep our purchased stuff separate at this point, but we have been given some joint gifts by family members.
4. Will you share groceries?
This goes along with the previous point, but is a slightly different issue because it's not something you keep. You have a couple of choices with groceries. You can choose to keep things separate, meaning each of you pays for and consumes you own food, you can split groceries, or you can do a combo of the two. Andy and I cook a lot, so we split most of our groceries. I'll talk more about our shopping methods in a different post, but basically we agree upon a dinner menu for the week and split the cost of those meals, as well as staples like eggs, milk, and bread. We also have individual items such as lunch foods (which we usually eat separately), snacks, and sweets that we get for ourselves, so we pay for these ourselves. To make checkout quick and easy, I put the whole total of the groceries on my credit card, then go home and highlight our individual items on the receipt. I deduct the cost of our individual items, divide the remaining total in half, and then add on the cost of his individual items, resulting in the total he owes me for that shopping trips. Usually he writes me a check every couple of week for his grocery money and I pay off the credit card.
5. Uneven Expenses
I have a car. Andy doesn't. He got along fine without a car before I came along, enough that he doesn't want to get one of his own, but he likes being able to use mine in bad weather or when he needs to get somewhere quickly or far away. Also, anytime we are going somewhere together, we take my car (obviously). For the most part, I am happy to let him use my car. However, I have the added expenses of car payment, care insurance, maintenance, and gas that he doesn't, yet the convenience of having a car on hand. For now, he has the financial and chore responsibility of the outside of the house as a way of evening this out slightly. He is responsible for lawn maintenance, including cost of tools, etc. He also has permanent trash duty. When we go on trips or anything that requires an unusual amount of gas, we split the cost of gas, and if he uses an unusual amount of gas on his own, he pays for it. Sometimes he'll buy me dinner or drinks when we're going out instead of chipping in for gas. The burden of payment still falls on me (and I can totally see why he wouldn't want to pay for it, since he didn't ask for the car and has no rights or ownership to it), but we've done our best to make it less of an issue. Trust me, you do not want to not address issues like this, because these are the ones that most often end up with passive aggressive behavior due to unhappiness or irritation.
This is probably the area in which Andy and I have been least successful, since neither of us are organized or super restrained in the kind of way that good budgeters are. However, having at least a general idea of how much money you should be spending on certain kinds of things is really important. When you add up all of your fixed monthly bills, how much does that leave you? How much then would you like to spend on groceries? How much does that leave you for dining out, shopping, and entertainment? How much can you save each month? Since the person you will likely spend the most time out with is the person you live with, you should both have similar budgets in these areas, unless one of you is going to pay for both of you for those types of activities or one of you goes out more with other people than the other does. Otherwise, one person will be wanting to go out more or to more expensive places and the other will be put in the awkward position of having to say no, I can't afford it, or make the bad decision to charge it. If you like to go on trips or are planning for a wedding, you might like to agree on an amount for each of you to save each month.
Those are the big conversation topics for me, and the ones we had to work to find amicable situations with most prominently. What money advice do you have for cohabitators, or what questions do you new cohabitators have?
Yours Truly, Jen