Moving in with your boyfriend or girlfriend is undoubtedly a romantic and exciting occasion, and it’s easy to get caught up with picking out designs for cushions and focusing on starting your new lives together.
But what about when the honeymoon period ends, when you’ve unpacked all of the boxes and you realise you’re going to have to figure out how to manage the bills together? What’s the best way to make sure you’re both covering the rent or mortgage and all of the other expenses fairly?
The truth is that there is no right or wrong way for couples to manage their finances together – it’s completely up to the two of you. It really depends on where you both are financially and how you decide you’ll cover the bills together. Let’s take a look at the different options – without letting money worries kill the romance.
Keep it separate
If you’re both independent, you might decide you want to keep your money completely separate in your own personal bank accounts. This may also be the best option if one of you has a history of managing credit poorly, as this could affect the other one’s credit score if you open a joint account together.
The best way to do this is to make a plan for all of the bills that you’ll need to pay: rent or mortgage, electricity and heating, water, council tax, and home insurance. You should also plan for any expenses that you don’t pay monthly, such as the TV license. For bills that only affect one of you, for example, if you have a car but only one of you drives it to work every day, you’ll have to discuss whether you’ll both cover it equally or if just one of you will pay for it.
Next, you’ll have to work out how you’ll actually pay for these bills: will you cover the rent and your partner pay for the electricity and heating, or will you pay half of the total expenses to your partner each month? It doesn’t matter which you go for – as long as you both decide together and keep each other updated on when each bill is getting paid. After you’ve lived together a while and get to know each other’s spending habits better, you may decide you want to combine your finances a bit more closely.
A middle ground
If you want to link your finances, but still retain some independence, one way to do this is to open a joint account together, but still keep your personal bank accounts. Using a joint account is a great way to manage the budgeting of your household bills, without relying on one of you to cover the payments. You’ll have to decide whether you both pay in to this equally – if you earn vastly different amounts, one of you might want to pay in more. Opening a joint account together is a big step though, and if one of you has had problems with their credit history in the past, you might decide against it.
You’ll still be able to keep some of your own money to spend on whatever you want – meaning it won’t spoil the surprise if you decide to treat your partner to an impromptu present. However, you need to discuss what the joint account should be used for. Is it exclusively for household expenses, or is your partner going to be alright with you spending £100 from the joint account on Xbox games for yourself? Miss-using the joint account could cause friction and resentment between the two of you, so if you think you’re likely to be tempted by this, leave the joint debit card at home.
Paying the other an allowance
If one of you is out of work, in full-time education, or working as an apprentice, you may decide it’s best for the main earner to transfer a monthly allowance to cover any spending. This can get problematic, as if you’re not earning, you might start to resent being given ‘pocket money’ by your partner and having to ask them if you want to buy anything else. It might be best if you have an end-date in mind for when the other one will be able to pay their own way again – for example, when you go back to work after maternity leave or you finish your degree. That way, you won’t have to feel that you rely on your partner for money and can get some of your financial independence back.
What’s mine is yours
You could pool both incomes into your joint account, and this money will then be used to cover all of your spending, including household bills and any personal treats. This can make your budgeting simple, as you’ll always know that you have enough money to cover your rent or mortgage and utility bills. However, it could cause problems if you want to spend money on yourself, particularly if you have different spending habits from your partner.
If you’re the kind of person who doesn’t mind spending a few hundred quid on yourself now and again – provided you can afford to – you should discuss this with your partner before you decide to combine all of your finances. You might decide to put any big purchases on a credit card – that way, you won’t be spending a lot at once and you’ll be able to pay it off every month without it making too much of a dent in your joint account finances. Bear in mind though that if you pay off a credit card bill over several months, you’ll start having to pay off interest on this too.
When you move in with another person, it’s also important that you register to vote at the new property. This will ensure that the electoral roll is up-to-date, one of the first things that lenders look for if you come to apply for credit in the future.
You should also change the address for your bank account and credit cards to the new house. If you don’t, your monthly statements could go to whoever is now living in your old property. Not only is this a security risk, it is also important for you credit it can also mean that you’ll get your statements late or not at all – meaning it will take you longer to pick up on any mistakes on them.
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By Linzi Nuttall