Fresh out of college, my boyfriend of one year and I knew that we wanted to get married.
We were in no position, however, to afford a wedding. Neither one of us wanted to live with our parents during our pre-engagement, nor did we want the expense of living alone. We decided, instead, to join the growing population of cohabitating couples.
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After the excitement of finding an apartment we loved wore off, we decided how much we would each pitch in for the bills, and agreed on 50/50, with completely separate accounts. He was working in insurance sales at the time while I held an entry-level public relations job. We figured our financial issues were solved.
We weren’t opening a joint account or making a major purchase together, so not much of a discussion was needed. But over time, we found that our quick money chat didn’t cover nearly enough of the issues that would eventually crop up.
Here are the five biggest money mistakes we made when we moved in together—hopefully, you won't do the same.
1. We Let Him Take Charge of Paying the Bills
Tim* took most of the shared bills in his name, just to make things easy. Our bills were emailed to his account, so I never saw them and was oblivious about when they were due. While I kept and stuck to a careful budget using an online budget tracker similar to the LV Money Center, I wasn't as diligent when it came to calendaring out my bill payments. I always had the money I owed, but I would wait for Tim to ask for it, which I later found out made him uncomfortable. He would pay my share while he worked up the nerve to ask me for the money ... and him paying for me made us both uncomfortable.
How You Can Do Better: It was only after a year of living together that we devised a system that worked. I knew that every month, my share of the water bill came out to roughly $10, electricity roughly $120, Internet roughly $50 and so on (we split groceries 50/50 right at the cash register). I'd give Tim one lump check at the first of the month—the same day we paid rent individually—for my share of the bills. I treated bill pay as if it were rent, and thinking of our shared financial responsibilities in a business-like way made it easy for me to remember to pay on time ... and it took the pressure off Tim. So many money issues involve emotions as much as dollars and cents. Lesson learned.
It was only after a year of living together that we devised a bill-paying system that worked.
2. We Ignored How Our Spending Affected Each Other
Since our money was 100% separate, we often failed to consider how our financial decisions affected each other. For example, when I had a week-long break before starting a new job, I wanted to celebrate my new position with a trip to Costa Rica, which we would split 50/50 as we did everything else. While Tim agreed to go, he later told me the trip put him into $1,000 of debt that took him four months to pay off. I felt terrible.
Yes, he chose to spend his money, but it was clearly at my urging. I eventually asked him why he didn’t mention his money trouble while I was planning the trip, and he said the emotional high of the situation made him feel he couldn’t tell me no. Since I live in perpetual state of thinking I can't afford things, I always speak up when I can't cover costs, and it never occurred to me that he wouldn't.
How You Can Do Better: Recognize that no matter how separate your bank accounts, your shared lifestyle will impact your partner. By anticipating what Tim would say to my idea of a trip ("Yes!"), I made it hard for him to communicate his actual thoughts. Instead of sweeping him away in my excitement, I should have explained my thinking, asked for his opinion, given him a way out and approached the conversation more like this:
"Hey, I have this one week between jobs, and I probably won't have time to take vacation for a year or so. I'd love to take a trip with you, somewhere that's relatively close, not too expensive, but super fun. I've been thinking Costa Rica. I've finally saved up a bit from my job, and I have wanted to take this trip for the past couple of years. What's your honest opinion? I bet I can get Alex* to come along if you want to pass on this one, or I can travel by myself."
And remember: If you find yourself in the awkward position of being unable to afford something your partner wants you to buy, it's ultimately up to you to speak up.
3. We Never Anticipated a Serious Money Problem
A few months after moving in together, Tim quit his job selling insurance. I tried to stay cool and support him emotionally (as I had known that he was feeling unhappy and unsuccessful for a while) but I secretly panicked. I was already living paycheck-to-paycheck on a $26,000 salary with only a few thousand dollars in savings—was it my job to support both of us if he couldn’t find work? I knew he had saved the money from a bonus he'd received a few months back, but that wouldn't last forever. We had never planned to merge finances before getting married, so what would I do? This spiral of confusion could have wrecked our relationship for good.
How You Can Do Better: Having his-and-hers emergency funds would have alleviated a lot of my panic. An emergency fund is a savings account holding (ideally) six months of net pay, to be used only in very specific situations:
- You’ve lost your job, and need to continue paying rent, bills and other living expenses
- You have a medical or dental emergency
- Your car breaks down, and is your primary form of transportation
- You have emergency home expenses—e.g., your A/C breaks down in 100-degree weather, your roof is leaking, your basement is flooded, your toilet is overflowing, etc.
- You have bereavement-related expenses, like travel costs for a family funeral
In the end, we dodged a bullet, since Tim got a new job in only three months—and enough part-time work to hold him over in the meantime—but I quickly realized how important those savings are, and we started to shore ours up.
4. We Wouldn't Compromise on Spending
Tim and I came from very similar upbringings, but we have different spending priorities. I am a "saver" by nature but am willing to spend on travel and other big life experiences. Tim likes making day-to-day life special, preferring to spend on things like organic groceries, date nights or tickets to a ballgame.
I felt resentful for some time, like he got all the nice things while I was busy saving for our future. Truthfully, I benefitted from his spending as well (after all, he wasn't going on date night alone), but if it were my money, I would have saved it instead. Though I didn't really have plans for my savings, in my mind, the older you grow, the more money you need. Weddings, houses, babies, kids' college funds, travel, retirement ... why not be prepared for all of it with a big cushy savings account?
How You Can Do Better: Really, who was I to say that Tim had to save for some as-yet-unnamed future goal? One of LearnVest CEO Alexa Von Tobel's tips for open communication about money is to "keep common goals in mind." If we had determined and pursued specific savings goals together (say, saving for a down payment on a house) and contributed to those equally as we did to everything else, I could have felt comfortable that we were saving what we needed to, and less conflicted about his daily spending.
5. We Thought One Money Talk Was Enough
After three years of living together, we felt ready to get married. So we established a wedding budget that we would split 50/50 from our separate bank accounts. Since we would soon be married and merge our finances, I started seeing all of that wedding money, both Tim's and mine, as "ours."
If Tim went into debt paying for his half of the wedding, that debt would soon be mine, too! I kept trying so hard to reduce our expenses (like saving $1,000 by doing my own flowers) and keep us under budget, but I felt guilty when I couldn't cut back, like on our catering bill. Tim was confused about why I was so anxious about sticking to our budget, and I couldn't explain it to him without getting defensive.
How You Can Do Better: Make regular, low-pressure appointments to discuss your finances. We set up a monthly financial meeting, called “The Wine and Bourbon Financial Summit,” which we still do to this day. If you'd like to set up your own "summits," LearnVest and Chase Blueprint's free webinar, The Money Talk, can help you figure out how to get started, what to discuss and how these conversations can help. The summits have worked for us: Six months after we got married, we bought our first house.
*Names have been changed.