In 2016, I moved into a new apartment with my now fiancé.
Moving in with a significant other brings a lot of new experiences.
Sharing a space, seeing each other every single day, and not having as much opportunity for alone time are just some of the things that come with moving in with someone.
Another thing that comes up, but that many people forget to consider, is the question of money.
How will you handle your money and split expenses?
Moving in Together
We decided that we wanted to move in together early in the year.
Living in the Boston area, that meant that we had plenty of time to start preparing, as the vast majority of rentals become available in September.
We agreed ahead of time that we wanted to split the moving expenses and furniture expenses evenly, so as we bought different items for our new home, we made sure to track what we were spending so we could make sure that the expenses evened out.
To keep things easy, we used an app called Splitwise. Each time one of us bought something, we’d enter it in Splitwise.
The app keeps a running tally of the things that you and the person you’re splitting expenses with are buying. It displays the amount that one person owes to the other, and makes it easy to settle up using cash payments or electronic transfers.
This system worked quite well, making it easy for us to split expenses while we went through the moving process.
Shared Expenses Pile Up
Once we moved in together, we continued to use Splitwise to split expenses.
In the first few months, there were a lot of shared expenses that we had to pay: a new microwave, a set of matching dishes to replace our mismatched ones, all the kind of stuff that you don’t realize that you need until you move into a new place.
We figured that after the first few months, we’d have gotten all of the shared things that we needed and that there’d be far fewer shared expenses:
- utility bills
Over the next year, we quickly realized that the shared expenses would keep piling up.
Uber rides for date nights, takeout orders when we didn’t want to cook, and all variety of shared expenses that we would have to log and track to make sure we split the cost properly.
How We Merged Our Finances
After a year of living together and a number of serious conversations, including planning for the future where we would get married, we decided that it would make sense to merge our finances.
Rather than having her money and my money, we would have our money.
This would remove the need to carefully track who paid for what and the need to pay each other back for every little thing.
To properly merge our finances, we used a few different tools.
Joint bank account
The most obvious thing you should do when you merge your finances is open a joint bank account.
In our case, I already used an online bank for my checking and savings account, which I used for my spending money and emergency fund.
I added her to both of those accounts and we moved her money into them. We are both able to access the account whenever we need to and all of our money is safely located in one place.
We also edited her direct deposit to send money directly to our now joint checking account, joining my direct deposits which were already deposited there.
Using an already existing account and converting it to a joint account is the easiest way to merge finances.
It helps avoid the headache of changing payment information for all of your accounts and lets you maintain access to your money during the merging process.
Authorized user on credit cards
We both regularly use credit cards, both for the perks they provide, like extended warranty protection, and the rewards that they pay.
We looked at the different credit cards that we each had and decided which we wanted to continue to use going forward.
We then made each other authorized users on those cards.
We also changed the payment account for these cards to be our now joint checking account so all payments
This made it easy for either of us to pay when we went out or to go grocery shopping using joint money when only one of us was there.
Keeping some things separate
One thing that we wanted to do when we merged our finances was make sure that we each had some spending money to ourselves.
Though we now had a joint checking and savings account, we both opened individual checking accounts that the other cannot see.
We set up automatic transfers so that each month, we get an allowance for personal spending.
We use that money for spending on things that we want that aren’t joint expenses, like books, games, or gifts.
This gives us the chance to spend without guilt.
If you’re thinking about merging finances with a significant other, I found these tips to be very helpful.
Talk about money early and often
Many people don’t like to talk about money.
They might find it awkward or have learned that it is something that you should talk about with other people.
If you’re planning to merge your finances with someone, talking about money is crucial, and you need to do it regularly.
Sit down and talk about your finances, what kind of accounts you have, and include rough numbers.
Talk about your debts, if you have any, and what kind of payment schedule you’re on. You should both know exactly what you’re getting into when you merge your finances.
Separating your money can be difficult and messy, so you don’t want to find any surprises, or deliver any surprises to your partner after you finish merging your money.
Even after you merge your finances, sit down on a regular basis to talk about money. Discuss whether you’re both comfortable with where you are financially, and any goals you might have.
Build your budget together
One of the most difficult things to do when it comes to money is to build a budget.
You only get so much money in your paycheck, and you need to ration it out to cover rent, food, bills, and hopefully some saving for the future.
When you merge your finances with someone else, you become a financial team.
You need to budget together to cover both of your priorities.
You might want to go shopping for new clothes once per month and she might want to see a few hockey games every season.
Unless you sit down and budget together, you won’t know what each other wants, and you won’t be able to properly allocate your incomes.
During one of your conversations about money, you should both build a budget and then compare them. See where you agree and where you differ. You can use your individual budgets as a template to create a single merged budget.
Avoid guilt for personal spending
Money can be a very difficult thing and it can definitely cause tension within a relationship.
One thing that can help avoid this is allocating some money for personal spending, and making sure that you don’t make
When you build your joint budget, you should allocate some money to each of you for personals pending.
Either set up individual bank accounts for each of you to hold that money, or keep it as cash in an envelope.
Whatever works, so long as you don’t spend time looking at and worrying about what the other person is spending their personal money on.
By making sure that you both have some guilt-free, no questions asked spending money, you can reduce a lot of the tension that can be caused by what you or your partner sees as the others’ unnecessary spending.
Align your investing goals
If you’re merging your finances with someone else, you’re committing to staying with them for the long-term.
You should take the time to talk about your investments and your investing goals.
Do you want to save for a down payment on a house?
Are you trying to retire early?
Whatever your investing goals may be, make sure that they are in line, and adjust both of your asset allocations to meet your risk-tolerances.
Merging finances with someone is a big step.
Having a plan and knowing the pitfalls that you may encounter can make the process much smoother and easier to manage.