Love is grand. Let's get that out of the way. On a more pragmatic note, there are financial benefits that both significant others may enjoy by cohabitating. The loss of your privacy may be offset by the squeals of joy from your bank account. While you will not know if the emotional results will be a benefit or detriment to the relationship, you can have confidence in the more verifiable financial advantages of cohabitation. The true value of your potential benefits will depend on how you and your significant other agree to split expenses.

For purposes of clarity, we'll assume a 50-50 split for each of you to enjoy maximum "together" financial benefits. Whether this plan is a strong benefit to your relationship is strictly your evaluation. In most cases, your budget will welcome this option. Before you make the decision, consider the following suggestions.

Pre-Cohabitation Tips
Discuss the Money
Be sure that you and your significant other are on the same page. Talk about the dollars and how the financial part of this merger will work. Openly share your attitudes about money and how it should be spent. Agree on how the monthly expenses will be split.

Put It in Writing
Your agreements with your partner should move from discussion to paper. This is no time to expose your wallet or purse to inordinate risk. This need not be an indecipherable legal agreement; a
clear statement of the financial terms you've agreed upon will suffice as a gentle reminder or, if necessary, a valid contract.

Keep Finances Separate
Stay in control of your personal finances, just as you would with a roommate. Avoid joint checking and savings accounts until you become more comfortable with cohabitating.

Use Housing Smarts
Both significant others should appear on rental agreements or leases. If you're considering a lease, try to negotiate a shorter term (six months, if possible) to protect yourself if this merger doesn't work as you planned.

Typical Financial Benefits of Cohabitating
Reduce Rental Costs
This benefit saves you the most dollars, unless you eat outrageous volumes of food or only devour gourmet edible items. You'll experience a windfall if you live in a large city (i.e. New York, Boston or Los Angeles), as rents for semi-spacious apartments can approach $2,000 to $6,000 per month. Saving $1,000 to $3,000 per month should be a huge benefit to your bank account balance.

Reduce Utility Bills
Heating or cooling two apartments or homes will usually cost more than heating/cooling one residence. Depending on the insulation quality of different homes, your savings of splitting these bills could be significant. Spending for one, not two Internet connections and cable TV services can also benefit your checking account.

Lower Food Costs
Food costs seem to be in an ever-increasing spiral. While you can "eat local" to get fresher food and eliminate escalating fuel-driven transportation costs, visiting the supermarket will still probably be in your plans. You might, at first, think that savings will be elusive as both of you still need to eat. However, many single-person households tend to eat out, whether fast food or fine dining, which is much more expensive than preparing a tasty home-cooked meal. Cooking at home is much more enjoyable with you and your significant other. Once again, financial benefits accrue along with improved health quality.

Student Benefits
If you and/or your significant other are still students, formerly living in dorms with meal plans, together you might save hundreds, if not thousands of dollars. However, if you've been living in a dorm with a complete meal plan, averaging around $13,000 per school year around the U.S., sharing a home/apartment with your significant other could result in major dollar savings.

The Bottom Line
As you can see, there are potentially important financial benefits from living with your significant other. Emotionally, there are equally significant risks. Those risks exist in all loving relationships. The financial risks, should there be a breakup, are real, but often dwarfed by the potential financial benefits. Who knows, your loving relationship may improve as much as your bank account.

Related Articles
  1. Investing

    3 Small Steps to Maximize Your Investing Goals

    Instead of starting the New Year with ambitious resolutions, why not taking smaller manageable steps that can have a real impact.
  2. Investing

    7 Creative Ways to Save for an Early Retirement

    Take note of these out of the box steps you can take towards securing yourself an earlier, more comfortable retirement.
  3. Saving and Spending

    Saving $100 Now Is Better Than Saving $1,000 In 10 Years

    Learn why it is better to save $100 every year starting right now rather than $1,000 in 10 years, and find out the benefits of early saving and investing.
  4. Retirement

    Birch Box Review: Is It Worth It?

    Learn more about the convenience of the subscription beauty box industry, and discover why the Birchbox company in particular has become so popular.
  5. Personal Wealth & Private Banking

    Women, Invest In Your Financial Literacy

    Becoming financially literate should be on the to-do list of anyone who is not.
  6. Savings

    How to Save Your First $100,000

    Saving your first $100,000 requires the discipline to put money away and control your spending. But just remember – the savings get bigger as you go.
  7. Insurance

    3 Reasons To Get High-Premium Health Insurance

    Health insurance is expensive, which is why many people opt for the lowest-premium plan. But that may not always be the cheapest.
  8. Retirement

    3 Reasons Why This Is the Perfect Time To Visit Greece

    Discover three reasons why now is the best time to visit Greece, including the favorable exchange rate and the country's unrivaled hospitality.
  9. Savings

    Building an Emergency Fund

    Do you have enough savings to cover the costs of unforeseen crises? We show you how to plan ahead.
  10. Retirement

    How Women In Transition Should Mind Their Finances

    A whopping 70% of female clients leave for a new advisor after the death of their husband or a divorce.
  1. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  2. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  3. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>
  4. How do I know how much of my income should be discretionary?

    While there is no hard rule for how much of a person's income should be discretionary, Inc. magazine points out that it would ... Read Full Answer >>
  5. What proportion of my income should I put into my demand deposit account?

    Generally speaking, aim to keep between two months and six months worth of your fixed expenses in your demand deposit accounts. ... Read Full Answer >>
  6. How do I use the rule of 72 to estimate compounding periods?

    The rule of 72 is best used to estimate compounding periods that are factors of two (2, 4, 12, 200 and so on). This is because ... Read Full Answer >>
Trading Center