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.
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.
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.
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