Millennials are notorious for taking on a more non-traditional lifestyle. In fact, according to Pew Research, 14 percent of Americans ages 25 to 34 are cohabitating (and interestingly enough, boomers are beginning to follow suit, with the number of cohabitating adults over 50 increasing as well). With the number of cohabitating couples on the rise, it’s important to address the unique financial challenges that may crop up. We’ve created a list of top tips for cohabitating couples:
1. Have a frank money discussion. Living with your significant other brings a new level of responsibility that you will have to navigate as a couple. Make sure you’re on the same page when it comes to your living situation and goals. Figure out if your finances will be a joint or individual effort, and establish what each person is responsible for. If someone comes into the relationship with credit card or student loan debt, determine how that will play into their participation in household bills.
2. Divvy out expenses. Lay out an arrangement of who pays for what, or open a joint account that will cover each person’s portion of bills. If you’re opening a joint account, don’t put all of your money in it, but enough to cover your portion, and what is left can go to dinner or something for you to enjoy together.
3. Alternate big purchases. Divide and record who owns what big ticket items. It will be hard to figure out if you were to split up and don’t establish it in writing. It’s more common for couples to take out a mortgage together before they are engaged or married, be cautious and make sure the property is titled correctly and establish an arrangement for paying the mortgage.
4. Know your rights. As strange as it may seem, consider meeting with a divorce attorney. This does not mean that you are expecting the relationship to end, but rather, you are becoming familiar with your rights if that were to happen. Since living together isn’t a legal bind the way marriage is, it’s crucial to understand how everything is structured.