Welcome to “Try Me.,” Elite Daily’s new advice column that shares the tough love your friends are too afraid to give you. You’ve got questions and we’ve got answers.
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We promise to tell it like it is.
I’m embarking on a new chapter in my life and I need some guidance.
I’m moving in with my long-term partner in three months. I’m excited (it’ll be really nice not having to bring two pounds of ground turkey meat from my place to his!), but I’m also a little scared. I think it’s because I’m unsure of the financial implications.
I’ve never done this on my own before (moved in without someone’s parents lending advice) and I don’t even know if I’m asking the right questions.
What are my financial risks and gains? Should I buy or rent? And can we go over renter’s insurance? I’m finally earning my own money and am responsible for my own accounts, and I want to be sure I’m making the best choices (and maybe even save, if I can swing it!).
This is an important moment in my life and I want to be prepared. I couldn’t feel more confident this is the right decision for me -- I want to feel that same way when it comes to my logistical knowledge.
Moving In Migraines
Dear Moving In Migraines,
We like where your head is at! It sounds like you know a lot more than you give yourself credit for.
Moving in together is kind of like committing to watching "Lost" again: There's a lot to consider; it’s good to seek out others’ support, and, in the end, you’re going to really enjoy it.
Here are five practical considerations to make when moving in together:
1. Splitting costs requires a formal conversation.
You can do this. The key is to communicate with each other effectively.
For example, before you and your partner even begin to look at spaces, you should talk through all aspects of your money habits, including income, debt, spending habits and current budget.
Once everything is out on the table, you can go over how much each person will contribute to rent and how you'll afford shared expenses like cable, groceries and electricity.
Consumer money expert at Intuit and Mint.com spokeswoman Holly Perez also strongly suggests getting everything in writing. She says,
Sometimes being in love and moving in together can blind you from the reality that breakups happen, but getting all cost divisions and spending responsibilities in writing as they’re established can save you both a lot of hurt down the road.
This way, you have a clear understanding of who gets to stay, how your bills will be handled and where Fido is going after the split.
2. Budget for rent first; this isn’t an episode of “Friends.”
The first expenditure you need to determine is what you can realistically spend on rent. Perez advises,
The general guideline is to spend no more than 25 percent of your income on rent, though in some expensive cities like New York and San Francisco this may not be realistic.
But you also mentioned you want to save money (always a financially sound idea!), so it’s important you not only strive to remain close to your 25 percent guideline, but also factor in the amount of money you want to save and any debt payoffs, like student loans.
You said you’re making your own money -- that’s pretty sweet. With many couples just starting out, it’s common to see an income disparity between the two people. Holly adds,
Establish a percent divide that you are each comfortable with based on compared income. Establish a groundwork for who buys what and how frequently, and be prepared to review and adjust your system after one month, three months, etc.
You can always revisit these numbers again if you or your partner receive a promotion or degree. There are even budgeting apps that can help track your spending and understand where you are putting your money.
3. Purchase renter’s insurance before you buy the new duvet.
Something first-time renters forget to ask about is renter’s insurance. Holly recommends,
You should definitely have renter's insurance, as it provides a needed safety net for many unfortunate situations like an apartment fire, in-apartment accidents and stolen goods.
You and your partner should each purchase your own renter’s insurance when you move in together, so you have a safety net in case things literally go up in flames. Why two separate accounts? Your partner’s policy doesn't cover your stuff -- like your laptop, TV, tablet and his PS3 -- and vice versa.
Thinking about moving into your partner’s pre-owned pad? Holly suggests your partner "should have homeowners insurance and you should plan to take out your own renter’s insurance policy,” particularly when moving in with someone for the first time.
4. Saving is sexy.
There are ways to save together, so it’s not just one person cutting back. Remember that talk we suggested having back there?
According to Holly, you should also establish short-term and long-term financial goals. Sacrifice a daily salad or cut back on cable (there’s streaming!) or do it the old-fashioned way and collect money each week for a vacation.
If you can’t imagine life without freshly-chopped vegetables, try rewarding each other in free ways instead. Saving money will feel like less of a “to do” when there are incentives involved.
“Most importantly, make saving a team activity,” adds Holly.
Have a “Chopped”-themed dinner where you cook the only five items left in your fridge together; look on deal sites for theater tickets.
You don’t have to skimp on the fun times to afford other long-term costs.
5. Join a mailing list before you join bank accounts.
When it comes to joint bank accounts, take it one step at a time. First focus on moving in together before you agree to formally merge your finances. You don’t want to add financial stress to your relationship if one of you can’t handle your funds.
If you’re really set on combining your accounts, Holly recommends maintaining three separate accounts: Yours, Mine and Ours. She says,
Contribute a small portion of each month’s paycheck into the shared account to cover household expenses and ensure you are each in agreement about what qualifies as a household expense.
For more expensive, longevity purchases, like a big screen TV or couch, divide the costs by item (and comparable price) so if you were to break up, deciding who keeps what is already clear.
Got all that? Don't worry, the remaining things to figure out are for you and your partner to explore together. This is where the real fun begins.
You're gonna be great,
Ready for the next big step but not quite ready to make the leap alone? State Farm can help. They’ll be there for you with guidance and support, empowering you to live life confidently every day.