Are there different ways of merging/not merging your finances when you cohabitate with your sweetie?
My girl is moving out to live with me, and we’re really serious about one another. The thing is, I worked and scrimped and saved to get out of debt and she is just finishing school and has got lots of debt. About 4x as much as what I currently have in savings. I cringe at the thought of losing every bit of savings I have to pay off her debt. But it seems like if we’re sharing rent, utilities, food, etc. Is it just an illusion that our finances are even separate?
Absolutely there are, and most people I’ve heard advise keeping it all as separate as you can for as long as you can. How you handle this is something you will have to work out with a serious conversation. Simplest way: Your money is your money and her money is her money. You pool what you need to to pay bills, but her debts come out of her money. If that makes it so that a larger portion of the bill-paying falls to you, you may have to re-examine your expenses.
He moved in, he wrote me a check for part of the mortgage (I had a house), half the utilities. He had no car, I covered insurance and gas - he bought groceries.
We got more serious. We got a joint checking account. We each put in enough to cover monthly bills in an approximately proportional percentage.
We got married. The joint checking account became our primary account. We then each got an allowance transferred out for our needs (both got the same amount).
We had kids - allowances became silly and now there is just “our money.” We sold “my” house and bought “our” house.
Be cautious with debt - as long as he had debt, we kept the even expenses thing. Once he got rid of his debt, I was willing to share my assets with him. YMMV. You may wish to consider, should you be serious enough to consider marriage, a pre-nup even though you possibly don’t have a lot of assets. At least itemize out proportionally what you both came in with. Not terribly romantic, but handy.
My SO and I maintain separate finances. I pay most of our expenses because I make about twice what he does and am more on top of my finances than he is. The situation isn’t the ideal, perfectly-equal division of finances, but I would rather pay for more stuff and leave my SO with fewer financial worries than insist things be equal and force him to live like a dog to afford his share. I would rather he build up his savings than go 50/50 with me on expenses right now.
We are both well aware that it’s not a fair arrangement (he dwells on it far more than I do), but I think it’s our best option.
Not trying to be a wet blanket, but definately keep your finances separate as long as there is no formal legal commitment in place. All it takes is one good fight for her to walk out without even a thanks for dumping your savings into her debt.
Mrs. D_Odds and I keep our seperate finances separate when we got together, and started contributing (by percentage of salary) to the household (joint) checking and savings.
We pool resources on common needs – mortgage, utilities, groceries, travel, etc.
The debts we came into the relationship with remain our own (i.e., I pay my credit cards and student loan bills, he pays his credit cards and business loans).
Is your girlfriend working? If not, I foresee problems. I’d recommend treating this as much like a platonic roommate relationship as possible for at least the first year (from a financial perspective). When I had roommates, this meant alternating months of responsibility for the act of paying the bills and collecting payment for 50% of each bill from the other person.
Live within each of your means, with you perhaps occasionally treating her to something special, just like you would probably do if you were living separately and dating.
I guess I’m going to be the first (only?) voice to say that my wife and are are as joint as can be when it comes to finances.
Our paychecks go into the same bank account. Our savings goes into the same account. This cash pays the mortgage, utilities, and payments for both cars. We make all our day-to-day purchases on the same credit card account. We pay that off monthly from the aforementioned cash. When either one of us wants to buy something small, we just do it. When bigger purchases are involved, they get discussed. It’s not asking permission as much as informing. (“I looked at the budget, and I think we can afford this…just be aware that a new computer’s worth of money is about to go missing.”)
We don’t argue about money. Ever. We can’t because neither one of us knows whose money we’re spending. And neither of us is more stingy or spendy than the other, so there’s no issue with one of us hogging all the discretionary income.
We kno most people don’t eaily operate this way. It probably helped that we started in very similar finanical circumstances when we got married 5 years ago. We were recently out of college, and both had mostly debt and no real assets. For us, sharing half the common debt was about the same as keeping our own.
It’s easier to keep things separate than you think. My SO and I have been together 7 years, lived together for about 5 and bought a condo last year. We each have our own bank account, he handles the bills and I simply transfer my share into his account each month. The only things we regularly pay jointly are household expenses. He pays for his credit cards and car, I pay for mine.
We split the expense for travel, unless one says they want to pay. We split the bill for meals out and so on. It’s worked really well for us and we really never fight about money. The only money type arguments are over when we should have the bathrooms and kitchen remodeled, buying large home items like a new TV, stuff like that.
My parents work the same way as aerodave and his wife. They’ve been married 35 years…can’t say if it has always been this way or not but it has been this way for at least the last 20.
I’m about in exactly the same situation as the OP. I’m 28, been working for a while and clawed my way out of about $20,000 in credit card debt + student loans. The girlfriend is 25, fresh out of grad school, makes significantly less, and is in a not-trivial amount of debt from student loans. She’s moving into my house that I own.
She is under the impression that she’ll live there for free while she pays down her debt. I don’t believe that is a fair situation at all, so we’re going to sit down very soon and work out a budget. Obviously I will be pitching in more money than she will, which is totally fine with me, as long as she pitches in SOMETHING to the house/shared expenses.
Like Projammer recommended, I am certainly NOT dumping my savings into her debt, and our finances will remain 100% separate until we’re legally married. I would recommend the same.
My ex husband and I had joint everything, and I ended up bankrupt from the 40k of debt he ran up in my name (it was a nasty abusive relationship I ended up quite literally escaping from). Z.R. Test had joint everything with his ex wife too, and neither of us wants to do that again.
We each pay half of the rent, I pay the electric and Internet, and he pays the gas for the house. I buy more of the groceries because I have a bit more income and he has a few more personal expenses. We pay for our own cars, insurance, gasoline, mobile phones, and any personal debt. We split entertainment costs, so if we go away for the weekend I might say, “I’ll get the gas and hotel, and you get everything else, OK?” If one of us is a bit short we’ll say so, and the other will kick in a bit more on their end.
That sounds more complex than it is, it tends to just work without discussion. It’s wonderful, really. We have no arguments about money or spending ever.
No, Brainiac4 and have the same system now. But it took several years from “moving in” to “kids” and it took several years from “the gas bill is $100, you owe me $50” to “joint credit cards, joint savings accounts, joint investment accounts.” And I wouldn’t recommend anyone jump into joint. Particularly if there is a significant difference in net worth and one net worth is negative.
At this point, we each have our own 401ks and IRAs. Our investment account through work (ESOP, options) are separate. But everything else is joint.
My husband had about half the debt I had in savings. part of it was college debt; part was imprudent spending. When we married, we went the pre-nup route.
However, I found that such a difference in debt does require compromise, no matter how it is officially resolved. My husband, when he saw my savings, felt a bit ashamed and made the resolution to himself to clear up his own debt as fast as he could. Of course, I was very glad for that, but that does mean that in the two years that we’ve been together, I either had to pay for the all the romantic trimmings myself, (restaurants, trips etc) or put up with the lack of such trimmings. Even now, after two yerasm he still isn’t totally debt-free.
So in the end, even though my husband pays his own debt, I’m still influenced by his less then perfect financial management of the years before he met me.
When we moved in together, we had nothing. No debt, no savings, just our personal possessions. We couldn’t have kept a minimum balance on two bank accounts some months, so we just had one. So everything is joint, but then again, all the savings that we have we saved together.