Whether you rent or own, moving in together is a big deal. While dealing with your partner’s incessant snoring and strange family dynamics may seem like huge hurdles to overcome, nothing can tear a relationship apart quite like money.
In fact, one researcher from Kansas State University found the frequency of money arguments in a relationship to be the top predictor of divorce.
So before you decide to up the ante and combine finances, or go all in on a home purchase together or lease, it’s essential to make sure you and your partner are on the same page when it comes to money decisions and habits.
Does your relationship pass these six tests?
1. You know your partner’s full financial picture
Credit scores and debt might not be the most romantic conversation to have, but if you’re thinking about merging finances, it’s imperative to know the state of your partner’s financial health. You should be fully aware of their debt load and their plan and means for paying it down, as well as how they might appear to a potential lender.
2. You understand each other’s general spending habits and attitude toward money
Your partner’s exorbitant spending on that model airplane hobby might not bother you much now, but it could grate on you significantly more once your finances are combined. Now is the time to fully understand what both of your attitudes are toward money, how you allocate it, and whether you can find a healthy common ground with your spending habits.
3. You have full trust and open communication
Combining finances is an act of confidence in your partner and a tangible way of saying you fully trust them to keep your best interests in mind. If your money conversations are fraught with tension and secrecy, count that as a massive red flag.
You and your sweetheart need to be fully transparent and honest before commingling any funds or signing mortgage papers together.
4. You know how the dollars and cents will be allocated beforehand
So you’ve decided to move in together and tackle all your bills together. Great. Now how exactly will you both contribute to running the household? Will you each pay half? Or a percentage of your take-home pay?
To avoid resentments and money fights down the road, you should know exactly how you both plan to contribute.
5. You are able to discuss issues without a knock-down, drag-out fight
If you have trouble navigating through a minefield of touchy subjects now, combining finances will only increase your chances of an argument. Money can bring up a whole horde of new issues that should be addressed calmly and with a clear head if you want to make it to the other side.
Will you be able to work together if one of you loses a job? Or if one person’s spending habits are putting pressure on the household finances?
6. You see a future with your partner
This might seem like common sense, but if you’re already on the fence about your relationship, the most detrimental thing you can do is throw money into the mix. Unraveling combined accounts or a jointly held mortgage is a lengthy, complicated process, and it could obliterate your financial foundation in the process.
You might not be able to predict the future, but it’s important to at least have the intention of staying together for the long term before pooling assets.