Before we begin: a disclaimer. You should never move in with someone just to save money. Many have done that and within a few months or years it’s time to divvy up the dishes and debate who gets the cat.
The reason for shacking up should always be due to being in love and having compatible lives. But feel free to bask in the financial benefits of sharing the bills when you live together. And there are many.
Cashing In On Shacking Up
When you live with someone, you pay half the rent (or mortgage), utilities, phone bill (if you have a land line), cable and internet. For your cell, you can take advantage of couples plans that are cheaper and let you call each other for free. Other benefits: depending on how the plan works, many workplace health plans will allow you to put a common law partner on the plan.
Talking About Money Is No Longer Taboo
Living together is about more than fun and quality time together. It’s a serious move that requires talking about money. No wonder people thinking about getting married live together first: it lets a couple test the waters, including the financial ones. If your potential live-in mate is afraid to talk honestly about money or is secretive about finances, consider that a red flag. Once you share a home, your finances do start impacting each other. You’ll have to figure out how to discuss difficult things like dealing with credit card debt or deciding on large purchases. These chats may not be easy.
How To Maximize Your Savings
When the household bills are cut in half, it’s tempting to blow the difference on great perks: a new TV, progressively bigger places to live and more nights out. Resist! Take this opportunity to put in place some savings programs. For instance, take the amount you’re saving each month on sharing costs and put it into an RRSP or TFSA. Some extra costs at this time will be smart: make sure you’ve got good contents insurance for the home you share because it’s a lot to lose if something happens.
Keep Yourself Covered
If this living arrangement is truly serious and may last some time, you may want to protect yourself with a cohabitation agreement signed by a lawyer. This protects you in the event that you break up and makes sure things are split fairly. Do this for sure if you buy a home together, but even smaller purchases like a car, electronics or furniture can become contentious should you part ways. And unlike a divorce, a common-law break up is not governed by rules that allow you to take half no matter what.
Organize Your Money
Paying the rent or mortgage each month by slipping each other cash, cheques or doing internet money transfers is going to get tiring very quickly. Best to set up a joint account that you can both easily access. Agree on a monthly amount you both put in each month (it can be an equal amount, of perhaps a different amount pro-rated to your incomes) to cover rent and basic household bills. You might pay for groceries out of that account, or just do those on the fly.
A Stepping Stone
Living together is about combining your lives in a basic way. After a few months together it will be surprising how much one person’s choices — financial and other — can impact the other. It’s a time to learn about each other, set some boundaries and see if you can build a happy life together that benefits you both on a number of levels.