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Have a money talk before moving in together

Have a money talk before moving in together
(Dreamstime)

Millennials are waiting longer than previous generations to get married, but that doesn't mean they're navigating their finances solo.

About 30% of millennials are married, and about 15% of people ages 25 to 34 live with a partner, according to the U.S. Census Bureau. When combining households, it makes sense to have a conversation about money before moving day.

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You don't have to divulge every dollar, debt and detail when you start dating, but if you're moving toward a future together, you need to cover the basics. Start with up-front conversations about income, goals, spending and debt. Even if you're not combining any accounts now (or ever), a partner's finances can affect yours.

For example, one low credit score can affect a couple's ability to rent an apartment together or qualify for a mortgage. As your situation changes, consider your plan for sharing expenses, how you save for shared goals and more.

"Talking about money is often one of the most uncomfortable parts of a relationship," says Ted Rossman, industry analyst at CreditCards.com. But most experts recommend that couples schedule money meetings at least once a month and use the time to review budgets, check in on goals and revise the approach as their lives or relationship changes.

If you're splitting shared expenses, consider each person's income and other liabilities. If one person earns significantly more than the other, you may want to divide shared bills proportionally — a 60-40 split, for example. To streamline payments for shared expenses, you may want to open a joint checking account where each month you both contribute enough to cover rent and other household expenses.

Limiting that account to cover the cost of shared expenses, keeping separate credit cards and waiting to buy a home together are particularly smart moves for unmarried couples because they don't benefit from the same legal protections as married couples. Eventually, you may merge most of your accounts, draft one shared budget and set guidelines for how much either partner can spend without checking in with the other first.

For most couples, sharing finances isn't an all-or-nothing deal. And over time, as your relationship evolves, your financial strategy will likely change, too.

"Long term, I often recommend a yours, mine and ours approach," says Britton Gregory, a certified financial planner in Austin, Texas. A certain amount of income can go into a joint account that covers shared expenses, including the rent or mortgage, groceries, utilities and other agreed-upon items.

Individual accounts can be kept for each partner's personal or discretionary spending. And, if one person covers dinner and a movie, the partner can transfer money to the other's account or send a Venmo payment.

Kaitlin Pitsker is an associate editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.

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