Shacking up is super exciting but there are some things you should talk about first.
So you’ve decided to move in together! Sometimes with all the excitement you can forget to talk about the boring everyday stuff like money, and how you are going to pay for shared expenses.
Once you’re living together you’ll be seen as being in a de facto relationship in the eyes of the law, this includes same sex relationships. That means if you break up you may have to go through a property settlement. Find out more about that in our splitting up section.
If you’re on income support payments you’ll have to notify Centrelink about your new living situation.
Talking to your partner about shared expenses
Once you move in together there will be a whole bunch of new shared costs to think about like rent, bills, food, furniture and cleaning products. There are a lot of different ways to manage these shared expenses and it’s up to you and your partner to work out the best way for you.
It’s a good idea to talk about this before you move in together so you both know what to expect from the start. You might want to split everything evenly, or work something else out depending on how much you both earn.
It’s a good idea to talk about this before you move in together so you both know what to expect from the start.
Equality doesn’t necessarily mean splitting everything 50/50, if one of you has a larger earning capacity they might want to contribute more to the rent or bills. There isn’t any best way to do this, it’s about what feels comfortable for you.
Some things to think about:
Signing the lease and bond
If you’re renting make sure both your names go on the lease—that way if something happens and your partner moves out you won’t be solely responsible for the rent. The same thing applies for the bond. If both your names are on it then you’ll both have to sign the form to get it back.
Whose name is going to go on the bills?
If your name is on the bill then you are responsible for making sure it gets paid. It’s a good idea to put both your names on the bills so that one of you doesn’t get stuck paying them if something happens. This goes for housemates too; if you’re all on the bill you’re all equally responsible.
Having a kitty
A kitty is a small fund of money that everyone in the house contributes to pay for things like groceries. You can put aside a certain amount each week into a jar, or alternatively set one up electronically. This means everyone contributes the same amount to household items.
Should we get a joint account?
Getting a joint bank account might seem like an easy solution to managing shared expenses, but it’s not a decision that should be taken lightly. There are many risks to consider when opening a joint bank account.
There are two kinds of joint bank accounts, one type requires both people’s signatures to make a withdrawal. The other type allows either person to withdraw from the account at any time.
The risks of sharing a bank account include:
Your partner using joint funds on purchases you haven’t agreed upon.
Your partner emptying the account of all funds.
Your partner accruing debt on the account that will show up on your credit report.
You will be legally responsible for paying back any debt on the account.
Only get a joint bank account with someone you trust will not use your joint income on things you don’t agree to, or generate debt that you’ll be responsible for.
If your partner is pressuring you into getting a joint account it might be a good idea to think about why. If you feel like your partner is trying to control your money they could be financially abusive, read our information on financial abuse to find out more.
Making joint accounts work
If you do decide to get a joint account, it’s a good idea to still keep your own separate bank account in case something does happen. That way you’ll always have a bit of your own money to spend on what you want, and have a safety net if things go wrong.
It’s also a good idea to set up some rules before you open a joint account so you both have a good idea of how the account will be used. For example, agree on how much you will deposit each pay period and when and for what you can withdraw money.
What about a second credit card?
A second credit card on your account is not the same as having a joint bank account.
Although the credit card may be in your partner’s name, you alone are responsible to pay off any debt they have on the card. It will also affect your credit rating, possibly making it harder for you to borrow money in the future. Make sure you have considered all of this before getting a second credit card on your account.
Make sure you have considered all of this before getting a second credit card on your account.
If you are feeling pressured by your partner to get a second credit card from your partner, try discussing why they want you to and explaining your concerns. If they are still pressuring you they might be financially abusive. Find out more about financial abuse here.
Talking about budgets
Creating a budget with your partner is a great way to forge a good financial relationship. Budgeting creates a framework for a shared financial future and gives you the opportunity to talk about a range of issues that might otherwise be difficult to bring up.
Making a budget together means that both of you will have a better idea of the real cost of living in your household. If this is left to just one person, the other may have no idea of how much is spent on groceries and bills or even how much debt there is.
Making a budget means you're both on the same page when it comes to your joint income and expenditure. It also means you can both manage the household finances should something happen to your partner, like a sudden illness. You don’t want to have to learn how to pay your home’s monthly bills while you’re handling a family crisis.
Talking about what to spend your money on can be made easier when the discussion is centred on an objective tool like a budget. This helps to remove some of the emotion from the situation.
You might find that when you sit down to make a budget for the first time it will take you hours, not because the process is particularly complicated but because of all the other little conversations that thinking about budgeting will trigger.
These conversations can be critical relationship builders. Often when couples talk about money, they are talking about hopes, fears, the future, the past, and many other things.
Often when couples talk about money, they are talking about hopes, fears, the future, the past, and many other things.
When you sit down to create your first budget you’ll be talking about a lot more than just numbers.
Dealing with resistance
If your partner is resistant to sitting down and working out a budget with you, it can make things really hard. If you’ve tried a couple of times and aren’t getting anywhere, one solution could be to create a basic plan for your budget and to ask your partner what they think. They might be more open to it if some of the work is already done.
Come up with a basic budget outline that covers the bills including things like food and utilities. Then have a discussion together about how discretionary income should be spent.
It may help to talk about goals or desires that you have, such as owning a home or going on a holiday, and how you can achieve that through a budget. This might help to convince your partner that budgeting is a good way to reach some of these goals.
Taking out loans
Whether you’re looking at buying a house, a car or something else taking out a loan is a big decision, especially if it’s a joint loan or if you’re being a guarantor on a loan.
Although a joint loan may mean you can borrow more money, it also means you will be legally responsible for paying back the debt if your partner can’t pay for some reason.
Different types of borrowing
So what’s the difference between being a co-borrower and a being a guarantor? If you are a co-borrower, you and your partner are both signing the loan, that means you are both responsible to repay it (even if one person can’t) and both have equal share in any assets bought with the loan.
If you are the guarantor for a loan, you are still responsible for paying back the loan (including fees and interest) if the other person can’t make their repayments, but you don’t have the right to own any assets bought with the loan.
The risks of taking out a joint loan
Guaranteeing a loan can have huge affects on your own financial future. If your partner can’t make the repayments it will show up on your credit report, meaning you might not be able to take out your own loan.
If you have used assets, like your home, as security for the loan you might not be able to use them for your own loan, and could even end up losing those assets. You could even end up being made bankrupt, and have to sell your home or other assets to pay back the debt.
Credit lenders might also take into account the repayments for the guaranteed loan when considering whether to give you your own loan. This means even if your partner is making their repayments it could still prevent you being able to take out a different loan.
Get the facts
If your partner asks you to take a loan with them, whether you will be a co-borrower or guarantor, make sure you have all the facts before you agree. Check out Money Smart’s guide to loans involving family and friends for more information.
If your partner is pressuring you to take out a loan when you don’t want to, they could be financially abusive. You can find out about the warnings signs of financial abuse and where to get help here.
How do I know if we’ve got too much debt?
Any debt that can’t be paid off at all is too much debt. Many couples and individuals will have to take on at least some debt in their lifetime. The problem arises when a pattern of revolving debt emerges—when one debt is being paid off by taking on another debt.
There is no quick solution to this situation but with some honest communication between partners, a system can be arranged to stop spending more than your combined income.
Here is a guide that might be helpful to help you start rethinking your debt:
Make a list of all your debt: house, credit cards, car, student loans etc.
Divide the items on your list into two categories: debt we’re OK with and debt we’re not OK with. Most people are comfortable having a mortgage and car payment.
Review the OK category. Are the payment amounts on these debts more than you can manage with your current income? Does paying these debts put you in a tight financial situation?
Total up the “not OK” category. Then ask yourselves whether you think you have a realistic understanding of your income, and if you are possibly trying to live a life that’s beyond your means. Talk about which debt you should commit to paying off now.
Rework your budget to include a higher payment on the debt you’ve decided to pay first.
If you are in serious financial difficulty, there are a number of financial counselling services you may be eligible for, the Financial Counselling Australia website can help you find a financial counsellor in your area.