Whether you have had roommates before or come from living alone or with family, living together with a person with whom you have a relationship is a big step. And, while it is fun to build a home together, you must consider some financial aspects in advance to ensure that you do not run into snags or strains later.

Being open about your financial situations

It is important for both people in a relationship to understand each other's financial habits and obligations. If one or both partners have credit issues, eventually, this will affect the household. Being honest may be difficult but will help you manage better overall –both your expenses and your expectations-. It is a clever idea to share credit reports with each other and talk openly about any financial issues that you have. It will also help you create a realistic and pragmatic budget.

Dealing with financial difficulties

If one of you, or both, is facing financial difficulties or has debt issues, it is best to be upfront. Ultimately, the issues will affect you both and having an open mind will help you work out a plan to get through it together. And, if you want professional help, remember that OAS FCU's partner GreenPath Financial Wellness offers our members free financial services:

• Financial counseling
• Debt counseling
• Debt management programs
• Housing counseling (home owning and renting)
• Student loan counseling
• Credit report reviewing service.

They are available to assist you individually or as a couple. They will work with you through appointments over the phone in the language of your choosing.

The budget

If you are ready to figure things out as a household, you can start with a simple budget of your income and expenses before you look at housing. Look at your combined monthly income. Then, write down your individual expenses (phone contracts, subscriptions, student loans, debt, etc.), plus your allocations to savings and any investments. Add it all up and calculate how much you will need for shared household expenses: utilities, food, rent, insurance, and so forth. This will help you determine where you stand and what you can afford together. Later on, and if you wish to draft a full household budget, we recommend you try our blog post on creating a full budget.

To share or not to share accounts

This is one of the toughest decisions to make, and one to make with your eyes wide open. If you or your partner has had financial difficulties that you currently deal with, you have three options:

• To maintain separate accounts, and one of you gives the other money every month for the shared finances –food, rent, utilities-.
• To join accounts and manage it from a centralized perspective.
• To open an independent joint account where you both contribute and manage all household finances.

What do the experts say? According to a study published in 2017, couples pooling money experience more than financial gain from fewer fees. Sharing finances fosters the practice of communicating between partners. And couples who share accounts tend to discuss financial decisions more, resulting in an increase in mutual trust and contentment. They are more likely to stay together.

As a compromise, you could maintain separate accounts while you settle into a shared financial system. However, if you choose one of the options to open a joint account, keep in mind OAS FCU Rewards Checking. It is a no fee, no minimum balance solution that provides actual rewards for its regular use.

Using a 50/30/20 plan

An effective way to start a joint household plan is using the 50/30/20 breakdown of after-tax funds:

• Fifty percent goes to musts. This includes rent, utilities, food, insurance, and everyone's minimum monthly debt payments.
• Thirty percent allocated to wants. This includes things that you do in your free time, hobbies, concerts, and going out.
• Leave twenty percent to being smart. Being smart allocates money to paying down extra on your debt, and to saving for the future.

While this may seem overly simplistic, it helps people acquire healthier financial habits and understand the importance of frugality. Note: frugality does not mean saving, saving, saving. If you want to learn more about this, check out our blog Eight financial habits everyone should master by age 30.

How to split expenses

While the most obvious way to split expenses is 50/50, it may not be the most realistic, or the fairest. Example: one of you makes a significant amount more than the other and you split everything halfway. At the end of the month, one of you has a significant amount of disposable money to save, the other has no money.

If your respective incomes are similar, a halfway split is the solution. However, when the situations are decidedly uneven, we would suggest that each one contributes proportionately to the household expenses. You do that using each person's after-tax income in proportion to the household income. Then, as each person's situation changes, you can redraft the contributions to home expenses accordingly.

Rainy day fund

We recommend that you agree upfront to saving up a rainy-day fund equivalent to one month combined income that you save for household emergencies: things break, and people often must travel suddenly for a family emergency. Life happens, and it is nice to agree to have guilt-free money available.