Getting Hitched? Ask These 9 Financial Questions Before Living Together

Millennials experience more stress and don’t manage it well, according to a survey by the American Psychological Association. Compared to other generations, they’re the most stressed, followed by Gen Xers, Boomers and finally, Matures. Over half of millennials report lying awake at night worried during the past month. Primary stress culprits include money and work. At Sage Financial Advisors, debt and planning for the future are some of the most common worries we hear from young adults.

Additionally, millennials dominate the ranks of renters, are less likely to own a home or marry than prior generations at a similar age, according to Pew Research. Young adults aged 25 to 29 cohabitate almost four times the rate of Boomers at a similar age.

This is the second in a series of articles focused on helping young adults have less financial stress and plan a successful path ahead.

Here are questions that young adults should ask before moving in together or marrying:

  1. Discuss reasons for moving in together. The list should be long. The phrase “makes financial sense” should be one of the benefits, not the primary one. Yes, a break up between non-spouses is less legally complicated than a divorce. However, how much more stress do you want and why enter a problem relationship? Separate living arrangements might be preferred.
  2. What are your expectations of each other? How will chores and bills be split? Will it be okay to hang out late with your co-workers? Who will cook and who does the dishes?
  3. Talk about finances. It’s good to know upfront about each other’s current financial condition – prior bankruptcies, significant debt and poor credit scores. Whose name is on the lease? Is the bill pay schedule manageable for both of you? Should you have mine, yours and our bank accounts? Here’s a sample couples money worksheet.
  4. Agree on the address. Does it provide equal commutes? Is it affordable and match your needs?
  5. Prepare for the good, the bad and the ugly. A mentor taught me how to read a contract – if you can live with the “come hell or high water” provisions (consequences of breaching the contract), then it’s probably an okay deal. This includes piled dishes, sleeping in until noon, snoring, and slow pays after the courting days are over. And have a break-up plan in advance.

What about marrying? Add these to the list:

  1. Discuss your money views and saving/spending habits. Money talks are emotional and personal. Openness and transparency take priority. What would you do if given a million dollars? How do you feel about money?
  2. Discuss family plans. More women are waiting longer to be mothers. It’s not unique to millennials – it’s been a trend since 1970 with a shift away from marriage and increasing educational attainment. Delaying parenthood is not due to a lack of interest though. Pew Research says over half of millennials say being a good parent is one of the most important goals in life – higher than having a successful marriage.
  3. Open the financial kimonos. Full disclosure becomes more critical with the legal issues of combining assets, pre-nuptial agreements, wills, trusts and life insurance.
  4. Negotiate priorities. I met an interesting gentleman years ago at a business retreat. He shared his key to marriage: Learn when to negotiate your priorities. For example, if the topic was where to dine that night, he’d ask his wife, “How important is that to you?” On a scale of one to 10, if she said “8” and he ranked it a “3” then she gets to decide. When deciding where to vacation and your destination ranks highly for both of you, then it’s time to sit down, discuss and negotiate. It’s a mindset of working together and compromise.

Remember to treasure your relationships more than your possessions and ask the hard questions before moving in with your significant other.

Good luck!

You can also view this article on Reno Gazette Journal.

About Brian Loy

Brian Loy writes insightful and inspiring articles about the ever-changing world of personal finance and the global trends that affect the risk and return on investments and shape the financial- and retirement-planning process.
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