The pitfalls and pleasures of co-habiting

So you’re in love and you want to move in together? We show you how to enjoy the togetherness and win at finances.

You’ve fallen in love and you’ve decided to live together. You’re high on romance and you can’t wait. But now comes the hardest thing of all: just when thoughts of romance are uppermost in your mind, you must engage your financial brain. Unromantic as it may seem, thinking about the practicalities now can help to save you from disagreements further down the road.

Cohabiting partners are the fastest growing family type, with more than 3.4 million in England and Wales. But they have less legal protection than those who are married or in a civil partnership in the event of death or separation, says the Government's Women & Equalities Committee. In 2021, it launched an inquiry that will look at legal protection for people who are living together. But while we wait for that, here are some things to think about:

Should you choose joint or separate bank accounts?

The short answer is likely to be both. With trust and a good relationship, a joint account can work. When our income was low, I found it a natural disincentive to spend on anything other than essentials, and so did my partner. However, if your partner has a different approach to money, it can be a nightmare not to know what might await you when you check your banking app.

A good technique might be to keep your individual bank accounts for your earnings (and your occasional impulse buys!) and to open a joint account to cover regular living costs. You could each pay an agreed amount monthly into this account and do a health check-up every few months. This is to see if you really do need that extra video streaming package or magazine subscription that you meant to cancel when the free trial ended.

Keeping your individual financial identity and credit score can be important so that if you do part ways, there are no surprises when you come to open a bank account, or to get a mortgage, loan, or credit card in your own name.

Are you thinking about buying property?

If so, you could both receive legal advice, as it can be important to ensure both your names are on the deed and that you share costs. If you have a mortgage, it's likely that it could be in both of your names.

It also matters how the property is held – together, or as tenants in common. If you own it together and one partner dies, the other automatically inherits the property, or if you split up, you can agree what happens to the property. But if you are tenants in common, you'll only get to keep your share if you split up, or if your partner dies – unless they have left it to you in their will.

One woman in her thirties had lived with her partner for a decade, during which she had met most of the living costs. "He said that was my contribution to the household, as he was paying the mortgage. But he wouldn’t put my name on the house," she told me. During that time, she even paid for a barn to be built on his land. When they split up, he ordered her out, told her she couldn’t prove she paid for the barn, and sued her for custody of her own dog, as she couldn’t give it a stable home. She went to a lawyer, who told her the boyfriend’s position was watertight. There was a happy ending, though: he gave up on the dog, and she found someone a lot nicer to spend her life with.

To avoid situations like this, the Law Society says you should consider getting a cohabitation agreement (Opens in new window) and making wills to protect your interests.

Are you renting?

If you're renting, you could consider getting the tenancy agreement in both your names. Otherwise, if the relationship ends, and the lease is in your partner’s name, you could find yourself homeless. If it is in both names, you might be able to ask the landlord for an early end to the lease and both move on, or if one of you could stay on under a new lease.

How about insurance policies?

While it may make sense to have joint names on your energy bills, when it comes to insurance, do the sums for your circumstances. If you have two cars, it may be cheaper to have one insurance policy cover them both, but make sure you do some comparative shopping first. If you have one car between you and are the named driver rather than the policyholder, you may not be able to build up your own no-claims discount.

Now that travel is opening up again, it may be worth pricing up a joint travel policy. You could consider an annual policy, as it may be cheaper than the price of insurance for a couple of trips. However, it would be wise to check first if any of your current accounts or credit cards have insurance included, and if they do, that they are suitable for your needs.

A word about inequality

Finally, remember to enjoy living together and learn to take it easy on the exactness of your cost-splitting. My guess is that you’re moving in together because you like being together. Be sure to talk about sharing informal costs with your partner. Decide how comfortable you are about which costs to split and which to take turns in paying for. If that means going to see a movie, sharing a meal with friends in a restaurant, or taking a boat down the river on a Sunday afternoon, don’t sweat it. Share the cost or take turns, and don’t keep count. Not everything can or should be monetised. Once you have sorted out the finances, you can relax and enjoy living together.

It’s important to get this balance right. You may earn exactly the same, but it’s unlikely. Be fair. If your income is unequal, perhaps your deposits into a joint household current account should be proportional. Some of the biggest relationship problems are caused by a big difference in pay and expectations. Just because someone earns more, doesn't necessarily mean they have more disposable income. Equally, someone might just not be in a position to pay anything close to an equal share.

An architect friend who was at the beginning of his career earned far less than his dentist girlfriend, and felt it was unfair that they each had to bear their own holiday costs. She would often shoot off with friends for a skiing or beach holiday that he couldn’t afford, leaving him at home alone. He was not invited, she said, unless he met every penny of the cost. Don’t be like that person. (Spoiler: They’re no longer together.)