When millennials Alana Saltz and her boyfriend, PJ Kneisel, decided to move in together last year, their excitement at cohabitation was sobered by economic reality. Even by sharing rent, their piecemeal earnings from freelance gigs and art work proved inadequate to cover their heavy student-loan debt and the high cost of Los Angeles-area housing. They confronted a perfect storm of limited options.
“It was a cascade of factors,” says Saltz, 29, a freelance writer and editor. “I had just had a car accident and lost my car, PJ’s father had passed away, and his mother was recovering from knee surgery and needed assistance. The one-hour commute I’d been making to see him didn’t make sense any longer.”
After weighing all economic, logistic, and wellness factors, there seemed one less than ideal way to make it work: by moving in together on the bottom floor of Kneisel’s mother’s Redondo Beach house—his childhood home.
“It wasn’t everybody’s ideal choice,” says Kneisel, 31, a youth counselor and freelance artist. “But we rationalized it would just be for a few months. That few months has turned into a year.”
Saltz and Kneisel’s situation is far from unique. Millennials face a tight job market, immense student loan debt, and, in the urban areas where job prospects are best, skyrocketing rents. Perhaps that’s why in a recent Avvo-sponsored relationship study, millennial respondents ages 25 to 34 were more likely than other generations to say that good relationships require money.
Meanwhile, millennials’ rates of cohabitation continue to increase. According to the Pew Research Trust, 9.2 percent of millennials are currently living together, a 59 percent increase since 1997. How many of them are shacking up just to get by?
Have the money talk
Moving in together, however, comes with thorny economic realities. One way to navigate potential issues is to work through a cohabitation checklist before shacking up. A frank discussion about finances goes a long way toward ensuring the transition is both peaceful and successful.
Consider drafting a cohabitation agreement, a legal agreement that provides each partner some protection in the event of a breakup or one partner’s death.
While cohabitating couples do not have the legal protections of marriage, your cohabitation agreement can outline the equitable distribution of assets in the event of a breakup. Be respectful of each other’s belongings and inventory which items have special meaning or value to each of you, so you can allocate them appropriately in the event of a breakup. Items you might want to retain shared ownership over are the ones you’d likely sell, splitting the proceeds.
Finding out about a long ago bankruptcy or auto repo is the opposite of romantic—but better to discuss now than after they turn up on that credit report required by the landlord once you finally score an apartment.
Determine responsibilities for household expenses
Examine your current personal financial situations: income, expenses, credit scores, outstanding debts, and how much you each can legitimately afford going into a new housing situation.
Each month will feature some expected bills—rent, utilities, groceries, etc.—and a handful of unexpected ones. Decide who will be responsible for which household bills, both financially and in terms of managing the accounts and ensuring their payment. Determine which bills will be yours, mine, or ours, and discuss the merits of opening a joint bank account for shared expenses.
In the Saltz-Kneisel household, the nominal amount of rent the couple pays Kneisel’s mother allows them to save for their own home. “We don’t have a shared bank account, and PJ covers most of the rent,” Saltz explains. “We pay for our own cars, and we split meals or treat each other when we go out. Overall, we mostly just continued to do what we’d done as a dating couple.”
Discuss your plans with parents
For millennials who still rely on parents for rent or other financial support, a conversation with them prior to moving in with your significant other is critical. If you’re receiving housing or other financial assistance from your parents, will they continue to provide it after you move in together?
Justin Oliviero, 26, an Austin-based social worker, was excited to be moving in with his boyfriend of three years. “Social work isn’t known for its high salaries and Austin’s become an expensive place to rent, so in addition to car and health insurance, my parents had been helping me out with [rent payments] since I graduated college,” Oliviero said.
His parents’ response? Taking the “adult” leap to cohabitation meant Oliviero would have to start coming up with rent on his own.
“It was a much larger monthly hit than I was accustomed to taking,” he says. “Ultimately it meant leaving my great building in a really hot neighborhood and us moving into someplace a lot cheaper to make it work. It was the first of a lot of big compromises that both of us were really sideswiped by, and I wish now we’d put more advance planning and preparation into the move.”
Devise a “breakup plan”
Unfortunately for Oliviero, moving in together proved fatal to his three-year relationship. “It was literally the precipitating event,” he says. “Between the long hours we were both forced to work to make it happen, the long commutes we now had to make, and the constant stress around money, it just wasn’t a happy refuge anymore. I really believe if we’d spent more time planning and saving, we’d still be together.”
Just as with a prenuptial agreement, few couples want to enter into an arrangement by discussing its demise. Nonetheless, having a plan is always a good idea. Think of it as a way to learn how your partner values his or her assets, so that you can go into the move with a level of care and respect.
You might also consider how a breakup could affect any pets you have. Deciding in advance how you’ll share custody or schedule visitations can alleviate a lot of arguing in the event of a breakup.
Move in—and move in unison
All relationships require compromise, and moving in with your partner demands the same approach. Make smart decisions about your move and how it will impact your finances, and know you’ve covered your bases with a well-considered plan.
“We’ve had a few conflicts,” says Saltz. “Should we eat out less? What should we spend on trips or video games or books? What’s realistic? You’re not paying a lot on rent, but what should you be saving?”
The couple’s advice to others considering cohabitation? Get a clear picture of where you are financially before taking the leap, and make sure you have the same relationship and financial goals.
And remain flexible, recognizing that even the most carefully devised plans can hit speed bumps. Kneisel notes, “Living with my Mom was something we’d only planned for a few months… and here we are at a year. It’s just being comfortable with flux and change, because on the way to your goals, plans will change, things come up.”
One more piece of sage advice: keep things in perspective. “There are other people our age who have it far worse than us,” Saltz says. “So that’s something I’m definitely trying to learn, to make the best of the situation you are in and trying not to be bothered if things aren’t perfect in the moment.”