How to move in with a partner

Find out how to manage your joint finances effectively.

It can't buy you love, but it sure can mess up a relationship.  A recent survey by credit report company CreditExpert found that a quarter of couples regularly argue about money and more than two million people break up every year because of financial worries.

If you're about to move in with a partner, it's easy to get carried away on a wave of Ikea furniture, potted plants and new bed linen.  But inevitably, your new life together won't always be a bed of roses and rose-patterned cushions, and at some point, you're going to have to talk about money.

Remember there will be household bills to pay every month, as well as the rent or mortgage. And the earlier you figure out how you are going to share these costs, the better.

Keep it simple

One of the best - and simplest - ways to pay for shared costs is to set up a joint account, registered in both your names. You will then each have complete access to all the funds in that account.

The next question is whether to close your own individual accounts and get both your salaries paid into the joint account. It's important to discuss all your options thoroughly with your partner, but my advice would be to avoid this strategy like the plague if you are the kind of person who goes through bank statements and queries what the money was spent on. It will only cause friction in your relationship.

Furthermore, in a world where a third of marriages end in divorce, I think it's wise to maintain some financial independence from your partner. If you agree, you should keep paying your salary into an individual account, and set up a standing order contribution each month to the joint account.

If you are currently banking with separate banks, it is a good idea to move your existing current accounts so that you are both with the same bank. This will allow you to transfer funds into your new joint account quickly and easily. Alliance & Leicester is currently offering new customers who pay in £500 a month to its Premier Current Account a whopping £100 cashback, while First Direct has a similar offer on its 1st Account to customers who pay in £1,500 a month.

That's £200 to start off your joint account straight away. But where's the rest of the money in that account going to come from? What is the best way to organise your finances and share costs?

It's not fair

Unless you and your partner earn exactly the same salary, it can be difficult to work out a fair way of sharing joint costs. Many couples choose to split everything down the middle and contribute equal amounts to their joint amount each month.

While this is certainly democratic (and simple), it is not always fair. If you are earning significantly more than your partner and you contribute equal amounts to the joint account, then as a proportion of your income, you will actually be contributing less. To put it another way, your contribution will hurt your finances less than your partner, who may have to make more sacrifices in order to be able to afford the joint bills.

If this doesn't seem fair to you, another option is to:

• 1) Add up your household expenses.
• 2) Add up your both your salaries to figure out the total household income.
• 3) Work out your salary as a percentage of the household income.
• 4) Pay the bills according to this percentage.

So if you earn 60% of the household income and your partner earns 40%, you would pay 60% of the bills and joint expenses and he or she would pay 40%.

This method is a transparent reflection of your relative spending power and is particularly useful if the higher earner has expensive tastes or wants to live in a more costly area, which would drive up your household costs.  Why should you both miss out on the good things in life, if jointly, you could comfortably afford to pay for them?

However, such an arrangement is not without its problems. You need to be sure that you are both entirely happy with it, and feel comfortable with the fact that one of you is subsidising the lifestyle of the other. If you are the higher earner, ask yourself: would you feel resentful about all the money you have spent on the other person, if you split up? Would you throw it in their face in an argument? If the answer to either of those questions is yes, then it's probably best to stick to equal contributions.

Good vibrations

Remember the key to a happy financial affair is good communication. So if you want to discuss money with your partner, pick your moment carefully - and define what you think is and is not a ‘household expense'. (Hint: it usually involves the house.)

Nobody's perfect and there are bound to be some spending decisions that your partner makes that you won't agree with.  Try not to get angry. After all, it's only money - and money can't buy you love.

Read Part 2 of this article here to find out what moving in with a partner means you need to do in terms of drawing up a will, life insurance, pensions, cohabitation contracts, state benefits and joint tenancy of the mortgage.

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This article was updated in May 2010.