We're moving in together, what should we do with our money? - Ask Susan

Send your questions to susan.edmunds@rnz.co.nz

I'm about to move in with my partner and am wondering about money. He earns more than I do and I'm wondering whether we should combine our finances, or if not, how we might split the bills. Do you have any advice?

The boring answer is that the right thing to do will depend a lot on your own individual circumstances and your personalities.

However, here are some things I would think about.

If you're moving in together as part of a serious relationship, and you're in a similar stage of life and with similar goals, I'd think about simply combining your money. It isn't for everyone and lots of people will disagree with me, but I think it gets rid of a lot of potential worries about who pays for what and keeping it fair.

Liz Koh, who is a retirement planning expert at Enrich Retirement, says there would be pros and cons to doing this.

"The first thing to be aware of is there can be implications further down the track under the Property Relationships Act should the relationship break down - so it's always a good idea to have a contracting out agreement in place. There is also a certain amount of loss of financial freedom when finances are combined. On the plus side, combining finances and having shared goals usually leads to a much happier relationship, with less conflict and better use of financial resources.

"There can be issues to deal with when one person earns significantly more than the other and when the two people concerned have different attitudes towards financial risk, or different money personalities. There can be quite a bit of negotiation required to reach an agreement on how money will be spent, saved and invested due to these differences. However, once agreement is reached it makes for a much smoother pathway for both enjoying life and building wealth over time."

When you've been together three years, assets generally become relationship property, unless you have an agreement in place (and even these can be challenged sometimes).

If you decide to keep things separate, maybe because you have different goals or different obligations - such as kids - there are a few approaches that might work.

You might set up a joint account for things you do together and for the bills for the house, then put an agreed amount in each payday.

That could be a percentage of your pay, or an amount that represents the portion of the household income you earn.

For example, if you earn $50,000 and your partner earns $100,000, your partner might put twice as much into the joint account.

There is no "right" way to do this, so it's a good idea to talk about it all before you move in and make sure you have the same expectations.

If your partner owns the house you are moving into, I wouldn't pay rent (at least not at market rates) unless you are going to end up with some sort of stake in it. This is controversial, but I think in those situations you can potentially tie yourself into an agreement where you aren't able to buy a house of your own, because you're paying rent to your partner. If you could end up with nothing if your relationship broke down, that could be unfair. Just something to think about.

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