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Why Cohabitation Will Ruin Your Finances

We're thrilled to present this smart LearnVest story here on Savvy!

The views expressed here are those of the essayist and not the LearnVest staff, but we look forward to opening the floor to debate and discussion, so tell us what you think. This Money Mic is part of a conversation about living with your partner — click here for the opposing view.

A Seductive Idea

First off, let me say that I have no moral qualms about cohabiting: No “Why would he buy the cow . . . ?” arguments here.

In fact, I lived with my ex-boyfriend through most of my 20s before we finally broke up — which is why I would never move in with someone again, unless I was certain I was going to spend the rest of my life with him.

Why? We’ve all done the back-of-the-napkin math, and when you do, living together can look seductive. Half the rent! Half the utilities! With the added fun of playing house.

I get it — that’s why I did it. And in the short-term, I agree: living together can look like a good deal. But in the end, it can turn out to be ugly, financially and emotionally. In the long-term, shacking up can cost you far more than any savings you rack up. And don’t just take it from me.

The Financial Perils of Playing House

“I moved in with my boyfriend mainly because I was tired of commuting to Brooklyn,” says Sarah*, 24. “But I did only pay $700 a month. So that was a perk.” In six months, she’d saved $4,900, as compared to living in her old apartment.

Then, just six months in, the relationship ended. All of a sudden, Sarah needed somewhere to live — and fast. She paid for movers ($300), for storage ($100), and for a real estate broker to find her a new place ($1,800). And now that she’s got one, she’s faced with refurnishing: “I have to buy all new furniture because I got rid of it all when I moved in with him,” she says. “I don’t even want to think about how much that will cost.”

Financially, at least, she’s pretty much right back where she started — and that’s to say nothing of the emotional toll. “It was super stressful,” she says. “Now I tell my friends, ‘I’m getting a studio and not moving out until I get back from my honeymoon.’”

Read on for more on cohabitation.

Unhappy Endings?

My experience — and Sarah’s — are actually typical of cohabiting relationships. A 2002 study found that only half of first-time cohabiting couples will stay together for five years, and despite the fact that the commitment-shy tend to use living together as a litmus test before saying, “I do,” it’s actually a better predictor of divorce.

That same study, published by the National Center for Health Statistics, found that when couples cohabited first, the likelihood their marriage would last 10 years or more decreased by six percent. (And Bankrate cites the cost of the average divorce at a cool $20,000.)

But the relationship doesn’t need to end in divorce for things to get messy. For couples who never make it to the altar, the law doesn’t automatically provide the same protections it does for those who are hitched — which can be a costly lesson to learn.

Getting Cohabiting Right

The thing is, there are two types of living together: “Prenuptial cohabitation” is the type where you already have a ring and a wedding date in the not-so-distant future. So far, no study has shown that moving in before the big day will hurt your finances — or your prospects. (To prenup or not? Figure it out with this article.)

The iffier kind, of course, is long-term living together when you a) move in on a whim, b) don’t know (or want to look) where the relationship is headed, or c) do it out of convenience.

If you’re going that route, at least consider cohabiting in a way that could spare you a lot of inconvenience later: namely, get your rights in writing.

The Alternatives to Marriage Project at Unmarried.org suggests that anyone intent on sharing a roof consult a lawyer to draw up the following:

1. A Living Together Agreement: a legal contract that covers how you’ll handle property and assets when you’re together — or when you break up.

2. A will: if either of you were to die without one, the survivor inherits nothing — and inheritance law often penalizes the unmarried.

When you crunch the numbers, it all comes down to the fact that living together is a bigger decision than just how much you’ll save: if you’re savvy enough to factor your bottom line into your romantic picture, be wise enough to take a step back, look at the big picture — and protect yourself — before signing on the dotted line.

The debate’s not over! Read the opposing view explaining why cohabitation is actually great for your finances here.

Image Source: Thinkstock
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Join The Conversation
HelloAnia HelloAnia 4 years
My boyfriend and I moved in together after a short 2 months courtship. Both of our leases were up at our apartments which we shared with roommates and we decided that one of us would definitely be wasting money to be paying rent at a second apartment since at that point we were spending most of our time together. I am usually an analytical person but in this case it just "felt right." If I had read this article at that time I probably would have taken it into consideration. But from my personal experience I can tell you that every relationship is different and there isn't an article or any else's experience that can predict what will happen when you move in with your significant other. Unlike many females in our society, I don't place great weight on marriage, considering those vows are often broken with infidelity and divorce. My boyfriend and I have lived together for almost four years now and he has recently joined me in relocating to another part of the country. We are very happy and I am glad that we had made the decision to live together. I don't doubt that my experience could have went very differently but I also feel that it's important to not let statistics shape the course of your relationship.
shannrose shannrose 4 years
I appreciate this article, but I find a lot of flaws in it. It is true that there is a positive correlation between moving in before marriage and either not getting married or getting divorced. However, there is much merit to looking into the reasons for couples deciding to cohabit. For instance, if the couples really are doing it for convenience, naturally it makes sense that they will break up when they realize that the relationship is not completely harmonious. I would definitely believe that those who cohabit with a firm intentionality of marriage and of working things out would have a much higher likelihood of staying together, primarily due to their reasoning for living together and intention to work through the bad times. My boyfriend and I just moved in together two weeks ago and I understand the cautions that this article suggests, but also realize that we moved in together with the intention of getting engaged quite soon and then married.
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