NerdWallet's Smart Money Podcast - Romance and Real Estate: Navigating Shared Rent and Housing Expenses

Episode Date: January 8, 2024

How can couples split housing expenses without splitting up? Learn how to keep your finances — and relationship — healthy. 01:30 This Week in Your Money: What part of your life can have an unexpected impact on your finances? Hosts Sean Pyles and Sara Rathner discuss how personal experiences with ADHD and side hustles have had financial implications for them beyond what you might expect. Learn how unexpected opportunities and even scrolling social media can impact your buying decisions and affect your bottom line. 12:31 Today’s Money Question: What’s the best method for splitting housing costs with your significant other? How can you figure out what’s “fair” when one partner is making a lot more money than the other? NerdWallet writer Kate Wood joins Sean and Sara to help answer a listener’s question about how to split living expenses like mortgage and utility bills when cohabitating with a loved one.  They explore various options for splitting rent or mortgage payments, including informal agreements, formal rental contracts and tenancy in common. They also weigh the pros and cons of a classic 50/50 split versus splitting housing costs proportionally based on income, and explain why having an emergency fund is especially important when living with a romantic partner. You’ll walk away with a better understanding of how you can ensure fairness and transparency through practical tips that can keep both your relationship and your finances healthy. We also wanted to let you know about an upcoming webinar from our tax Nerds on Wednesday, January 17th at 9:00 AM Pacific Time, noon Eastern Time. You will get the rundown on all things taxes, like tax credits, deductions, tax advantaged accounts, and how to prepare for a filing season. Space is limited, so click the link in the episode description to register. In their conversation, the Nerds discuss: finances, housing costs, cohabitation, sharing expenses, couples, money in relationships, mortgage, income-based strategies, impulse buys, written contracts, roommate tax implications, cohabitation agreements, managing money, sensitive financial discussions, transparency, cost-splitting methods, financial partnerships, housing budgeting, formalizing financial arrangements, rental agreements, tenancy in common, financial responsibilities, life goals, and emergency funds. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Hey, Sarah, when you first moved in with your now husband, did you guys split rent 50-50 or did you try to find some fairer way to share your housing costs? We started at a 50-50 split, but pretty quickly realized that that was actually financially unfair to my then boyfriend, now husband, because at the time his salary was less than mine. So we switched to paying proportionally to our incomes, which we still do now with our mortgage. Well, I am a fan of that approach. But in this episode,

we are going to help a listener who's grappling with how to share housing costs with their partner. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Sarah Rathner. Listener, it's 2024, the future, and I'm betting that you have some new money questions. Like maybe you want to get a new puppy, but you aren't sure how much it's going to cost. The answer is a lot. It's true. Or you want to find a new puppy, but you aren't sure how much it's going to cost. The answer is a lot. It's true. Or you want to find the best way to use points

for your spring vacation, which will also cost a lot, but not as much if you use points. So whatever money questions you have, we nerds have the answers. So true. You can text it to us or leave a voicemail on the nerd hotline

at 901-730-6373. That's 901-730-NERD. Or you can email your question to podcast at nerdwallet.com. This episode, Sean and I answer a listener's question about how to split mortgage payments with a partner you're not married to. But first, Sarah and I are going to talk about things in our lives that we didn't expect to have a big influence on our finances, but ended up having a really big influence on our finances. Yeah, like you might not think that making plans with a friend is a financial decision. But then after a few hours, you've bought some junk at a boutique and had a snack at a cafe. And the next thing you know, you're out 50 bucks.

So Sean and I wanted to share a couple of things from our lives that we didn't expect to have the financial implications that they ended up having. So, Sean, what's yours? Mine is my own brain, specifically the way it is ruled by a storm of chaos and whimsy and distraction, aka living with ADHD. For me, it manifests primarily as hyper focus on things. And this hyper focus, I would say is both my superpower and my internal slash eternal nemesis. Like it helps me run the show, for example, helps me get really, really deep into topics that I'm researching. But sometimes it leads me to hyper fixating on things that I want to buy, allegedly, but really don't need at all. Yeah, you know, Sean, it's funny, because like working with you,

you have so many systems in place where you are very organized. You are the first person to claim time on my calendar every week, which I appreciate. Because once the time is scheduled, I will work around it. And so you have dibs on my free time. But it is interesting to hear

how it manifests itself for you financially, where impulse purchases can become a really big problem if you don't keep yourself in check. Yeah. I mean, this is part of why I try to stay away from social media, because those ads just hit me so hard. I was scrolling through the other week, and I saw this pair of glasses that were extremely beautiful, handcrafted, limited edition. I saw them on my face immediately and

thought that's going to make me look so fly and so smart. And then I clicked into the website and they cost no less than $1,100. Oh, no. Yes. I haven't worn glasses in years. That's really expensive. It's really expensive. And even if my insurance was to cover some of that, it would still be very, very, very expensive. So that helped me shake out my hyper focus a little bit. But then I began scheming for ways to make it more affordable. Like, OK, what is my insurance going to cover?

How much do I have in my HSA? Is this worth it at all? And I decided to step away from my computer, put down my phone, get away from social media, because I've been through this cycle before where I get hyper focused on something that I didn't know existed an hour before, but now I suddenly have to purchase. So I think this is one tip that anyone can apply to impulse purchasing, whether they have ADHD or not, is build in that time buffer. If you see something that you think is great for you, and you just want to buy it right then and there, step away, maybe give yourself a day or a week, and just think about it. Like I saw those glasses last week. And now at this point, I'm thinking,

you know, I actually have a pair of glasses that's a little bit similar to that. And I already own them outright, they are not going to cost me $1,100. So that's one way I stop myself in my tracks from getting hyper focused on something. Another thing that I do is I try to ask myself, what this purchase is going to change or improve? It's the kind of so what question, like if I have this thing in my life now, so what? What's it going to do? How are things going to be better if at all? And another question that I recently came across in conversations about buying things is the where is this going to be in three years question.

So when you want to buy something, if it's like a new suitcase or a water bottle or a very expensive pair of glasses, where's it going to be in three years? Is it going to be in a landfill? I mean, my glasses probably wouldn't be, but a water bottle, probably. Not to call out the girls who love their Stanley cups, but I'm just saying, a trend is a trend. Yeah, what's crazy, I can't believe there are trends in water bottles, because I drink from a Yeti, which apparently is very 2018 of me. Those were trendy. And then high school, college were like the Nalgene bottle years. And then like, yeah, it's very strange that there are trends in water consumption.

Whether you have ADHD or not, just putting systems in place to protect yourself and your wallet from yourself is how I try to operate this weird brain that I have. I would say one good thing about social media is the existence of what are called by nothing groups. If you haven't joined them, I think they're mostly on Facebook, but they're by neighborhood. And so if there is an item that you think you might need or really want, you could first reach out on the by nothing group and see if somebody has one that they're willing to give away. And I've gotten some pretty amazing things for free this way. I've also given away things

for free that I was no longer using. Okay, anyway, so Sarah, what is something that you experienced in life that you didn't think would have the big impact on your finances that it did have? For me, it was embracing a side hustle, which I did, oh my gosh, over a decade ago at this point. It was something that I didn't think I would do because I had a full time job. And people would sometimes come to me with freelance opportunities. I was like, I don't have time for that. But at this particular point, I think I just gotten married. And I had all this free time now that I wasn't planning a wedding anymore. And I was like, you know, I could do that. And it not only changed my finances to have that extra income coming in, which was really nice, but it also ended up changing the trajectory of my career.

So here's what happened. So years ago, my brother and sister in law before they got married, worked with a financial planner together. And they worked with a woman who was about the same age as I am, which is very rare in the financial planning world, less rare now than it was a decade ago. And they said, you should like look her up, I think you'd really like her. And so I subscribed to her email newsletter and would just like she would, you know, send out interesting articles and tips and stuff about money. And one day, she posted an opening for a virtual marketing assistant just to help with content management, publishing articles on her website, social media, things like that. And I have no idea what mysterious force prompted me to apply. I just was like, you know what, I can't do that. And it turns out I was the only person she ended up interviewing. And since I had writing experience previously,

she expanded the role to include writing blog posts about personal finance for her. Okay. Yeah. And guess what? Right now, I'm a full-time personal finance writer at NerdWallet. And I am happier in my career. The work I do is actually much closer to what I went to college for and what I have a degree in than ever before. So it took me about 15 years to circle back around to that. And I earn more than I ever did before. That's fantastic. Hashtag girl boss, which is why I pay more of the mortgage. So really, sometimes a side hustle or some other opportunity might come your way. That's a way to make some extra cash or try something

different, test out a possible career change. And if you have the time and the inclination, I would say go for it. Because worst case, you do one project for somebody, and then it's not a good fit. And then you just like you kind of mutually quit each other. And sometimes it ends up being life changing. And your experience also speaks to the unexpected opportunities that come up when you expand your network, whether it's through a really intentional professional move, like what you made, or just serendipitous through the friends that you have. I think back a lot to the relationships and friendships that I made shortly after moving to the Bay Area when I was in my early 20s. And the people that I met in the first few weeks after I moved there ended up giving me opportunities that led me eventually

to the job that I have now. And there's always that balance of meeting people just through happenstance and coincidence, and then taking that opportunity and putting in all of the work and getting to where you want to be. So there's a bit of a balance to that of like, how much of it is pure chance? How much of it is your own initiative and hard work? But you can't really have one without the other. Yeah, it's really hard to put yourself out there in that way and be vulnerable and be like, hey, I'm looking for new opportunities or not. And just, you know, and being open to having those conversations with people that you meet. But you really never know what sorts of networks people are tapped into. I mean, and there are still people that I'm in

touch with from previous roles, or just people I know socially who happen to have amazing networks. And sometimes I am in touch with them to find sources for my articles, because they're tapped into certain industries and can connect me with experts in different fields. It is good that when you have a good connection with other people professionally to nurture those connections over time because you really never know. And then that can also put you in a position to help another person who is looking to make moves as well. It's like a buy nothing group. What goes around comes around that karmic cycle of giving and receiving. It just applies to so many other things in life. Perfect callback. Thank you. So even though we just shared two totally different experiences,

they both highlight the way that things in our life, in my case, having a weird brain, in your case, subscribing to a newsletter, can influence your finances and create opportunities in ways that you wouldn't expect. And in general, I think it's really worth connecting the dots like this so you can see how the various things that have happened to you have resulted in the challenges and opportunities that you're currently facing. Because in a few years time, you might be surprised by how the decisions that you made and the experiences that you had in 2024 had ripple effects on your future self. So yeah, you know, it's nice to be nostalgic and look back on things in previous years. But when you're doing that, think also about how those instances played out for you several

years beyond that. And it can help you imagine, you know, how might something that's happening to me right now, whether it's good or bad, affect me in the future? And how might I be able to turn things around and use those experiences to propel my my goals financially, professionally, relationshipally, whatever, that's not all of those things. All those things. Yeah, you get what I mean. Appreciate what got you here and then see if you can will that experience into giving you the future that you want. Yeah, you know, I think the word manifesting is overused, but sure, let's do it.

Manifest your future. Manifest away. Yeah. Before we move on, listener, I wanted to let you know about an upcoming webinar from our tax nerds. On Wednesday, January 17th at 9am Pacific time, noon Eastern time, you will get the rundown on all things taxes like tax credits, deductions, tax advantaged accounts, and how to prepare for filing season. Space is limited. So click the link in the episode

description to register. Okay, now let's get on to this episode's money question segment. This episode's money question comes from a listener who left us a voicemail. Here it is. Hey, so I have a question about rent slash mortgage sharing with a partner that I'm not married to. So I own a townhouse and some time ago, my girlfriend moved in with me. At the time, she was going through school and she wasn't making any money. So we agreed that she didn't have to pay rent or utilities at the time. But now she has a job and we think it's fair that she shares in cost of the utilities and pay some, I guess you can call it rent. However, my issue is figuring out what is an appropriate amount for her to pay. However, I own my place and she's not getting equity from paying rent to me.

I don't think it's fair that she pays half the monthly mortgage. So what I've done is a cursory search on Craigslist to see what rent would be for like a one bedroom in someone else's home. And I just took the average of that, which I live in Orange County, California. I kind of ballparked it around $900. So she agreed to this number. And with her current salary, it's a little tight for her, but she says it's okay. I am still unsure if this was a fair amount. Furthermore, if we continue to live together and she earns more money and rent in the area increases, as expected, should her rent increase?

To me, that seems a little extortive, but I'm not sure what's fair to me. I'm having a hard time basically balancing the compassion for a loved one with the financial responsibility of owning a home. I'm just really lost in this matter. And some advice would go a long way for me. Thank you. To help us answer our listeners question on this episode of the podcast, we're joined by NerdWallet writer Kate Wood. Welcome back to Smart Money, Kate. Hey, thanks for having me. Hey, Kate. So let's start by talking about a few ways people in our listeners situation can have arrangements with a partner that they're sharing housing with.

There's a spectrum from like most lax arrangements to the most formal. So let's start with the most lax and informal agreement between our listener and their girlfriend. How would that work? And what might be some pros and cons? So, I mean, an informal agreement is what it sounds like, right? Just kind of saying, Oh, you know, I'm going to need you to pay rent. Now, here's how much you can pay. So the pro is obviously doesn't really get much easier than that, right?

It's kind of just like, well, here's what's going to happen. All right. You know, the big con to that is, this is just a conversation that you're having. And if questions come up later, at that point, it's he said, she said, it's each person's memory. Also, it could be harder to change like if your situation changes since you both just kind of agreed to it. Yeah, I feel like this is a situation

where it seems really easy in the beginning because you're just making it so you can go with the flow and figure out your housing payment, but it can lead to a lot of problems later on when you do have some sort of discrepancy or maybe one partner can't pay as much of the housing costs as they thought they could a month before. And then suddenly, because nothing is written down, it becomes a really complicated argument. Absolutely. I mean, that's kind of the thing, whether it's with someone who's a romantic partner or whether

it's someone who's a friend, you've got a different relationship than if this were simply someone who was your roommate or a tenant or something like that. There are different kinds of expectations that can come in and having a more formal arrangement is probably going to lead to some awkward and very not romantic conversations. But if you get a bit more formal and you have an actual rental contract where it's something that you can consult and you can agree, okay, this is how much you're going to pay. If the amount is going to change, this is how often it could change or how much it could change by. So then you've kind of got everything out in the open and it's something that you can go back and consult. It's something that you can still amend if needed, if your situation changes. Definitely

awkward to set up, but then kind of once you have it, that's like a living document that you can keep turning back to. And having a formal rental agreement like this would also help the person whose name is on the house or on the lease. Because if you have an informal agreement, and the person who is informally paying rent to the person on the lease of the mortgage suddenly just dips out or doesn't wanna pay, then the person who's on that document, the legal document to have to pay for this piece of property

is the one who's gonna be on the hook if something happens. One other thing, and I hadn't thought about this before because I am not a tax pro, but technically you are supposed to report rental. Even if it's just you renting a room within your house, that's still rental income. You are still supposed to report it to the IRS. Yeah, so that can get complicated. You want to consult with a tax pro and maybe a real estate attorney if you're going to be structuring a formal rental agreement like this. But speaking of getting even more formal, on the totally opposite

end of the spectrum from an informal agreement is something called tenancy in common. And it doesn't seem like our listener is going to actively pursue this, but it's still worthwhile to touch on so folks are aware of all their available options. And this is basically a formal agreement where you share property ownership between a non-spouse. You can divvy up ownership proportionally. So if one partner can only pay 40% of the mortgage costs, the other can pay 60, you could split up ownership accordingly. Right. And working out the details of that kind of agreement can definitely be complicated. So this is another one where a professional like a real estate attorney can come in very helpful. Something that's important to note with tenancy in common

is that there are major differences between sharing ownership in the sense that you've got a second person on the title and sharing ownership in the sense that this person has been added to your mortgage. For a lot of folks, especially in this current interest rates environment, they are not interested in adding someone to the mortgage because in order to do that, you have to refinance, right? So you're getting a new interest rate along with that. But you can add someone to the title at any point. You're just working with the title company to do that. Now, if someone else is on your title, that means that they have some kind of legal right to the property. The biggest thing to note here is that it does not mean that they are in any way on the hook to repay the mortgage. So if something

were to come up and you as the mortgage holder were having trouble paying, as far as the lender is concerned, someone who's just on the title but not on the mortgage doesn't even count. So that's an important distinction to make. Sounds like that can get dicey, potentially. So there are a few ways to structure these kinds of agreements. But let's turn to the financial aspect of our listeners question. They're really concerned with charging fair rent, which I appreciate. But let's talk about fair ways to share housing costs with a partner. The easy one, similar to just kind of having an informal agreement, is just going, you know, just kind of going with the vibe, like, oh, like, here's what feels right.

And so again, that's fewer awkward conversations, but it, you know, it might not make financial sense. And it also could be harder to adjust if either of you, you know, have a change to your situation, since there's not any real basis for why either of you is paying the amount that you're paying. So that one can get a little bit trickier. Yeah. It seems like just like you were saying, Kate, where it's similar to having an informal rental agreement. If you just have a situation where you're paying what feels right, you're going off the vibes of your finances or what you think someone can pay, then you're probably going to have some awkward conversations

down the road. In my opinion, it's usually better to have these conversations upfront. So you're really clear on the expectations going into something as important as figuring out who's paying for what amount of housing. Now, I also want to turn to splitting housing costs 50-50, because this is something that people might think is really fair, because you're two people, most likely. And so you could split the rent or the mortgage right down the middle. And that seems like a really clean and easy way to structure how you're going to cover this. But there can be some real challenges to this too. And it actually might not be as fair as it seems at first. So what do you

guys think about that? Right. So in theory, it's fair in that, you know, you're two people, you're using what, like the same amount of house, right? You're both contributing, but this really is only going to work if you actually make very comparable amounts of money, because as soon as there's any mismatch, one person's overpaying relative to their income and one person's underpaying. So say that one person is making $100,000 a year and one person's making $60,000 a year. If you were splitting 50-50, each person's proportions are going to be off by something like 13%. So the $100,000 person is going to be underpaying. They're getting a deal. Whereas the $60,000 person is going to be off by something like 13%. So the $100,000 person is going to be underpaying, they're getting a deal, whereas the $60,000 person is going to be stretching

to come up with their half of that amount. Yeah, you don't want to pull the wool over the eyes of somebody you're romantically involved with. Ideally, no. Don't do that. That's just bad karma. Yeah, not a great way to structure a relationship financially or romantically over the long run. I mean, even if you're just living with a friend, like this is somebody you like, don't do that. And have those conversations and be open about your income. It's not fair if one of you is living bare bones and the other person is rolling in savings because you're trying to be equitable, so to speak, about splitting your rent or your mortgage. And that's why we tend at NerdWallet to favor proportionally splitting housing costs like this

based on your income. And to do this, you can add up your two incomes to come up with your total household income and then figure out how you would split the housing costs proportionally so it's fair. Yeah. So using that same example of we've got one person who makes $60,000 and one person who makes $100,000, nice round numbers. They might not always be that way in practice, but it works for an example. So their household income would be $160,000. If you take each one of those and you divide the person's income by the household income, the person making $60,000 should be paying about 37% of the housing cost. And the person making $100,000 should be paying about 63% of the housing cost.

I am a fan of this method. It's something that I still do in my life because it's honoring the fact that, again, somebody is going to benefit way more than the other one if you're splitting rent 50-50 and somebody else is earning so much more. You want to be mindful of the fact that in a couple, you don't always earn the same amount of money. And sometimes you have one half of the person that you are romantically involved in. So you never want to be in that situation if you can help it. I'll also add that there are a number of ways where you can split housing costs proportionally.

There might be an instance where you actually split what your housing cost is for the mortgage or the rent 50-50, but then the person who earns more is covering utilities. So it ends up balancing out proportionally. It doesn't always have to be based on what the rent or the mortgage payment is specifically. You can kind of refigure it for whatever works for your situation. Yeah, I mean, you can also think about in terms of the time spent doing labor around the house, time is money. And so maybe you have somebody that one half the couple is earning less. And so they're able to cover less of the cost of the home, but maybe they earn less because they work fewer hours and they have more time to cook or clean or grocery shop or other tasks that are part of the upkeep of the home. So our listener mentioned that they were looking at rental prices in the area to see what fair

rent would be. And that's another approach. What do you guys think about that? So when it comes to deciding or determining what fair rent would be for your area, you also want to make sure that you're not comparing apples to oranges. You want to consider what it would cost to rent the kind of home that you own. So the listener mentioned that they live in a townhouse. That's going to cost a different amount every month than say renting a one or two bedroom apartment or renting in a detached house. So don't compare a townhouse to a two bedroom apartment. Compare townhouses to townhouses. And then think about this is what fair rent is for similar homes, because the person that moves in with you is going to enjoy that type of property with you. So that's one thing to think

about. And also, like, you know, you don't want to over or under charge, but it's tough because you might live in a home that would be so much more expensive than if your significant other were single and renting a place by themselves, they'd go for a much smaller kind of home because of their budget. So that's another thing to think about. Would your significant other rent a townhouse with a roommate or would they rent a two bedroom with a roommate? Absolutely. Would they go for a studio? Would they go for having a roommate? That kind of thing.

If renting one bedroom in someone else's home isn't something they would actually do, it's not maybe the best comparison. Something that would also be potentially worthwhile is just using a rent calculator. We have one on NerdWallet to figure out what would be affordable rent for her current income. Yeah. And I do like the impulse to get some data points from the market to bring something close to objectivity to this decision. But again, with how expensive housing is right now, this could make a housing payment unaffordable for the partner. And if our listeners goal is to be fair, this could end up being less fair than splitting housing

costs proportionally like we discussed earlier. Yeah. Months ago, Sean, you and I interviewed a listener who I believe she and her significant other were living in a high cost of living area, and they were living separately in rentals with roommates. And they wanted to move in together. They were ready to move to that phase of their relationship. But in doing so, they would be dramatically increasing their housing costs. And I really felt for them because it's one of those situations where you don't save money by moving in together. And all of a sudden, you're in a situation that's untenable. But you also don't want to be living with roommates forever. So what do you do?

And that's just another thing to think about. By moving in with you in the home that you own, are they just lowering their quality of life dramatically? And then what can you do to prevent that from happening? Yeah, you have to think about location, the roommate factor is real too, and other financial goals. I mean, for that couple, living together was a financial goal of theirs. And so even though it might not be the most cost efficient thing to do, it's what they wanted out of life. So in that sense,

it would still potentially be worth pursuing. I would probably have pursued that if I were them just to get to that next step with my partner and not have so many roommates. Yes. You reach a point in life where you just don't want roommates anymore. That's fair. Yeah. Okay. Well, Kate, Sarah, have you guys ever been in our listeners situation?

I guess either the situation of the listener or the girlfriend. And if so, how did you handle this? Not exactly in the same way. I wasn't a homeowner until I had been married for a few years. So when we bought our home, it was a joint purchase and we were both on the title of our home. But when my husband and I rented before we got engaged and married, and then obviously into marriage, we started by splitting it 50-50 and then ended up switching to paying proportionally to our incomes because hashtag girl boss, I was earning a lot more. And it just wasn't fair that I had so much more money at the end of the month to play with. So that was a discussion that we had. And then as our salaries adjusted over time, whether it was due to raises or switching jobs, we

recalculated what percentage of each of our incomes made up the household income and then readjusted the proportionality of our payments toward rent and now mortgage. And we still pay our mortgage proportionally to our income. So you are not going just on vibes. You are doing some math and making sure it's as fair as can be for both of you. Yeah. Some of the other stuff we do on vibes like groceries but then other bills we usually split those 50 50 and then there's like one or two bills I take on like extra just to sort of make up for things so yeah there's always some squishiness to it there's a little squishiness yeah okay what about you well I've definitely

been in the situation before of being like yeah we can just do what feels right and go just on vibes more or less because at the time I didn't want to seem greedy. I didn't want to seem greedy. I didn't want to seem like, oh, I was trying to take more than I deserve, but actually I really regret not standing up for myself and being like, okay, wait, can we actually talk about like how much money we're making and how this would work. I, for a couple of years, was splitting rent 50-50 with a partner who I did not know how much that person made. And what I found out later was that not only was that person earning more than twice what I was in terms of income, but was also getting financial help from his parents. So the whole time that we were together, I was

living paycheck to paycheck, draining it down to the very last dollar every month, not contributing to my retirement because I felt like I couldn't even put that money aside. And he was not doing that, very not doing that. And if we had been more open about money, if I'd known what he was earning, I would not have even remotely agreed to that. Right. That sucks, Kate. I'm really sorry that you went through that. It was not great. I'm glad you're out of that now. I'll say I've had a vibes situation that went fairly well. So my partner bought a house five years ago, and I was not on the mortgage. We didn't have a tenancy in common. Our informal formal arrangement

was that I would pay slightly less than half of the mortgage because I wasn't on it. I wasn't getting any equity from ownership of this house. And the idea was that I would be able to set aside a lot of money, hopefully, and be able to buy my own property. So we talked through our finances and who was paying what percentage of the mortgage, but we did it with other financial goals in mind. And I also picked up some utilities because I was earning more than my partner then. So it wasn't the most precise way to do it. It's not exactly what you're doing, Sarah, but it worked out well for us. And we also have a lot of really open and honest communication about our finances. And that I think is what

made all of this viable. Yeah. I mean, yeah, I mean, I will say what makes things a little bit easier in my situation is, you know, it's one of the benefits of being married and both sharing the title of the home and sharing the responsibility for the mortgage is, for better or for worse, we both have rights. And we're both building equity. This is our asset. It is a lot more difficult when it's one person's asset and the other person has no claim to it whatsoever. And so it is, you know, what are you paying for? And it's for the enjoyment of the property, the same way that you would rent a home from a landlord.

They're profiting potentially or not, not necessarily off of you owning the home, but you are paying into somebody else's mortgage and maintenance of the property, but you are getting a roof over your head. You're getting something for that money. You're getting a maintained property that you can live in that's kept up to a certain standard. Yeah. I did not have to pay for any repairs in the house. So that was nice. Yeah. I mean, I've definitely heard stories of people moving into a significant other's house and paying some form of rent and also buying furniture and decorating and doing all the stuff out of their own pocket for a property that they don't own. And then when they break up, it's like, well, I spent all this money on furniture and now I don't get to take any of

it. You know, it's, it's. Oh, oh, I would be taking that furniture. That's not even a question. Yeah. But then you have nowhere to go. So it's like, well, what do I do with this albatross of a couch? And it's, it is hard. So I would, yeah, I would caution anybody who's in the girlfriend situation, not only have conversations about the roof over your head, but also conversations about the upkeep of that property and what's your responsibility and what isn't. Well, something we've touched on a couple of times in this conversation is how awkward it can be to talk with your partner about money and housing. So it's probably a good idea if we discuss some tips for this. One thing we like to recommend at Nerd

Wallet is setting aside time, having a money date, which may not be the most romantic date you ever have, but it's probably going to be one of the most productive because you're dedicating 30 minutes or an hour and you're saying, we're going to hash all of this stuff out. Let's look at our income. Let's look at what our housing costs are, See how we can make this fair for all of us given our cash flow and our financial goals that we have individually and together. And then also maybe at the end of that time slot, put 30 minutes or an hour on a timer. When you're done with that, go on a walk or go have an actual date, something enjoyable so that you have something to look forward to when you finished this task. Anything else you guys wanted to add on to that?

Yeah, I would say don't move in with anybody if you don't know their income. Sorry, Kate. No, I mean, that's, that's, uh, you should, you should learn your significant other's income. Maybe not on like the third date. That's not like a third date thing, but it could be like a 10th date thing. You know what I mean? Yeah. No, definitely. That's a real fool me twice shame on me. It happens.

It's not your fault. And if you are in a relationship and you're inclined to lie about those things, I mean, I don't know. Go to therapy. Go to therapy. Because apparently you have so much family money to play around with. You have money for therapy. Yeah.

I feel like it's also often hard because in general, talking about money is still, still somehow somewhat taboo. And I think particularly if you're a woman in a heterosexual relationship and you're asking a man about how much he may, like there is definitely a perception there. Right. And that you don't want to come off as like, Oh, like I'm trying to get your money. I'm a gold digger. I'm doing all this stuff. Right. And so it can be really hard to bring stuff up where you're just trying to kind of find out like what the baseline is, you know, what's happening in the relationship and what's going on. Because, you know, you don't want this like stigma or this perception or you're like, you know, oh, I don't want to make demands or

sort of be like that. And it's like, you're not being like anything like this. This is like a pretty basic thing. That can speak to the power imbalance in a lot of relationships like this, especially when one person is on the mortgage and the other is not. And for the girlfriend in this situation, it's probably going to be a good idea to beef up that emergency fund a little more than you might anticipate originally, because you want an exit plan if you need one, and that would hopefully be able to cover a security deposit, maybe first last month's rent on an apartment. If you do realize you need to get out of there, you don't want to be financially dependent on a partner or dependent on them for housing too.

That can be a really tough situation. Yeah. You always need the FU fund. Yes. Whatever that stands for. Freedom, other words, whatever. I mean, I would also say, I mean, we talked about maybe if somebody's coming into a relationship also with family money, a lot of times there's this impetus to hide that because sometimes there's a feeling of shame. You have this money that you didn't earn and you benefit from it, but it's not through work. It's through privilege.

And sometimes people have very complicated feelings about that. So they tend to keep it pretty quiet. Or you're concerned that somebody might only be with you because you have that family money. And so hopefully you are in a relationship where you feel like you can be honest about all the sources of your income and you're with somebody that you trust and their motivations for being with you are not your money, but they're with you and you have money. And maybe there might come a time when you're together long enough that they also might benefit from your family money, but when it's appropriate. Okay. Well, Kate, thank

you so much for talking with us today. Absolutely. Thank you for having me. And that is all we have for this episode. If you have a money question of your own, turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Visit nerdwallet.com slash podcast for more info on this episode. And remember to And here's our brief disclaimer. We're not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.