When Josh from Orlando, Florida called The Ramsey Show asking for advice about navigating finances and splitting bills with his girlfriend, host Dave Ramsey’s advice was clear: don’t move in together before marriage.
Josh makes more money than his girlfriend and, when discussing moving in with her, he suggested they split the bills 50/50 since they aren’t married. This would leave him with more money left over to pay down his debt.
His girlfriend, however, feels that the extra money should be put in a savings account for them both to use, since Josh would only be saving money to pay off his debt because of her contribution.
“I kind of understand where she’s coming from because she is helping me save money and that money is paying off debt,” Josh explained on the show. “But at the same time, I feel like that’s not necessarily, like, a healthy mindset.”
Here’s what Ramsey and co-host Dr. John Delony had to say.
Ramsey’s advice is pretty straightforward. In fact, he points to data that suggests cohabitating before marriage negatively impacts your finances and your relationship.
“So, you want a roommate that you sleep with, but you don’t like their answers about money,” said Ramsey. “Moving in actually sets you back on several fronts. The data is horrible on living together. The relationship data and the financial data sucks.”
Delony pointed out that living together would actually put his girlfriend at a disadvantage. “She’s totally exposed if she moves in with you, pays off your debt and then you break up with her,” said Delony.
It’s worth noting that Ramsey is an evangelical Christian, so his stance on living together before marriage is rooted partly in his religious beliefs. But there is some research to back him up — at least in part.
A study from Sonya Britt-Lutter — an associate professor of personal financial planning at Kansas State University — and Cassandra Dorius, an assistant professor of human development and family studies at Iowa State University, found that people who cohabitate before marriage have lower net worth and accumulate fewer financial assets than married couples.
“Cohabiting relationships tend to be more short-term and unstable, and you keep starting over every time,” Dorius shared with U.S. News. “That is difficult for wealth generation.”
However, the data isn’t entirely clear-cut. The same study cites previous research showing that people with higher consumer debt are more likely to cohabitate in the first place. That raises a “chicken and egg” question — does living together cause weaker financial outcomes, or are people with financial challenges more likely to move in together before marriage?
Cultural trends also play a role. Cohabitation has become more common in recent years, with nearly two-thirds of millennial couples living together at least once before marriage. The long-term financial outcomes for current couples could vary from the Britt-Lutter and Dorius study, which was performed in 2017 and may reflect trends from years earlier.
Still, without careful planning, couples who share a home before marriage can face real risks if the relationship ends — especially if one partner is contributing more toward debt or asset growth than the other.
Read more: Do you own rental properties in the US? These 6 hacks can help you boost your income and lower your tax burden
If you plan to live with a partner before marriage, it’s important for both partners to protect themselves financially. Here are a few key steps you can take to make that happen:
Have a candid money conversation before you move in: Discuss income, debt, spending habits and savings goals. Be open and honest
Decide how to split expenses: Will it be 50/50 or a split based on income percentage? If one partner earns significantly more than the other, it often makes sense to split based on income percentage — so if one person earns 60% of the total household income, they cover 60% of the shared expenses
Keep some finances separate: If you don’t have the legal protections of marriage, don’t fully combine your income. Consider creating one shared account where you deposit money for shared expenses, but keep your personal account — and your personal savings
Protect big purchases: If one person pays more toward a shared asset — like furniture, appliances or even a car — keep records of who paid what. Consider a cohabitation agreement to outline ownership of shared property
Revisit the plan regularly: Income, goals and expenses change over time. Check in every few months to make sure the current agreement is fair to both partners
With more partners living together — either before marriage or with no plan to ever marry — it’s important that couples have frank conversations about money. Mingling finances before marriage can be risky, but making a plan can help you share a home without putting your financial future in jeopardy.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
