Thinking of moving in with a partner, friend or family member? Make sure you are aware of the financial and practical implications of sharing a home.

There are many reasons to move in with friends, family or a partner - renting or buying is expensive, so sharing living space can be a practical and cost-effective solution.

If you live in a city, it is also a good way of making sure you are able to live closer to where you work, so saving you commuting costs as well as the time spent travelling.

Before you move in together, it’s important to talk about how you’ll sort out the household finances.

The 5 financial things you need to know before moving in together

You might have different ideas to your prospective housemate about how to pay the bills and manage the money so the best way to see off any conflict over finances is to make sure you all know from the start what your responsibilities and challenges may be.

These include:

1. Who pays the bills

Whether you are living together as flatmates, a group of friends, or a partner, there will be one person who will earn more than everyone else.

In order to make sure the bills are paid you will need to decide how you split the costs.

Deciding on how you want to split broadband, utilities, rent or mortgage costs is vital if you want to avoid arguments.

2. How your flatmates affect your credit rating

Your credit rating is a file of financial information that lenders check before they give you credit. It is compiled by credit reference agencies including Experian and Equifax.

Your credit rating can affect the deals you are offered for credit cards, personal loans, mortgages and even broadband and TV contracts and your rating will be affected by missed payments or multiple applications for credit in a short period of time.

When you apply for joint credit with someone else you create a financial association. This would be if you applied for a mortgage or joint bank account, or even shared names on a broadband contract in some cases. 

The finances of the other person will be linked with you on your credit report under a section called Financial Associations.

What is a financial association?

This is when you share a credit account with someone, which means you share credit report information too. 

You'll become financially associated with someone if you:

Marriage doesn't create a financial association, and you aren't legally responsible for your partner's debt unless it's in your name as well. 

If you’re planning on moving in with others, it may be a good time to check your credit report. 

3. Using a joint bank account to pay the bills

If you are moving in with a partner, then having a joint bank account might seem a sensible option to share the household costs.

Using a joint account for bills can be a good budgeting tool. You can keep your own bank account and set a joint one up for bills, for example.

Some couples choose to pool their salary and earnings. Using a joint salary to pay bills means you need to set up a standing order to pay your share of bills into the joint account. 

However, it’s worth noting the bank or building society can ask either one of you to pay off the whole debt on a joint account (such as an overdraft) if they wish. That means if you and your new partner split up and he or she refuses to pay, you could be asked to repay every penny.

Joint loans and debt – what it could mean for your finances

Before you and your new partner take on any joint loans, such as a bank loan or a mortgage, it’s important to be clear about what it could mean for both of you.

First, you are each responsible for paying off the whole debt.

Second, when you take out any form of joint credit, your credit records (which show how promptly you’ve repaid money you’ve borrowed) become linked.

This means that if you or your partner applies for credit in the future, the lender will be able to check both of your credit records.