How to manage finances with a roommate

Having roommates can be an amazing experience — it can also make your life a living (and live-in) nightmare. Very often, the difference between those two situations involves household finances.

How you decide to handle financial responsibilities with your roommates will have a huge impact on the peacefulness of your coexistence. Here are some strategies for approaching the topic.

Decide who is responsible for what

When you're living with roommates, it's often a good idea for each person to be in charge of collecting money for and paying one type of bill. For example, one person can handle the rent, another can handle the internet and streaming, and a third person can handle the utilities.

Also, decide when everyone should send in their portion of the bills. For example, if rent is due on the 1st, then have everyone pay their portion of the rent by the 26th. That will provide enough time for the funds to be deposited in your bank account so you can send the full amount to the landlord.

Apps like Splitwise are great for dividing bills. Each person can add a bill, decide how to split it and the app will calculate how much everyone owes. Then, they can send in their portion via Venmo, Zelle or PayPal.

(Even though a joint bank account may seem like it will simplify things, avoid opening one with roommates. When you share a bank account, each person can legally withdraw funds from the account at any time without notifying the other account holders. Also, they can overdraft the account and incur fees that you will be responsible for.)

Protect yourself

Even if you have roommates you can trust, you should still verify that all the bills are getting paid on time and in full. If possible, ask your landlord if they will accept separate rent checks from each roommate. That way, the responsible roommates aren’t penalized if someone doesn’t pay their share.

If the landlord doesn't allow this option, then you should find a way to double-check that the rent is being paid. The easiest way to do this is to submit the payment yourself.

For other bills, you can create a mutual email address that everyone can access. Use this email address when creating online accounts for utilities, internet and more. That way, each person can see when bills are due and whether you’re behind on a payment.

Some utility and internet companies will let you add multiple people to the account, so everyone has access to it. This also makes things easier if there’s an issue with the service and someone needs to call the utility or internet company.

You should also discuss who will be responsible for late fees. For example, if one person pays the electric bill late, should the late fee be split among all the roommates? Or is the bill payer the only party responsible?

Talk about shared expenses

Rent, utilities, internet and streaming services are commonly split between roommates, but what about groceries and household products? Before you move in, talk about how you want to divide these items.

When I had a roommate in college, we bought most of our food separately, except for basics like milk and eggs, which we would take turns buying. If we needed to buy soap or toilet paper, we split the costs evenly. Some roommates may prefer taking turns buying these items. Choose a system that works for you and keep track of who has bought what.

You can also all decide to pitch in a certain amount each month to use for shared expenses. If there’s money left over after a few months, everyone can get their money back or you can splurge on a party or night out.

Discuss potential issues early on

When you live in a shared space, you will almost certainly face conflict at some point, so focus on effective communication.

Before you move in with your roommates, talk about any potential issues and how to handle them. If one bedroom is significantly bigger or comes with an en suite bathroom, should that person pay more in rent?

Also, give your roommates the benefit of the doubt and try not to complain behind their backs until you’ve talked to them. Confronting them directly may be awkward, but it’s better than letting resentment build up over time. This is even more crucial if you’re friends with your roommates, because nothing erodes a friendship faster than unresolved issues.

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