3 Tips for Splitting Expenses With Roommates
More and more Americans are seeking roommates to help cut back on expenses. The number of shared households, defined as an adult who is not in school and is living with a family member or other adult who they aren’t romantically involved with, increased by 11.4 percent, to 22 million, between 2007 and 2010, according to Today. Furthermore, shared households accounted for 18.7 percent of all U.S. households in 2010, according to the U.S. Census Bureau, up from 17 percent of all households in 2007.
And while rooming with someone (or several people) can help you cut back on expenses, it can also be stressful. Rooming with others means relying on them to pay their fair share. Luckily, thanks to the many great website and apps available, there are plenty of stress-free ways to ensure everyone is paying their cut each month. Here’s how you and your roommates can split and keep track of your household finances.
1. Site sharing
There are several great websites available that are worth checking out. Using a website, or app, prevents one person from being stuck with managing the house’s finances because, let’s face it, no one likes that job. Take Splitwise, for example. It’s simple; all you need to do is enter some information about the apartment, and let the calculator do the thinking for you. It will give you an estimated cost, based on your specific room, and it takes into account the size of your bedroom, whether your room has windows, and even if it’s a long walk to the bathroom, according to the New York Times. The calculator is intended to help simplify group finances, encourage on-time payments and prevent awkward roommate encounters. It also keeps a running total over time, so your roommates can pay each other back in one big payment and avoid disagreements on who owes who what. It even has friendly email reminders for those who may be a tad forgetful.
The Rent is Too Damn Fair is another site worth checking out. “Splitting rent fairly between roommates is a difficult problem. Not only do rooms range in size, condition, and features, but personal preferences vary, too. Enter TheRentIsTooDamnFair, a system designed to elegantly consider all these factors and determine who should live where and how much they should pay,” according to the website.
The site splits the rent using a three-step process. First, every potential occupant bids the most they would be willing to pay to live in each of the house’s rooms. The site then assigns each person to a room, and calculates each person’s rent, making each roomie’s “surplus,” which is the difference between their rent and their bid, equal. Just like that, you’ve eliminated hours of discussions with your roommates about how much everyone should pay.
2. App-titude to pay
What would we do without technology? For one, we’d probably fight with our roommates over finances more. Just like websites, there are also plenty of apps available to help roommates split bills in an easy and efficient manner. First on the docket: Fairshare, an app designed to split tasks, encourages communication and keep finances in line. The app lets roommates split up household chores; you can then check them off as they’re done, ensuring everyone knows who’s doing what. This helps make sure everyone is pulling their weight around the house, and prevents anyone from accidentally redoing the same chore. There’s also a house feed that lets roommates connect, whether it’s to organize a dinner, choose a movie, or see what everyone is up to. Finally, its bookkeeping feature keeps track of upcoming bills and who still needs to pay. At the end of the month, each roomie will get a final statement, detailing where they stand. This nifty app is available for Androids and iPhones.
Venmo allows you to exchange payments with people in your social circles (in this case your roommates) by using your smartphone. The app’s simplicity is what makes it such a great tool. To pay your friends instantly, all you have to do is select a friend, type the amount you want to exchange and select a sharing option. Don’t worry, the app uses bank-grade security systems and data encryptions to keep your funds protected. Sounds sort of like Paypal, right? The big difference is that Venmo is completely free as long as you use a bank account, supported debit card, or a Venmo balance to fund your payments. If you use a credit card, there is a 3 percent fee.
A pair of former freshman year roommates, Andrew Kortina and Iqram Magdon Ismail, came up with the idea for a mobile money service after realizing the inconvenience of paying each other back.
“One of the times that we got together Iqram didn’t have his wallet and he ended up writing me a check,” Kortina told Forbes. “We thought, ‘this is weird that we’re still doing this [because] we do everything with our phones.’”
The Muse suggests trying SpotMe, an app designed to remind roomies about what they owe. When you’re living with others, there tends to be a lot of loaning and lending, particularly with money. This app lets you itemize expenses and keep a running balance of who owes what. It’ll help you even keep track of the little things, such as who should pay for the next dinner or whose turn it is to get the next round of drinks. You’ll be able to track roommate bills, and it easily lets you lend, split bills or borrow with one simple click. The app’s available for iPhones.
3. Talk it out
For a few non-technology oriented suggestions, Manilla recommends giving every roommate a bill to manage. Rather than put the sole financial responsibility and task of nagging on one roommate, know exactly who will be paying what, and make sure that it comes out fairly. For example, if only one roommate’s name is on the lease, have that person pay rent. The other roommates can then handle utilities, electricity, cable and food, ensuring everyone is paying their share. Make sure to write this down somewhere, so it’s easily accessible for the house to see.
When determining how to split the bills, sit down and figure out how much people should be paying based on their specific usage. Ask a few of these questions, as suggested by Manilla.
- If your roommate doesn’t watch TV, should he or she pay for cable?
- What happens if somebody accidentally leaves the air conditioner running all day? Are they responsible for paying more?
- When the bill comes, do you need to split down to the cents, or can you round to the nearest dollar?
- If someone goes on a two-week vacation, do they still have to pay for a full month’s electricity?
- Does a significant other spend half their time at the apartment? If so, should that roommate be required to chip in extra?
Be flexible and open to changing these requirements as roommates’ needs and usage change. Remember, talking with one another frequently can help prevent you and your roomies from ever having a major blow-up about money.