Getting a roommate may save you money on rent, but sharing your living space can create a whole additional set of financial headaches. From housemates who are chronically late in paying the landlord to those who never seem to have money on hand when you’re going in on pizza, money issues are a major source of stress in roommate relationships. You can keep conflicts to a minimum by keeping these five tips for managing money with roommates in mind.
1. Talk about money before you move in
Whether your potential roommate if your best friend or someone you found on Craigslist, you should talk about money issues with them before you start moving boxes into the apartment. After all, sharing a living space and expenses with someone creates a financial relationship between the two of you, one that can could easily turn into a nightmare if you’re not careful. An irresponsible or shady roommate could leave you on the hook for unpaid rent and bills or even steal your identity.
Avoid problems by screening your roommates before you sign a lease. Ask about their employment situation, approach to paying bills, and philosophy about using shared resources (e.g., Do they like to crank the thermostat in the winter or do they prefer to save money by throwing on a sweater?) Don’t just take a potential roommate at their word, either. Running a credit and background check on a potential roommate is just common sense.
2. Put it in writing
Verbal agreements about financial matters can be easily misunderstood. Rather than assuming you both really meant it when you agreed to split the bills a certain way or share a Netflix account, put it in writing. A formal roommate agreement can spell out who is responsible for which bills and expenses, whose job it is to send in the rent check, what happens if a roommate decides to move out, and how often your roommate’s girlfriend can stay over before she starts having to chip in for rent.
Depending on your situation, separate leases for each roommate can be a good idea, if your landlord allows for it. Then, if one roommate flakes on paying rent, only he is subject to eviction, not the entire household. If you both sign the lease, make a note of who paid the security deposit and be sure to remove your name from the lease when you move out.
3. Don’t split everything evenly
A 50-50 split isn’t always fair when it comes to sharing housing costs. Some bills, like heat and electric, are harder to split based on use, so an even division is usually easiest approach. But if bedrooms are substantially different in size or come with certain amenities, it makes sense to split the rent accordingly.
Splitwise, an app designed to help people track and split expenses, has a rent calculator you can use to divide rent costs so the roommate with the larger room and private bath pays more than the person stuck in a tiny room with no closet. Or use The Rent Is Too Damn Fair, which will automatically assign rooms and determine rents based on what you and your roommates bid.
4. Make technology work for you
Until recently, keeping track of who owed who what in a roommate situation meant hounding people for cash and leaving passive aggressive notes on the refrigerator. Now, apps make splitting roommate expenses way less stressful. In addition to helping you divide rent expenses fairly, Splitwise also lets you and your roommates easily manage your IOUs. For example, if you pick up toilet paper and paper towels at the store, you can let your roommates know how much they owe you with the app, and they can send you payment via Venmo or PayPal.
Automating payments can also reduce roommate financial friction. RentShare allows you to divide rent expenses and then automate payments to your landlord, so you won’t have to worry about hounding your slacker friend for his monthly check.
5. Keep some things separate
You may be sharing a home, but you don’t need to share everything with your roommates. Take groceries. While the idea of sharing the cost of food may be appealing, it only really works if you and your housemates have similar eating habits. If you eat only fresh and organic food and your roommate lives on diet of frozen burritos and instant ramen, splitting the grocery bill will only lead to conflict when you object to paying for junk food and he wonders why you bought expensive heirloom tomatoes.
Going in together on major purchases with roommates can also be dicey. Splitting the cost of living room furniture or a new TV seems like a good idea at the time, but who gets the couch or the flat screen when you go your separate ways? If you need to furnish common spaces, consider having everyone contribute individual items. Yes, you’ll have to replace the kitchen table if your roommate moves out, but it’s a much better option than cutting it in half so you each get your fair share.