Living under the same roof with someone has its pluses and minuses. While you may have to forgo the excitement of living alone, you get to share rent and other recurring expenses with someone so that you can save money for your future commitments. Although that’s the biggest plus of living with a roommate, there’s a downside to it.
Besides the general problems that can arise while living with roommates, a significant issue relates to money. You have no idea how quickly a money matter can escalate into a conflict that results in broken relationships. And this is especially true when you find a roommate who excels in eluding rent and utility payments with excuses that don’t add up.
While moving out is an option, it may not be feasible right away, so living in a rental home with someone you’re not compatible with can be painful. Therefore, to ensure that the living situation doesn’t turn into a nightmare, you and your roommate need to get together and put a budget in place.
Here are 11 tips you can follow to set up a budget with your roommates:
1. Create financial rules before moving in
Before you decide to move in with your perfect roommate, get together and openly discuss finances because this could be a deal-breaker. To determine their financial strength, create a list of questions to ask them when you meet. The questions you ask them should relate to the following topics:
- Their monthly income
- Whether their income remains the same every month or keeps changing
- Their current job security and tenure
- Their credit score
- Whether they have any pending credit card debts or student loans, which could adversely affect rent and bill payments
- The expenses they’re willing to share
- Whether they have any money set aside for emergencies
While the questions might seem too probing, remember it’s essential for you to choose a roommate with best quality regarding the financial wherewithal to pay the rent and utilities. Should they be laid off from their job, who’ll pay the rent and the bills? You!
Finally, according to the joint and several liability clause in your lease, every tenant is equally responsible for paying the rent as a whole, not parts of it. In other words, if your roommate decides to take a hike right before the rent is due, you’re in line to pay for it through and through unless, of course, you can find someone else to replace them soon.
2. Record expenses on spreadsheets
At times, you might feel a bit crazy managing multiple expenses, such as rent, utilities, and others. If there are two of you, it’s okay, but the situation may spiral out of control if you have more than one roommate. There’s bound to be confusion about who needs to make a payment or the payment amount and due date.
So, to streamline the process, it’s an excellent idea to use an excel spreadsheet and record data such as the expenses to be paid, the payment dates, and the payment owners, monthly. Update it from time to time whenever someone’s paid their share. How will this help? Well, anytime someone claims to have made a payment that they haven’t, the spreadsheet will serve as evidence and resolve issues.
In a word, while creating the spreadsheet, make sure your roommates are present, and they understand the process completely and what they each owe every month.
3. Appoint one roommate to make payments
It’s wise to appoint one roommate to take care of the rent and utilities. Be sure to select someone who has a knack for managing money and making timely payments, if there are multiple people. Check if all others are on board. If there are two of you and your roommate has no issues with you taking up the task, go ahead.
The other roommates should be responsible enough to pay their portion of the rent and utilities to the finance manager a couple of days before the payments are due. It makes sense to use digital apps such as PayPal, Venmo, and Splitwise to track the payments since they feature in the payment history.
Cash payments are always tricky because you have no way of keeping an account of whether someone who claims to have paid, has actually paid or not.
In the end, drive home the point that the payments must be paid by the due date without fail, so they need to have their shares ready well before time.
4. Discuss meals and grocery expenses with your roommate
Decide whether you’re comfortable cooking meals with your roommate and sharing the grocery expenses or you’d rather cook for yourself. In that case, you’ll be responsible for your own groceries. Practically speaking, it works well if you purchase your own groceries to avoid conflicts over food.
People have different taste buds or might prefer buying high-priced stuff. They might even want to step out more and eat at diners. Therefore, it’s not a good idea to share groceries with your roommate if you want to keep your expenses to a minimum.
On the other hand, there are certain essentials such as milk, coffee, condiments, and juice that you may find challenging to consume alone. In this case, it’s wise to divide the costs of such items so you both get to consume them while ensuring that none are wasted. Have an open conversation with your roommate to leave no room for future complications.
5. Purchase furniture and similar items separately
As far as accessorizing the house is concerned, a great way to avoid confrontations is to buy furniture and similar items separately. Why, might you ask? If you decide to buy the furniture and other items together and split the overall cost, that works too. But when it’s time to move out, do you intend to sell off the stuff and divide the earnings? Or are you going to take with you the things you purchased?
There might be a lot of confusion about who the rightful owner of a piece of furniture or crockery is, leading to unnecessary arguments and making the process of leaving doubly painful. So, talk to one other about what each of you is interested in buying for the house and buy them separately.
You might be more excited to purchase couches, coffee tables, and rugs for the living room, while your roommate could take up pots, pans, tables, and chairs for the kitchen. Just ensure that you make a note of the things you’ve purchased or use nail paint to add your initials on them.
Finally, something else you may want to consider is what happens if you damage something that your roommate bought and the other way around. The logical thing to do is to pay them for what you damaged and have them pay you when they do the same.
6. Have a policy in place for guests
It’s a given that you and your roommate will have family and friends over while living together. They might come over now and then and stay for a few days. When they’re around, they’ll be consuming food and using household supplies. So, the question is: Who’s going to pay for their groceries and supplies? The answer is pretty obvious, isn’t it? If it’s your friend, you automatically become responsible for taking care of their needs, so when you buy your own groceries and toiletries, buy their share too for as long as they’re around.
If the guest uses or consumes anything that belongs to you or your roommate during their stay, either of you needs to reimburse the other depending on whose guest they are. Simple.
To sum up, remember to have an honest discussion with your roommate and keep each other informed whenever you choose to have visitors over.
7. Brace yourself for unexpected costs
While you and your roommate may have prepared a budget that accounts for all of your shared expenses, keep in mind that you might come across unforeseen costs, such as damages to the apartment or house you’re living in.
Now, ordinary wear and tear of the apartment or house is allowed and doesn’t involve any expenses on your part. Suppose the extent of the damage is large-scale, such as holes in walls or a badly-torn carpet. In that case, the cost of repair or replacement will be deducted from both your security deposits, provided both of you are responsible for the damage.
Should you be accountable for the damage, you need to pay for it from your deposit. Likewise, if your roommate’s caused the damage, they need to fork over the expenses from theirs.
Other unexpected costs could include additional fees charged by landlords for services such as valet trash or maybe a pet fee if you decide to get a furry friend. Also note that many successful landlords do not charge for it. Additionally, be careful not to purchase things on the spur of the moment and expect your roommate to pay for them. And it works both ways!
In conclusion, whatever may be the unexpected costs, be sure to have some emergency funds in hand to deal with the situation.
8. Decide how to split household supplies
For rent and utilities, the payments are always divided equally among roommates. As far as household supplies go, there are essentials such as toilet paper, paper towels, laundry detergent, napkins, and cleaning supplies that you and your roommate will be using. So, it makes perfect sense to divide the costs of these items equally.
Make sure you buy them in larger quantities because you might get great discounts and end up paying less. Also, you can rest assured that you and your roommate won’t need to worry about household items for a long time!
9. Create a roommate agreement
A roommate agreement contains rules, expectations, and healthy boundaries concerning shared expenses, food consumption, use of things owned by each member, and policies relating to guests. Once created, read, and signed, it leaves no room for doubt concerning the standards of behavior each roommate is expected to follow.
Sit together, discuss in detail, and come up with guidelines that work for all. If you or any of your roommates have issues concerning any of the rules, get them clarified or modified to suit everyone’s requirements. At the end of the day, you need to think about yourself and those you’re living with and know where to draw the line, so that you can peacefully coexist.
10. Clarify consequences of non-payment of expenses
If you’re responsible for paying the rent and utilities and most of your roommates pay you their share on time, there’s no reason why everyone has to suffer because one person didn’t bother to give you their share before the due date. Before the monthly payments begin, let all your roommates know that they need to take up all the household chores if anyone decides to pay later. If they still don’t pull up their socks, they need to vacate the apartment or house at the end of the month.
Moreover, when your so called "passive aggressive roommate" deliberately delays payment of rent or utilities, they need to bear the entire late fee amount. Add these details into the roommate agreement.
In summary, while the onus of paying the rent and utilities might be on you, never make the mistake of paying them till all your roommates have shared their portion of the expenses with you. This should keep everyone on their toes and help avoid delayed payments.
11. Talk about money issues and saving money
Occasionally, situations may arise where utilities or other expenses (such as internet and cable) may end up being more than what you set aside monthly especially in big cities like NYC, San Francisco, Los Angeles, San Diego. Technically, the reason you’re sharing a roof with others is to cut costs and save money. If you don’t manage to do that, it defeats the very purpose of living together, doesn’t it?
So, call a meeting and brainstorm ideas to lower your expenses or what you spend outside of shared ones. For instance, you could have reduced electricity bills if you use energy-saving bulbs. To that end, do away with a couple of streaming services or use appliances that consume less energy.
That said, if any of you have problems with the money you’re contributing towards monthly expenses, make it a point to broach the topic and talk about it openly instead of seething inside. Communicate, and you might find a viable solution to whatever’s bothering you without inconveniencing others.
Conclusion
Although we mainly direct our attention towards the negatives of something, we must also focus on the positives. The most positive aspect of living with roommates is the money you save, which you can use for emergencies or things close to your heart. As far as roommate money problems are concerned, communication is key to resolving all issues. Be as candid in your conversations about money, including setting payment rules for everyone to follow, and things should fall into place!
