Last Updated on 11/15/2024 by Rany Burstein
Ah, the end of the month. The time when bills come knocking and roommates start scrambling like squirrels. If you’ve ever lived with a roommate, you know the feeling: splitting bills is like trying to solve a calculus equation with a head full of cotton candy.
Suddenly, the complexities of splitting the utilities feel like a game of Jenga — one wrong move and the whole tower comes tumbling down. And let’s not even get started on trying to divide up the grocery bill when one roommate thinks caviar is a basic food group and the other is surviving on ramen noodles.
Whether you are moving in with an acquaintance or searching for a new roommate — you will need to discuss how you will be splitting bills with roommates. From pizza night math meltdowns to epic battles over Netflix bills, this is the ultimate guide to navigating the financial maze of living with roommates without losing your sanity or your wallet!
Ready to start managing your shared expenses with ease? Here are the tips for managing shared expenses with roommates that you’ve been looking for.
Tip 1: Set Some Ground Rules
Setting some ground rules before you enter into any agreement is pivotal. This is why we suggest drafting up a roommate questionnaire for your potential housemate to understand if the two of you are on the same page when it comes to sharing expenses other than rent.
All roommates must agree on how you propose to divide costs, what expenses are to be divided, etc. You can make a roommate agreement and put your established rules in writing. Make sure that the roommate agreement is transparent and fair.
Some ground rules you should discuss before settling in with a new roommate are:
- What happens when one roommate is late for payment?
- Who pays for what.
- How to split the rent.
- Which expenses are shared, and which are considered separate?
Tip 2: Divide Bills Fairly
What you consider a fair way to split the bills is highly subjective. Some people prefer the income-based method, while most prefer sharing equally. Whichever method you choose, add it to your roommate agreement and ensure all new and old roommates are satisfied with the arrangement. Here are a couple of ways you can try to split rent fairly:
- Income-Based: Here’s how you can split bills based on income. For example, if the rent is $1,500, each roommate will pay a pre-decided percentage of their income towards the rent. This works best for couples or if there is a huge gap between the incomes of roommates.
- Equally: The easiest way to split utility bills, rent, etc., is to divide them all equally. Every cost is divided 50:50 between roommates.
- Usage-Based: Here is where it gets a little tricky. You could split the bills based on usage. So if a person has a larger room, they would pay a higher portion of the rent. Similarly, if a roommate stays home all day, they would pitch in more for the utility bills. However, keep in mind that most items can’t be recorded perfectly — like water usage or TV.
- Take Turns: Each roommate can take turns paying the rent or bills each month. This frees up space for other roommates to spend or save more on their ‘off-months.’
- Assign Bills Each Month: You can assign bills to each roommate and cycle them monthly. For example, if roommate A pays for rent, roommate B pays for utilities, and so on. By divvying up the expenses, you can avoid the headache of splitting each bill in four ways, which can quickly become complicated and time-consuming. Moreover, it will help each of the roommates build their credit score by making timely payments on several mediums.
Tip 3: Use Apps to Divide Expenses
If you wish to avoid the comedic circus of budgeting blunders, we suggest using an app to split the bills and other expenses. There are plenty of apps for sharing expenses that allow you to track bills, remind everyone of upcoming bills, and tally who has paid or not. It is like an old-school spreadsheet but easier and more centralized.
- Venmo or Zelle: Request payments from your roommates for their share of the rent, groceries, or more. No more excuses for not having cash on hand!
In fact, in a survey that we recently ran asking Diggz members how they are splitting their bills, 88% responded that they use Venmo and Zelle. However, 11% said they would love a better way, so below are some of the best bill-splitting apps.
- Splittr: Splittr is a great bill-splitting calculator for group expenses, whether monthly utility bills or group dine-outs. Each member can enter expenses as they go, and Splittr will let you know who owes what.
- Splitwise: It is one of the best bill-splitting apps to calculate payments, send reminders, tally which roommate has paid, track upcoming bills, etc.
- OurGroceries: Make your grocery lists on the app and invite your roommates to make changes or track items. It helps you divide bills based on the mutually decided list.
- June Homes Roommate Bill Splitter: This tool helps you divide expenses among multiple people. It takes into account the number of roommates, the cost of power, water, food, and cleaning supplies.
- Excel / Google Sheets: You could always try the old-school method using Excel or Google Sheets to split expenses. While a traditional Excel sheet doesn’t allow you to send reminders or tally payments, it works as well as any bill-splitting calculator in the market.
Tip 4: Decide Which Expenses to Share
It is smart to decide which expenses you consider joint before moving in together. Jot that down for your next roommate interview. This helps avoid any confusion or disagreements down the road.
And obviously, you are rooming to reduce expenses, not to exchange pleasantries on the horrid Monday mornings. So it’s no surprise that rent and utility bills are always divided amongst roommates. But there are plenty of other expenses you may want to share, such as groceries, cleaning supplies, entertainment, toiletries, etc.
There’s no one-size-fits-all approach to deciding which expenses to share. For example, if you’re a foodie or have specific dietary preferences, dividing grocery bills may not be practical. Similarly, your roommate might prefer the single-ply tissue — and nobody wants that!
The best way is to have an open discussion with your roommates and mutually decide which expenses will be shared and which ones will be kept separate.
Tip 5: Have a Roommate in Charge
If you would rather not use apps to streamline the payment processes, you should at least have a roommate in charge. This roommate can take on the role of a treasurer, responsible for collecting and distributing funds for shared expenses, keeping track of expenses, and maintaining records. It helps avoid confusion and disagreements about who owes what and when.
It’s important to choose a reliable and organized roommate, a.k.a. the mom of the group, who is willing to take on this responsibility. By having a designated roommate in charge, you can keep the financial aspect of living with roommates organized and transparent, making the experience smoother for everyone involved.
Tip 6: What to Avoid?
Late Payments
If you’re the responsible one footing the rent bill from your account each month, late payments from your roommates can leave an unwelcome stain on your credit report. Nobody likes to constantly nag their roommates to pay up. Try using the apps we suggested to ensure your roommates are reminded of the coming bills.
Irresponsible Roommates
You don’t want to end up with a roommate who is either, so frugal that you have to squeeze rent out of them every month or so spendthrift that they’re left empty-handed when it’s time to make rent at the end of the month.
Selena, a Diggz member looking to sublet in Brooklyn, shares an interesting insight, mentioning that she prefers rooming with working adults or individuals of the same age. The reasoning is clear — she wants to ensure that all roommates are financially capable of making rent every month.
Living with working adults can mean that everyone has a stable income and can contribute their fair share without delay. Similarly, rooming with people of the same age group can ensure that everyone is in a similar stage of life, with similar financial responsibilities and obligations. Luckily, all Diggz Roommate profiles feature a potential roommate’s occupation so you can immediately assess if they can pay the rent or at the very least, see whether or not they have a job.
Not Planning for Unexpected Expenses
Always have a roommate emergency fund for that immediate plumber call or something your landlord refuses to fix.
Similarly, it is best to have a discussion in hand about who pays for repairs and maintenance. For instance, most roommates divide the cost of repairs based on who is at fault. So if you are a dog owner, and your pet chews on the sofa or the hardwood — the repair would come from your pocket.
Underpaying or Overpaying Your Share
If you don’t pay your fair share, it can quickly lead to tension and resentment in your roommates. They might feel like you’re not holding up your end of the bargain, leaving them to pick up the slack. On the other hand, if you overpay your share, you run the risk of being taken advantage of.
To make sure you don’t end up overpaying or underpaying your share, consider creating a monthly budget (no, mental notes don’t count). Get fancy with a spreadsheet and make a monthly budget. Budgeting is the best way to keep track of income and expenses with roommates. For most young adults, the 50–30–20 budgeting rule works like a charm; 50% of the income is spent on needs, 30% on wants, and 20% stowed away as savings.
Bottom Line? Don’t Let Money Ruin Your Friendship!
Following these tips to tackle bills with roommates will help avoid future conflicts. Talking about money might make some people uncomfortable, but it is always worth the awkward talk.
Sharing living expenses with roommates can quickly turn into a nightmare if not handled correctly. Disputes over payments, confusion about responsibilities, and lack of communication can sour even the closest friendships. It’s essential to establish clear rules and boundaries to avoid misunderstandings and prevent conflicts from escalating. While you may not want to become best friends with your roommate, you will surely need a cordial and respectful relationship.
Don’t let the stress of managing finances strain your roommate relationships any longer. Take the time to create a comprehensive budget, set clear expectations, and split rent fairly. Using expense-sharing apps can also simplify the process and increase transparency. Take action now and use these helpful tips for splitting bills with your roommates to ensure timely payments with fair splitting.