How to Budget Living Expenses With a Roommate

Living with roommates can be a good money-saving move, but splitting bills with roommates can quickly complicate things if you’re not careful. Keep the good vibes flowing by creating a plan right away for how you will split costs with your roommates. There are plenty of methods and tools for keeping track of expenses and making sure everyone is responsible for their fair share. We’ll help you find the ones that work for you and your household with tips on how to calculate shared expenses.

Tips for splitting bills with roommates

The most important part of successfully splitting bills with roommates is keeping everyone on the same page. Use these tips to establish ground rules and manage costs in a transparent, organized way.

1. Decide which expenses will be shared and which won’t. You’ll likely be splitting costs like rent, utilities and internet, but what about things like streaming subscriptions, cleaning supplies and groceries? Run through all your possible expenses and decide which you’ll be sharing and which will be covered by individual roommates.

2. Designate a spot for displaying bills. It’s easy to lose track of bills as they come in. Pick a spot where you’ll store and display them so all the roommates can see how much is owed and when. Try highlighting due dates and amounts to make it that much easier for everyone to take notice.

3. Decide on a process for recording costs and payments. Digital tools like a roommate shared expenses spreadsheet or apps are a great way to keep a record of expenses. There are even a handful of apps designed specifically for managing household bills, like Splitrr, Splitwise and IOU. These tools let you calculate costs, communicate with roommates and sometimes even pay right from the app.

4. Make someone responsible for each bill. Making it one person’s job to pay each bill will be easier than everyone paying their share separately. You may want to divvy up the expenses, with one person responsible for paying electric and one cable, etc. If one personality in the group feels best taking the lead on all bills, it may be easiest to let them. The money can come out of a shared fund or collected by them before or after paying the bill.

5. Set a payment schedule. You probably have rent and other bills coming in throughout the month. There are a couple ways of splitting bills with roommates when each bill has a different due date.

   • Create a shared roommate fund. You may be able to anticipate your monthly costs based on what you spent last month. When rent is due, it could be convenient to pay everything else as well. Have each roommate put potential costs for the month into a shared fund that can be paid out as the bills come in. If there is extra money at the end of the month, use it for something fun like pizza or a night out. This household budgeting is essentially the same process as individual budgeting.
     
     
   • Pay as you go. Not everyone in your house may be comfortable paying a month’s worth of expenses at once. If your household prefers to pay as you go, the person responsible for paying the bill will have to let their roommates know the bill is due and collect the money themselves. That’s why apps and spreadsheets are extremely useful. It’s much easier to send someone an alert through their phone that they can immediately act on rather than hunting them down and asking for cash or a check in person.

Common living expenses to split

When splitting bills with roommates, you may find that different bills require a different approach.

Rent. Dividing rent between roommates is something that should be discussed immediately. Not all rooms in a house are created equal. The roommates with the smaller bedrooms or bedrooms with fewer amenities may feel like they deserve to pay less, so this should be decided on early.

When it comes to getting rent paid on time, the expense is large enough that each roommate may want to pay separately. Landlords and property management companies are used to receiving individual checks from each tenant. Plus, each of you should be on the lease individually.

Utilities. The first conversation should be if you all want “nice-to-have” services like premium cable on top of the basics like electricity, gas and water. Once that’s settled, it’s time to figure out how everything will get paid. Often, utility companies allow for only one primary person on the account, so it might be easiest to let that person pay the full amount each month. The roommates can pay them up front or after, depending on their comfort level.

Groceries and cleaning supplies. These can be the most complicated of all living expenses to manage. To avoid any “he said/she said” disagreements — and to always have toilet paper — try these approaches on how to split groceries with roommates:

• Each person buys their own groceries – One of the easiest ways (in theory) to divide up food costs is for everyone to buy and eat their own food.
• Each person buys cleaning supplies for one room – Roommate 1 has the kitchen, Roommate 2 has the bathroom and Roommate 3 has the family room.
• Use a receipt jar – Whenever something shared is bought by a roommate, they write their name on the receipt and place it in the jar. At the end of the month, add up the costs and see who’s owed money by the other roommates.

Other possible expenses. Some other expected and unexpected costs may occur during your lease. To make things easier to manage when they happen, discuss these potential expenses when you move in: security deposit, maintenance/grounds fees, parking fees, pet fees and renter’s insurance.

Home sweet home, for everyone

Living with roommates is a great way to help save for your financial goals. To keep the atmosphere friendly, try to sit down and figure out your budget for living expenses early on. This way, you can enjoy the benefits of sharing expenses while avoiding the pitfalls — and maybe even have some fun.

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This article has been updated from its previous posting on August 13, 2019. Matt Diehl contributed.