How to Handle Finances with Your Roommate

  |     |   Rental Tips & Advice

Living with a roommate can be an exciting new adventure, particularly for someone who has never done it before. While two people may have similar interests when it comes to hobbies, work or entertainment, it can be a completely different story when money is the topic at hand. It’s amazing how even the smallest of decisions–like spending a fortune on organic, vegan snacks–can lead to resentment amongst roommates. Living in a shared space is not easy, especially when finances are involved. Here are some ways to make money matters a little easier to deal with.

Track your own expenses
From paper towels to laundry detergent, who is going to pay for what? Keep your receipts and log all of your household expenses either in a notebook or a spreadsheet. You can also download an app that tracks your spending by the penny. The goal is not only to stay on top of how much you are spending on general and jointly used household products, but how often. If you and your roommate have agreed that you will foot the bill for such items, then there is no problem. But if you find yourself dish out more dough on these things, then a conversation may be warranted.

Be specific
It may seem petty, but it helps to hash out who will pay for small items such as kitchen or cleaning supplies. If you buy everything, will your roommate reimburse you? Or will he or she foot a larger portion of the rent to make up for it? Will the two of you take turns paying for household essentials? Be clear with each other so that this does not become an issue later on down the road.

Get your own furniture
Roommates commonly purchase large, expensive furniture items together to cut down on the cost. However, that joint decision can become a burden once it’s time to move out. It’s not something you typically think about in the middle of the excitement of furniture shopping, but you really do need to be thinking ahead. When you move, who will get to keep the sofa that you both paid for? It might be best for all involved to acquire your own furniture, this way there is no confusion once it’s time to go your separate ways.

Always have a secret stash of cash
Sure, having a roommate is one of the most popular ways to save money on living expenses. But do not make the mistake of spending all of your extra income just because you have a roommate who is paying half of the bills. What if your roommate loses his or her job? What if you are suddenly left to finish out the lease on your own? What if your roommate just straight up chooses not to fulfill their financial responsibilities? It is an absolute must that you maintain some sort of financial cushion. Having a “just in case” fund could save you from losing your apartment and completely ruining your credit.

Protect yourself with a written agreement
While you and your roommate will both have binding lease agreements with your landlord, it is smart to take the extra step and create another one that outlines each of your financial responsibilities. Even if the two of you agree verbally on how money will be spent, that will not hold up in the future when one of you forgets the details. That is why you need to write it down. It does not matter if you decide to split all expenses 50/50 or some other way, get it in writing and email it to both yourself and your roommate for future reference. Any time there is uncertainty about who is supposed to pay for what, refer back to your handy dandy written agreement.

How can you prevent financial problems with a roommate from occurring in the first place? Well, you never know what may happen in the future, but you can put in work now to make financial problems and disagreements less likely to occur. Take a different approach when screening for a new roommate. In this instance, financial expectations can be discussed and negotiated before anyone signs on the dotted line. If the two of you do not agree on how money should be handled, then you do not have to move in together. Easy, right? Once you do find someone you are considering living with, always do your due diligence. Check employer references. Speak to former roommates. Pay for an official background check. These are all vital steps if you want to protect yourself–and your wallet.

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