Living with a roommate has gotten really popular the last few years, and it’s no wonder how to split up the bills has become such an important topic. According to the following article, the demand for sharing space with a roommate is skyrocketing.
Eventually, even the best roommate can forget that they owe you or the bill collectors money. You’ll need a way to track expenses and transfer money to each other, so this does not happen. We’ll discuss some tips for splitting up bills in the fairest way possible.
We’re going to answer questions like:
- How do you split up the utility bills fairly between all roommates?
- How much rent should each roommate pay?
- What are the best apps or tools to pay and track expenses?
A quick warning before we start: Sometimes people have a bad credit rating with old unpaid utility bills. You could get a roommate with this situation, this will be a burden and could be a warning sign for what’s to come. Be careful!
What Percentage Will Each Roommate Pay?
Should all the roommates split the utilities and bills equally? Usually yes if all things are created equal in the living space. But many times they are not.
What if one of you works from home? That person should be paying more of the electricity bill because they are consuming more.
If you own a house and are renting a spare bedroom out, you should not expect your roommate who rents just one bedroom to pay 50% of the overall utilities. They are taking up much less square footage in that house then you are. A fair estimate might be around 30% since they are most likely only using a third of the overall house.
The same attitude should be considered for all of the expenses relating to rent, utilities, and any other miscellaneous living expenses. Have a discussion with your roommates and figure out an arrangement that is fair for everyone.
Add A Section In Your Roommate Agreement For How Things Are Divided
Adding a section in your roommate agreement of how the bills will be split up between you and your roommates is a very good idea. Make sure you include the total cost of all the monthly rent payments, utility bills, and other non-fixed costs that are required for the residence.
Make sure to document any costs that are covered by the landlord as part of the monthly rent. For example, if you rent an apartment the garbage and water are normally included in the rent vs. a house that does not include those costs.
I recently wrote an article that talks all about Roommate Agreements, check it out here: Roommate Agreement Ideas
Apps/Tools For Tracking Expenses Or Transferring Money
If you’re like me, then you like to be organized. Collecting money from roommates can be a real mess if you’re not tracking it. If you only have one roommate it will be easy, and you may not even need to use nothing more than a calculator and a spreadsheet. Then just collect the money from the person when the bills are paid at the end of the month.
If you have multiple roommates, you’ll want to try using an app to see if it makes things easier. Check out the below list of apps and tools to track and transfer money to each other.
Paypal – We all know about PayPal, it’s been around since 1998. Anybody with an e-mail address can sign-up and send or receive money directly from their checking account or credit card. The PayPal mobile app is pretty easy to use, and PayPal is a trusted company as far as security goes.
Venmo – Just like PayPal you can also send and receive money to anyone with Venmo. The best part is it’s free to use if you utilize your Venmo balance, bank account, or debit card to pay someone. Otherwise, the standard fee is 3%. Always review the fine print to find out how much is being charged in regards to merchant fees.
Splitwise – Is an interesting app that I recently discovered. It will track your expenses and IOU’s (what everyone owes) with your friends and roommates. It allows you to fairly split costs with everyone. If you can convince everyone involved to install it and use it, it can be very beneficial. It’s 100% free too.
RentShare – This app will help track each roommate’s rental payments to your Landlord. You can even use your credit card to pay your share of the rent. While that might be a nice feature, I’d be a bit concerned if my roomy needed to pay their share of the rent with a credit card. One last thing about this app, you’re Landlord has to sign-up too for you to use it.
Divvy That UP – If you plan on dining out with your roommates, then this app is for you. It will allow everyone to split the check and pay their fair share. It’s got an amazing OCR technology that allows you to scan the restaurant bill right into a smart phone’s camera. Wow!
Keep All Big Purchases Separate, But Share
If you need to buy a couch for the living room, it’s best to have one person buy it, own it, then share it. That way at the end of the lease and you part ways. One person owns it, and there’s no fighting as to how to split it.
In return for you sharing your big item such as a couch, your other roommates should purchase other big items to share. Such as a love seat, BBQ, Dining Room Set, Television, etc.
I once had a house with some roommates where we had a beautiful brick patio with lots of shade. We all wanted to set it up with outdoor furniture and a BBQ. I bought the BBQ, someone bought the table and chairs, and someone else purchased a fire-pit and some lounge chairs.
We all shared it, but we knew who owned what and could take that item when we moved out.
Groceries And Other Food Costs
Sharing the food costs with roommates can be tricky because what if one of you eats more than the other?
You can solve this issue by being very selective to what types of food you share together. Don’t share your favorite cereal. But if you decide one night to cook an expensive dinner and it makes enough for more than one person, why not ask them to chip in and share it?
Chipping in money on Wine, Beer, and bulk items like toilet paper, steaks, chicken and other frozen food packs you buy from Costco is also a great idea.
Never wait until the end of the month to collect money owed to you for shared food. Roommates have a horrible time remembering these types of IOU’s vs. the monthly utility bills which can be clearly pointed out.
What If Your Roommate Does Not Pay Their Share?
Having a roommate who does not pay their share of the rent is a terrible problem to deal with. It’s by far the worst type of roommate problem to have because their actions have a huge impact on you both. This could turn into a major problem if the rent is short on the day it’s due. You’re both placed in a bind that could leave you on the street.
The best thing to do in this situation is to exercise some patience and understanding! Try to help your roommate brainstorm some ways to get some quick cash and selling drugs will not work, don’t even think about it!
Let’s look at some legit options, shall we?
Here are some suggestions
- Ask a family member for assistance. Mom, Dad, or a Sibling would be best.
- Sell some books or video games for extra cash. Or any other personal items that have value.
- Get a payday advance from work (I highly discourage this, but do what you gotta do).
- You might think about picking up the entire rent and collecting it from them at a later time. Especially if you’re both sharing a lease and you don’t want to ruin your credit. BE WARNED! You’ll have to collect it in court if they don’t pay you back! Or just kiss it off as a loss.
- Face the reality that your roommate can’t pay and you might need to speak with them and your landlord to get a new roommate who can. This might involve the old roommate breaking the lease or having someone new take it over.
One of the biggest issues that cause stress and arguments between you and your roommates will be over money. Now that you know the secrets for how to track and divide up the expenses in a fair way. You won’t have to worry about that anymore, except if they don’t pay you!
Check out my other roommate living articles if you want to know about more ways to make living with a roommate easy.