Budgeting for Shared Expenses with Roommates

Author: Megan Bullock

Focused young asian girl roommates checking analyzing utilities bills sitting together at kitchen wooden table. serious women reading bank loan documents financial planning expenses using laptop.

If you’re budgeting for shared expenses with your roommates, we understand that it can be a bit daunting. But try to keep in mind that living on your own can be much more expensive than living with a roommate. For instance, if you are living alone and looking to rent a one-bedroom apartment in Atlanta, the current average as of May 2019 is $1,235, while the average for a two-bedroom apartment is $1,378. Rather than paying the full amount for a one-bedroom, you can pay half the rent of a two-bedroom. In this scenario, renting a two-bedroom apartment with a roommate in Atlanta will save you $546 a month! Splitting expenses with a roommate is sounding pretty good, right?

When you’re living with roommates, everyone has their own opinion regarding budgeting and spending. But don’t let yourself get in a tizzy over this – there’s a simple set-by-step solution to splitting costs with roommates. Whether you’re the roommate who forgets to chip in for their share of the Internet bill, or you have a roommate who’s known for repeatedly paying their portion of the rent late, it’s important to set some guidelines. Budgeting, planning, and saving for these shared expenses will keep you on track to ensure that all of your apartment rental costs are being paid on time, every time. Let’s avoid any future awkward conversations about who owes who what and what is due when, shall we?

 

Make a Plan and Stick with It.

The best thing you can do when splitting costs for an apartment is making a definite plan that you can all stick with. Everyone has to agree. If one roommate isn’t happy with the plan, then you’re bound to come upon payment issues in the future. You’ll want to discuss whose name is on each utility, the date that each expense should be paid, the way in which you plan to pay one another, and general guidelines for keeping costs low.

For instance, say that you all agree to spend no more than $50 a month on shared décor for the apartment, and you’re all willing to keep the AC set to 74 degrees during the summer months to keep your electricity bill reasonable. These are great examples of guidelines you should be discussing and coming to an agreement on!

 

Decide What Expenses are Worth Sharing.

Should every expense be shared between roommates? That’s a question you’ll need to ask yourself (and your roommates) as you’re budgeting, planning, and saving for the expenses that come with renting an apartment.

 

Décor and Furniture

What if you don’t agree that you and your roommates should share a décor and furnishing budget for the apartment? That’s fine! If you prefer to buy things like couches, decorative mirrors, rugs, kitchen towels, and lamps separately, that’s perfectly okay. If you decide to buy décor and furniture items separately, it may end up being easier for all of you when you move out. You can avoid figuring out who gets what items, and who owes who what for each item. It can get a bit messy (and confusing)! If you do buy these items separately, you should come up with an agreement that details what happens if an item is damaged by a roommate or a guest. For instance, if you break it, you buy it. However, if you decide to buy these items together, come to a consensus about how to split the cost – halfsies is always an easy go-to.

 

Rent

Rent should almost always be equally split between roommates, but how much each roommate pays really just depends on the agreement you have all settled on with one another. If you live in the master bedroom that’s accompanied by more square footage and an attached bathroom, and your roommates have the slightly smaller bedrooms with a shared bath, then they may suggest that you pay more in rent. Have a calm, reasonable discussion to decide how you will break down the cost of rent, and come up with a fair amount that each roommate can agree on.

 

Utilities

When it comes to utilities, it’s easiest to split them equally between roommates. After all, you can’t really prove that your roommate is hiking up your water bill from her extra-long showers. It’s best to just split the cost of utilities – fair is fair. Utilities that are not included with your rent (such as electricity and cable) will require one person to set them up and be the owner of the account. You can have one roommate in charge of all utilities with their name on each account, or you can split up who signs up for what. It depends on what you’re comfortable with – just remember, it’s important that any roommate who puts their name on the account is a responsible person (preferably with good credit history), since they will be liable for paying the bill on time. Just because you pay a roommate your share of the utility bill ahead of time, doesn’t mean they’ll pay the entire bill on time! Keep this in mind.

 

Groceries and Household Items

We all know how frustrating it is when you go to grab your milk out of the fridge, only to realize that it’s gone, or only has a sip left. This can happen when you share groceries with roommates. If you plan to cook your meals together, and you like the same brands and types of foods, then grocery shopping together and splitting the cost of food may work in your favor! However, if you’re territorial over your food and prefer to cook for one, then it may be in your best interest to grocery shop separately. However, splitting the cost of household items such as paper towels, laundry detergent, dishwasher pods, napkins, toilet paper, and cleaning supplies is often a good idea. These are easy items to share and keep track of – whether you switch off who buys what household items, or you simply buy them together and split the cost each time.

 

Consider Unexpected Shared Expenses.

You may find a few unexpected costs down the road of your apartment renting journey. These unexpected shared expenses can include anything from increased utility bills based on seasonality or an impulse buy, to any additional fees added to your lease. Let’s say that you turn the AC down to 68 degrees for an entire month during the scalding hot summer while your roommate is traveling for work or studying abroad. When your roommate sees their share of the utility bill for that month, they probably won’t be too happy with you – this is an unexpected increase in shared expenses, so be careful with that thermostat!

How about if your roommate comes home from a Saturday filled with shopping carrying in a $300 decorative ottoman for the living room? But wait! You didn’t agree to split the cost of that piece of furniture, but because you agreed to split furniture and décor costs, your roommate expects you to pay half. This is an unexpected shared expense (if you agree to it), so make sure you each set guidelines for one another to keep your expenses at a reasonable rate. If you’re going to make an impulse buy and expect to split the cost, then make impulse buys together!

Property managers and landlords cannot change the cost of your rent during your lease, but they can make addendums for additional monthly fees. These could include a new monthly pet rent or maybe a monthly charge for valet trash. Either way, you’ll need to save room in your budget in case you find yourself in this situation with additional, unforeseen fees.

 

Find a Method to Easily Track Expenses.

It may seem old school, but putting pen to paper (marker to whiteboard, chalk to chalkboard, etc.), is still a great way to keep track of your expenses. Maybe you can even make this a cute addition to your apartment – a piece of décor, if you will. Simply hang up a decorative chalk board in your apartment and list out what expenses have been charged, the total amount of each expense, how much each roommate owes, which roommates have paid, and what date the expense was paid on. If you prefer the whiteboard method, stick one to your fridge and keep track of your expenses there!

If you only have one roommate, it’s easy to simply text or email one another with a picture of each bill or receipt. This way, you and your roommate can easily pay one another through the numerous payment apps available on your phone. Though this is my preferred method, you may have more than one roommate or are interested in a way to more precisely track your expenses. If so, there are plenty of budgeting and tracking apps that you can download and make use of. With some apps, you can even directly link your bank account, pay your expenses, and put those expenses in specific categories. This is a surefire way to keep both you and your roommate(s) in the loop regarding your shared expenses.

 

Make a Roommate Agreement.

Now that you’ve come up with a set of guidelines for shared expenses, it’s time for you and your roommate(s) to make a roommate agreement. This will be a signed document between each roommate – its purpose is to keep things as organized and peaceful as possible. This way, if someone isn’t paying their share of the electric bill or is buying pieces of décor you didn’t agree to pay for, you can remind them what you all signed and agreed to – in both your lease and roommate agreement. This agreement should keep you and your roommate(s) paying your bills fairly and on time, and being respectful of one another and your apartment home!