Personal Finance

How to Split Bills With Roommates — Without Going Crazy

Mar 15, 2023

These days, living with a roommate isn’t just for college kids. In fact, the Pew Research Center reported that in 2004, 27% of U.S. adults lived with a roommate and by 2017, that number had risen to 32%.

One of the biggest benefits of sharing your living space is the money you can save on anything from rent to utility bills to everyday necessities. However, when multiple people contribute to living expenses, it also begs the question, “Who’s going to pay for that?”

There are effective ways to divvy up expenses fairly so everyone can enjoy the communal living experience. In this article, we’ll look at how to split bills with roommates without going crazy and without endangering this beneficial (and sometimes fragile) shared living arrangement.

Be Smart When Choosing Your Roommates

One of the best things you can do to gain an edge in the roommate game is to avoid living with complete strangers, if possible. If you do need to room with a stranger, be sure to check references and social media accounts, and always conduct interviews. Do anything that will help you gauge what type of person you may potentially be living with before signing any leases or contracts.

Friends are typically more invested in maintaining your trust and companionship than strangers would be. However, friends don’t always make the best roommates. They may be more inclined to bend the rules than strangers would, following the “It’s okay, we’re friends” mantra.

The same qualities that make some people fun friends can also make them not-so-great roommates. Your crazy, unpredictable buddy may be a lot of fun to go bar hopping with, but “crazy” and “unpredictable” may not be ideal traits in someone you live with and rely on to pay their share of living expenses.

Decide How to Split Bills Together

Once you choose your roommates, sit down together and decide how bills will be shared or split. It’s often easiest if one person oversees accounts. Will each person be responsible for one or two bills, or will all bills be divided equally? Will each person hand their payments to an “overseer” who submits the final payments, or will everyone contribute to a shared account from which bills are automatically paid?

It’s imperative that you and your roommates come to an agreement on these details ahead of time so that no one is caught by surprise bills – or arguments – down the road.

Establish Ground Rules – In Writing

Roommate contracts are effective tools for defining expectations for everyone and documenting them in writing. Important topics to cover in a roommate contract include quiet hours, pets, household chores, overnight guests, and smoking/drinking. The roommate contract should also include specifics on how bills will be paid (rent, utilities), if food will be shared, how early move-outs will be handled, and how damages will be paid for. You may also want to include rules for sharing things like furniture, dinnerware, cookware, and tools.

Each roommate must sign the agreement for it to be enforceable. Be aware, however, that while these contracts are legally binding, courts traditionally are reticent to enforce anything except clauses regarding finances, health, and safety. So, if Charlie constantly lights up a cigarette in the house, ignoring the agreement to only smoke outdoors and you take him to court over it, you’d probably win. However, if he agreed to take out the trash on Tuesdays but is now refusing to do so, you’d likely be wasting your time taking that to a judge.

Use Payment Apps

Regardless of how you and your roommates decide to divide expenses, it’s recommended that everyone use a payment app. These apps make it quick and hassle-free to send and receive money between people. Apps also keep a record of when payments are made, give everyone a receipt, and allow you to send reminders if roommates are behind on payments.

If not everyone wants to download an app, try peer-to-peer (P2P) payments with your bank accounts. For example, with Axos Bank Essential Checking, you can use P2P payments to send or request money. When you request it, the funds are deposited right into your account, without the need to involve a third party.

The Perks Should Outweigh the Challenges

While one of the biggest perks of rooming with others is the opportunity to save money, that doesn’t mean there won’t also be financial challenges. Overcoming these challenges begins with being selective about who shares your home. All roommates should be on the lease with the landlord, and all tenants need to sign a roommate agreement to clearly define rules and responsibilities. Decide together how to split costs and be sure to use a payment app for quick and easy transactions between roommates. If you are really worried about the financial aspect, you can even have the lease include the specific rent amount each roommate will pay. You may also want to consider adding a late fee if the rent is more than a few days late.

While you might feel uncomfortable talking to your roommates about money, having the awkward conversation is worth it. You’ll spend less time worrying about who owes what and more time enjoying each other’s company – another perk of sharing your living space.