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How to Manage Money When You Have Roommates

August 10, 2018

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Money can cause a lot of problems in relationships. And that goes for friends and roommates, too. Whether you’re living with one friend or a houseful, you’ll need to find some way to split the expenses.

Before you give out any keys, make sure you and your roommate(s) come to an agreement about money. It might be an awkward talk, but will help avoid problems later. Here are some things to consider before you advertise for a roommate or ask your old high school buddy to move in with you:

Split the bills equally. Instead of putting all the utility bills in one person’s name, divide them between all the roommates. (For example, one person could cover gas and water while another handles Internet and another takes the cable bill.) Never pay the bills until each roommate has contributed.

Get separate leases if possible. Check with your property manager to see if each roommate can sign a separate lease. If this isn’t possible, pay with a check and write up receipts reflecting each roommate’s share. Keep copies of your checks and have your roommates pay their share to you via mobile app or cash. Be sure to collect roommate shares well in advance of the rent due date.

Consider rental insurance. Accidents can happen, and you don’t want to be stuck with the cost of repairs. Each roommate should consider getting their own policy, but it’s a good idea to get one for yourself.

Don’t share the cost of food. Food is the source of many roommate disagreements. If one roommate has special dietary requirements and the others don’t, splitting food costs equally will cause a problem. Try assigning separate refrigerator and cabinet shelves for each roommate.

Don’t get a landline phone. Unless it’s necessary for your Internet connection, don’t get a landline phone. That way, there’s one less bill to split.

Protect yourself. Invest in a locking file cabinet or a fire safe for your important documents. This will help you prevent identity theft.

Get it in writing. In order to protect yourself and your roommates, set down your agreement for dividing the rent and other expenses in writing. Have the document notarized and give each roommate a copy while you keep the original with your other important documents.

Living with roommates can be a great way to save money, particularly when you’re just starting in your career. With some mutual respect (and agreed-upon responsibilities), you can manage your costs of living with roommates and build up your savings at the same time.

This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.

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