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Tuesday, September 28, 2021

How to Set Up a Budget With Roommates

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Sharing space with anyone is challenging. Because people have been raised in different environments with different values. When people from diverse backgrounds are forced to live under the same roof, there’s bound to be friction. Money can be a significant cause for conflict and sour relationships. You might be saddled with a roommate who’s not used to splitting bills or deliberately ends up paying late every month. When these practices repeatedly happen over time, they lead to a complicated living situation that might result in one of you moving out. To ensure you don’t get into one, it’s imperative to get together with your roommate and budget your expenses to divide them evenly and pay timely. It’s a win-win situation for everyone involved, and you end up saving money for your other commitments.

Let’s look at nine ways you can set a budget with your roommate:

Create financial rules before moving in

Since living on your own isn’t an option, you’ll be looking for roommates to share your expenses with. As part of the roommate screening process, you may want to have a list of questions ready to ask potential roommates to determine their financial situation before you shortlist someone. Here are some questions you could consider asking:

  • How much do you earn monthly? Is it fixed or variable?
  • Do you have a steady job? Since when have you been working at your present company?
  • What’s your credit score like?
  • Any pending student loans, debts, or credit card payments that are likely to hamper your payment abilities for rent and other expenses?
  • Do you have an emergency fund?
  • What household expenses are you comfortable splitting?

While the questions here may seem a little intrusive, they’re important for you to ask because you want to make sure you select someone who’s financially sound. If someone hops from job to job and barely earns enough to make ends meet, that spells trouble for you.

In the end, remember that the landlord believes each of you to be equally responsible for paying the rent (as a whole) and couldn’t care less about how much each tenant contributes. Should your roommate decide to make a run for it, the onus of the rent is entirely on you. Check your lease agreement before making any assumptions that may cause legal hassles in the future.

Assign the payment job to one person

It’s wise for one roommate, especially one who’s good with money, to take up the responsibility of paying the rent and the utilities. So, assign the role to your roommate, or if you’re up for it, take it up. 

If you have multiple roommates, there are always chances that someone might not make their part of the payment and share lame excuses such as not being paid on time or whatever. In such cases, let them know that they need to take up all the housework till they can pay their share. Since the entire rent or utility payment gets delayed on one person’s account, the roommate also needs to fork over the late fee. And if they don’t end up paying at all, the next course of action is to show them the door, legally, though.

Keep track of all shared expenses

If you’re the one making the rent and utility payments monthly, your roommate(s) need to pay you back. Several apps have made money transfer through mobiles fairly simple. Your roommate(s) can use Splitwise, Paypal, and Venmo to pay you their share of the rent and utilities. 

That way, it will help you trace whether all your roommates have reimbursed you the right amounts. Should there be a dispute about any payments made, you can pull out the history of payments received as proof and resolve it.

Purchase furniture separately

It makes perfect sense to purchase the furniture separately. This is because it saves a lot of time and trouble figuring out who gets to take what while moving out. Discuss this with your roommate and share what items you each wish to buy. 

Remember that while you may be buying these pieces separately, your roommate will be using them frequently, and the same thing applies to the things they buy. In other words, you’ll be using them. Prolonged use of the furniture may cause some wearing away, so be prepared to take it with you in that state when you move out. An even better idea is to buy second-hand furniture so that you don’t feel bad if something happens to them. Needless to say, you spend less and save more. Also, both of you should note down the pieces you’ve bought so that there’s no confusion or conflict later. 

Finally, accidents don’t happen with prior notice. You or your roommate might damage something the other has bought accidentally. So, what’s next? The most practical thing to do is to apologize and replace the damaged item.

Put up a shared expenses chart

Sometimes, when you have more than one roommate, reminding them of what they owe and when they owe can seem all over the place. So, how do you deal with the problem? Make a chart with your roommates’ names along with their rental and utility expenses. Put it up in a common space so that everyone can see it. When someone makes their share of the payment, strike their name off the list. This should drive the others to make their payments without any delay. Keep renewing the charts every month.

Pay for your own groceries

Let’s say you’ve bought some delicious snacks for yourself only to find that they’ve disappeared from the cabinet or someone’s opened them. How would you feel? Frustrated, for sure! So, if you don’t wish to share your food with your roommate, pay for your own stuff even if your roommate decides to tag along with you for grocery shopping. 

But there are some non-food items such as paper towels, toilet paper, laundry detergent, cleaning supplies, dishwasher pods, and so on that you and your roommate in the house will be using. Any one of you can pay for them and divide the costs later.

Have open conversations about problems

Problems, in general, can spiral out of control when not addressed on time. And problems related to money are graver and more damaging. The best solution is to sit down and have a candid conversation with your roommate about any payment issues bothering the two of you. If they exhibit passive-aggressive behavior by any chance, you need to be more empathetic and take the initiative to open the conversation. Let them know that you have both your and their interests in mind.

Put together a roommate agreement

Put together a roommate agreement that, among other things, contains rules about shared expenses, financial expectations and responsibilities of all roommates so that there’s an irrefutable system in place that everyone living in the house must follow. Ensure that everyone reads, understands, agrees, and signs the document. If someone has reservations about a specific point, discuss it with them and make necessary changes. 

In a word, should a situation arise where your roommate decides to make you pay for something they bought on a whim, this agreement should do the trick.

Think about unexpected costs of visitors

It’s highly likely that you or your roommate will have visitors from time to time, and they might even stay over for a little while. So, the question is: Who’s going to pay for their meals? The most logical answer that you and your roommate should arrive at is that whoever has invited the guest is their sponsor! So, they need to pay for the groceries they buy for their visitor and finance anything their family member or friend may have consumed whenever they visit the store. It might be a great idea to discuss this in person before living together.

So, do you think you’re ready to find a roommate and dive headfirst into the budget-setting process for your living expenses? We think you are! It’s natural for issues, monetary or otherwise, to crop up now and then, but making time for a budget to decide the expenses that need to be split and how much each roommate needs to pay, should keep money-related issues on the backburner. In a nutshell, address problems through honest communication, regardless of how unwilling you may be to take the first step. Set an example for them to follow and you should be able to live in harmony!

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