How to split living costs with a roommate

Summary:

• Splitting living expenses doesn’t have to be stressful if everyone agrees on the rules up front.

• Clear expectations around groceries and household supplies can help avoid conflict.

• Planning ahead for unexpected costs makes sharing a home easier and helps protect everyone’s budget.

• A written contract can clearly outline responsibilities and help keep relationships on good terms.

Roommates aren’t just for college students, particularly in areas with high housing costs. Figuring out how to fairly split the rent is one concern. But what about food, cleaning supplies and other shared items?

Maybe you love living with others, or maybe you see managing expenses with a roommate as a necessity until you’re ready to comfortably afford your own place. Whatever the reason you share your space, it can lead to one major benefit: real savings.

Just ask Josh Hastings, the founder of a personal finance blog, and his wife. They own their home and estimate they save $7,500 per year by living with a roommate.

“It helps us with our mortgage and paying off student loans,” Hastings says. “We decided that to cut costs, why not make use of our spare space?”

But living with roommates has its own financial challenges. Aside from remembering who last cleaned the kitchen, one of the biggest hurdles of communal living is figuring out how to split living costs with a roommate. Here are five tips to keep everyone happy with their living situation:

To manage expenses with a roommate, you have to determine how to fairly divide household costs.

Ben Huber, a personal finance blogger, believes it’s important to make sure everyone agrees on how to share costs—even roommates who move into an already established household.

“Each time a new tenant moved in, we sat down early on and tried to come up with general guidelines that would work for everyone involved,” he says. For his three-person arrangement, the deal is to share common household items and split the costs three ways.

However, one of Huber’s key tips for splitting costs is to avoid splitting the cost of expensive items. This can create complications if someone moves out. For example, if you’re furnishing a living room, Huber recommends that everyone buy one or two items. That way, everyone can take what’s theirs when it’s time to move.

Hastings and his wife have another suggestion. Rather than split the bills down to the penny, the Hastings include a fixed amount to cover the cost of utilities in the rent they charge their roommate. They also use that fixed amount to cover shared household items, including cleaning products.

However, they draw the line at personal items, like specialty kitchen tools. “When it comes to personal items, we don’t split costs,” Hastings says. “It is just easier this way in the long run.”

Huber, who estimates he saves $10,000 a year by living with roommates, says one of his most effective tips is to track everything each person spends.

Huber records each person’s purchases in a spreadsheet. Then, he divides the expenses at the end of each month. If someone picks up paper towels on the way home from work, he knows he’ll get reimbursed and that everyone is contributing fairly.

“We all hold a single utility under our name,” Huber adds, “Then, we transfer the difference in our utility payments to one another’s bank accounts on the fifth day of each month.”

Managing food expenses can be one of the toughest decisions when you’re deciding how to split living costs with a roommate. It can be especially difficult if you have limited fridge space or different shopping habits.

“Food is sometimes make or break for roommates,” Hastings says. “I have tried splitting food, and it seems to never work out. People like different things and use different brands.”

Huber and his roommates strongly suggest being flexible. Sharing grocery bills for special occasions is one example.

“We’ve all chipped in and fired up the grill numerous times for family dinners,” Huber says.

While the Hastings don’t typically share food with their roommate, they still help each other prevent last-minute trips to the grocery store. Josh recently borrowed an ingredient from his roommate so he didn’t have to leave home.

“I ran out of canned tomatoes one time, and just replaced them the next day,” he says.

Another suggestion Josh makes to manage roommate expenses is to create an official agreement. This is in addition to the rental contract you have with your landlord. That way, all financial and housing responsibilities are clearly laid out.

“Draw up a contract that is flexible, but also has clear-cut non-negotiables,” Hastings says. “Creating a contract up front that addresses rent and utilities is the way to go.”

Your agreement can also cover how you’ll handle day-to-day household responsibilities. For example, you might include cleaning schedules, parking fees and expectations for hosting guests.

You might have figured out how to split living costs with your roommate, but what about unexpected expenses? Agreeing to divide the cost of damage based on who’s at fault is another one of Huber’s suggestions.

“My longtime college friend and I both have dogs that, being dogs, caused damage requiring repairs that went beyond what was covered by our original security deposit,” he says.

Since all three roommates had paid part of the security deposit, it didn’t seem fair to use it to cover repairs that were the fault of two people. Huber and his fellow dog owner covered the expense so the third roommate wouldn’t lose his portion of the deposit.

If there’s damage and everyone is at fault—like marks on a hardwood floor from the kitchen chairs—then those expenses could be shared equally, Huber suggests.

To help manage unexpected housing costs, roommates could consider contributing to a shared emergency fund. Having money set aside can make it easier to cover surprise expenses when they arise.

Talking about money with roommates can feel awkward at first. But these conversations are important to prevent confusion or arguments later about who bought what and who owes what.

Some key takeaways to keep in mind when deciding how to split living costs with a roommate:

• Open communication sets the tone for a healthy roommate relationship. Talking about money early helps prevent misunderstandings and builds trust right from the start. 

• Tracking costs and setting clear expectations up front can reduce confusion and help everyone feel good about how costs are shared.

• A smart approach to shared expenses reduces stress and makes your home a better place to live.

By following these tips for managing your shared expenses with roommates, you’ll be able to spend less time worrying about money and more time just enjoying each other’s company.

“Living with other adults,” Hastings says, “provides me the opportunity to build lifelong friendships, in addition to saving money for future endeavors. As a fairly extroverted individual, I’ve been able to meet and actually enjoy cohabiting a space with individuals in similar stages in their lives.”

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