You and your roommates just signed a new lease—now what?
Well, a housewarming party may be in order. But before you figure out what to serve, you'll want to tackle an even more important topic: how and when to pay the bills.
As new roommates, you may feel like nothing could ever possibly go wrong. Unfortunately, sometimes they do—and these problems often start with disagreements about money. Instead of taking that risk, follow these five steps to lay the groundwork for settling money disputes.
1. Review All Your Expenses Together
Rent is your biggest shared expense. If yours includes utilities, ask the landlord which bills are covered and which aren't. It's not unusual for some utilities (such as heat) to be included while others (like electricity) aren't.
List all of your anticipated monthly expenses on a piece of paper. These may include:
- Garbage and recycling
- Other (snow removal, Xbox subscription, etc.)
You may also want to include costs for decorating the apartment, like paint, curtains, candles, etc. While you will only need to cover these the first month or two, you'll still want to know how to handle these move-in expenses.
For furniture, it is often best to agree on what each person will provide and buy these items separately. That way, when you move to your own place, you won't have to worry about splitting the sofa down the middle with an ax!
2. Estimate Your Monthly Expenses
Now that you have your list of expenses, estimate the amount each will cost overall every month. Some of these will be static, such as rent; others will vary based on your monthly usage, such as electricity.
If you are unsure about the variable expenses, ask the landlord to provide estimates from the previous tenants or ask the utility company to provide data about usage from the previous year.
3. Decide On A Strategy For Paying The Bills
Now that you know what the monthly expenses will be, decide on how you plan on paying the bills together. Some roommates split all bills in half; others agree to split the bills up between them. For instance, you both pay half the rent, but then you cover the utilities bills and your roommate pays for cable.
Make sure whatever you agree feels fair. If you don't want to cover an expense, speak up now. For example, if you don't watch television and don't want to pay for the premium cable package, talk about this with your roommate. Maybe your roommate can live on basic cable and you split the bill. If not, then maybe he or she pays for the difference between the premium and basic plan and then you split the basic bill.
There is no right way to split expenses—just the method that makes the most sense for you and your roommates.
4. Plan For How To Handle Disputes
In any relationship, financial disputes happen. Discuss how you will handle these disagreements so resentment doesn't build up and then blow up.
One way around this is to have a monthly financial meeting to bring up any grievances. These meetings only need to be 15 minutes, and some months may go more quickly. Set a date and time and stick with it, even if things are going smoothly.
In addition to regular financial meetings, agree that if you can't find a solution to your money issues that you will consult a neutral party. This could be a college counselor, a trusted professor, or a mutual friend who you know will not take sides.
5. Put It In Writing
Now that you've covered who's paying for what, put your arrangement in writing. That may sound too formal, but written contracts help people set clear expectations and know what to do if there's a difference of opinion.
Once the agreement is in writing, each roommate should sign and date it. Throw a signing party afterward to celebrate the achievement. Then post this document on the refrigerator to keep it fresh in everyone's mind. Refer to it as needed, and know you have done a great thing by starting your roommates' relationship by talking openly about bills, budgets, and bucks up front!