On episode 5 of the WeeklyBagel podcast, I talked about the idea of young working class adults having roommates. This is given the state of today’s economy. The idea of one relieves the stress of daily financial burden. Especially with two or more people paying down on rental expenses., rather than one person.
Should you talk about money when living with roommates?
Of course, you need to talk about money before you consider accepting someone as a roommate. During your venting process of selecting potential candidates, it is vital you discuss this with people. This is to avoid misunderstanding in the future. Most rental conflicts with roommates come from not having a written contract and understanding of how bills should be handled.
This is one of the things I loathe about having a roommate. Personally, I do not like the stress of having to ask someone to fulfill his or her part of rental agreement. But hey, not every young working class adult is fortunate to have a job which helps him or her pay rental expenses.
Hence, why I am grateful and should keep my opinions to myself. If you are one of those young working class adults trying to find a roommate, I cannot stress the importance of having a thorough understanding of how to split rent with potential roommates.
There are many ways you could go about cost sharing with roommates. Below is how I would like you to go about it. That way, there will be not issues in the future.
How To Split HouseHold Bills Fairly
There are five ways I want you to go about it with your roommate. Each ensures the burden does not fall on the other roommate. The arrangements below are fair, depending on individual needs. Also, they minimize potential future conflicts due to thorough understanding. So, how do you manage shared finances like splitting rent with roommates?
1. Split Rent Based On Income
You can split bills based on income. This is especially, when the one looking for roommate is the one who makes the most. I know- you may be thinking, “why would someone want a roommate if he or she made enough to cover rent?”.
Well, the thing about having a roommate is not always about getting someone to help you split rent. Some young working class adults do it, because they want companions. I have seen situations where young working class adults bringing home more than $65,000 after taxes, seek roommates to combat the loneliness epidemic amongst the young working class.
In situation like the above, the high income earner out of the two would have to split rent in a way where he or she pays more. Now, most people will not agree with this arrangement. In fact, splitting rent this way is more likely when both people want to share an apartment, but one person makes less than the other.
2. Split Rent Based On Room Size
Another way to split rent with roommates, is for the one with the biggest room to pay more. What do I mean by this, my dear reader?
You split the rent based on room sizes. Some apartment complexes tend to have master bedroom with a separate restroom. Usually, the master bedroom tends to be the biggest room out of all the rooms in the apartment unit. As a result, whoever gets to have it may have a higher share of the household bills.
I am talking about going 65-45 split on rental expenses or anything else which works. This is because the one with the master bedroom tend to use more. To simplify, the master bedroom will need more electricity to heat or cool.
Is it fair to split rent based on room size?
Personally, I would go with the 50-50 rent split. Some people may not be okay with roommate who has the bigger space paying more. Therefore, I would recommend exploring this rent sharing type thoroughly with your roommate before embarking on it.
3. The 50-50 Rent Split
This is the most recommended split. I like this one, because it is fair. Regardless of what each person makes or whatever room size they have, all rental expenses are split right down to the middle.
Why is this best way to split household bills fairly?
It is because all bills – utilities or rent, are divided equally. Personally, I think it decreases the chances of conflict. This is since everyone is paying exactly the same amount for rental expenses. The burden of rental expenses do not have to fall on one person alone. Hence, why I consider it the best.
4. Higher Chores Share Equals Less Monthly Bills
What do I mean by this style of splitting household bills fairly, my dear reader?
To split rent with roommates in this style, one of you have to offer doing the chores to get a lesser share of monthly bills. This would work, when one of you does not like doing chores. As a result, the one who gets to pick up after the other would negotiated getting his or her share of monthly bills reduced.
Here is what I mean.
Let us say the total rental expense is about $3000. One of you does not like to keep up with the apartment cleaning, the other keeping up with it may suggest a 60-40 split. That is paying 40% of the rental bills, while the roommate pays about 60%. Sounds fair to you?
I do not know about you, but I hate scrubbing the toilet. So, I definitely see myself agreeing to split rent with roommates this way. But hey, if it does not work for you, then let us explore the next tip for splitting bills with roommates.
5. Split Rent Payments By Number Of Roommates
This is the case for college apartments. I recommend this for college students who want to live in a community apartments outside of college campuses. You know- the ones where you have individual rooms with a common living room, kitchen or shared restrooms.
In this situation, you can split the total monthly bills by the total number of people living in the apartment. Splitting expenses with roommates this way is the cheapest way of going about it. This is especially, when the number of roommates are high.
For example,
Let us say you have five roommates living a community apartment complex with five rooms. If the total rent is about $3500 for the entire space, everyone gets about $700 in rental expenses monthly. This is $700 per roommate is gotten by dividing the $3500 by 5.
Does it make sense to you?
This is the cheapest way to go about it. I have also observed it is one of the arrangements with the most conflicts. This is because you will deal with a lot of people with varying outlooks on life, habits or morals. So, expect boundary clashes in this type of arrangement.
6. Discuss miscellaneous Discounts On Rental Bills
This is where a roommate who is likely cause inconvenience to another will pay a higher share of the rental expenses. What do I mean by this, my good reader?
Things like pets or presence of a lot of energy consuming electronics could be up for discussion. If one person moves in with a pet or two, then the person may want to assume a higher share of rental expenses. This is especially, when the other roommate does not have any pet.
The reason is due to the wear and tear, which the pet(s) may cause on the apartment unit. Now, do not get me wrong. I like pets, but I would not want them to be an inconvenience to someone who does not like them. As a result, offering to pay slightly higher than the 50-50 split could be a way of appeasing a roommate.
I highly encourage you get everything in writing though. Most people would agree on your pets not being issue, then turn 360 to make your life hell months later. This is why I want you to enter into a written notarized contract just in case of a situation like the above.
7. Utility Bills Split Based On Usage
This is another thing I want you to reach a thorough understanding with a roommate. Most rental conflicts between roommates stem from not reaching a solid agreement about utility bills. Sometimes, people want to pay utilities based on how much they are using.
Here is what I mean.
You two should consider giving discount to the roommate who is not moving in with a lot of electronics. This is particularly when the other roommate is moving in with half of Best Buy electronics warehouse. Okay- I am exaggerating but you get an idea of what I mean.
Although assessing a roommate electrical energy usage may be difficult, one could do it based on who has what. The person with no television or any electronic at all, could negotiate splitting monthly electrical bill in a way which is favorable.
But then, some roommates do not care about who uses most of what utilities. Most people will go for a 50-50 split, since each roommate will have equal access to the utilities- electricity, water or sewage. So, be sure you talk about this well before you split utility bills with roommates.
Is Rent Splitting A Good Idea?
Rent splitting is a very good idea. In fact, it is the only way to make sure one roommate does not end up with the burden of monthly rental bills. I am sure you have heard about roommates from hell. The last thing you want is to have a bum living with you.
Sorry I had to use the word, but this is the reality with most young adults sharing an apartment. It is how conflicts start. One person eventually starts slacking, and the other person picks up the slack.
Speaking of conflicts, this is exactly how it starts. It helps to have everyone sign a notarized written agreement. This is to prevent slackers who will renege on their share of financial responsibility.
Oh yes- you are going to have one of those when you do not vent your roommate well prior to accepting him or her. I talked about this on episode 5. I encourage you to listen to the episode, before you make the decision to get a roommate.
Furthermore, I want you to discuss this with your potential roommate before you even set up utilities in your new apartment. Once discussed, get everything in writing and have it notarized. It is one of the best ways to legally hold the other person responsible.
What a notarized written agreement does for you is, it makes it easy to evict anyone not meeting their share of rental expenses. Otherwise, the process of eviction takes months. In most cases, you may end up carrying the financial burden because you cannot evict the roommate who is not paying his or her share of the monthly rental bills.
How Often Should A Roommate Pay A Bill?
Remember the notarized written agreement I spoke of earlier?
Be sure to include on what days utilities and rent should be paid. This is where you agree on a particular day of the month, where all roommates pull their money together to pay for the bills. Also, the agreement should state who takes care of what.
This is what I mean below.
You will include who goes to pay what. Or even better, who keeps track of bill payments to ensure no late payment and penalties. I advice you keep track of these payments, because there are crooks out there. If you end up having one as a roommate, you will end up with some maddening debts.
I kid you not. Some young working class adults are that irresponsible. So, be sure to have someone make the payments, another keep track and one of you make sure the right payments are being done.
What Bills Are Shared Amongst Roommates?
Speaking of splitting household bills fairly, what bills would you expect to share with a roommate?
These are usually going to be reoccurring monthly rental expenses. I have written a list of reoccurring monthly household bills below, you all should consider sharing fairly.
- The rent
- Electrical bills
- Water
- Gas. Nowadays, most of the new apartments have switched to electrical stoves. So, you may not encounter this kind of bill with your roommates.
- Sewage
- Water authority fee. I talked about this on episode 11- the Hidden Cost Of Renting An Apartment. I paid this fee monthly without knowing about it. This is because it was not revealed to me prior to signing the lease. Now, the fee is not a lot, but I was dumbfounded to find it in addition to my water bill. Who knew there was such a thing as a water authority fee?
As you can see from the above, to split rent with roommates requires taking all of your monthly household bills into account. The reason you do this is to have all cards on the table in order to negotiate on splitting household bills fairly. Otherwise, expensive conflicts will arise as a result of misunderstanding.
Having talked about everything I think you should know, the fairest way to split rent with roommates is to go 50-50. It is my preferred method, because it decreases the chances of misunderstanding and conflict. I feel like everyone knows what they are expected to pay and do not feel entitled. But, that is my personal opinion though. I would like you to make your decision, based on your personal needs.
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