Have you dreamed of renting a great place that seems out of your financial reach? Of course, we all have.
One way to make your ideal home affordable, especially if you’re renting, is to invite roommates. Having a good experience with roommates depends on several aspects of relationships, but probably none more than the financial arrangements.
So, what is the best way to keep it fair and equitable between roommates?
Here are a few suggestions:
1. Agree on how to split expenses
Get buy-in from everybody: Have the difficult (i.e., money) conversations up front. That way, everyone knows their responsibility and is accountable because it’s been agreed to in advance.
Share common expenses equally: Utilities, cable, and WiFi are pretty much used equally, so these can be split evenly. Some financial experts suggest putting each roommate on every bill, so not paying a share has personal consequences if that bill is not paid in total and on time. Each roommate being the responsible party for a utility account is a way to spread the financial burden around the household, too.
Getting more costs more: If one occupant has premium accommodations (master suite, private bath, etc.), it is reasonable that they pay a greater proportion of rent.
2. Decide how to collect money
Everyone’s agreed on splitting expenses, so the hard part is done, right? Well, you still have to collect each share to make the main payment. One way to do this is to post each bill where everyone can see the total charges, their share, and the due date.
Some renters are set up on convenient money transfer apps to make the exchanges easy. Most payment apps allow you to send and share messages too, so communicating about payments is at your fingertips.
An obvious way to keep financial arrangements simple is to charge a flat rental rate that includes all expenses. This is especially applicable for situations where a leaseholder or homeowner solicits a ‘renter.’ It’s a simple arrangement where the responsible party establishes the expenses, then charges renters or roommates a flat rent that covers it all.
Just as a side note: the leaseholder in this situation may wish to ask for references, deposits, and credit background checks.
3. Formalize the arrangements
Even when people come to an agreement they can still sometimes lose track of details. It’s best to be sure that all financial arrangements are in writing, up front, with copies to all parties. That way there is documentation to refer to if questions arise.
Keep complete and clear records of payments, and make sure you keep good records for your own reference. This will help you ensure that all expenses are reported and tracked fairly.
Roommates can make life a lot easier in popular, expensive areas. You get the benefits of great location and amenities and the pleasure of companionship and friends to share it with!
Related Resource
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