Delayed marriage rates, climbing student-loan debt, and rising housing costs have led to increased numbers of doubled-up households, a term used by demographers to describe homes that include additional adults other than the householder or their partner. This includes people who live with roommates or parents, and accounts for about a third of the overall American adult population, according to a Pew Research Center analysis of census data.
Whether you’re living with friends, family members, or acquaintances in similar life situations as you, it’s important to have a system for managing shared finances. Even if you and your roommate get along great, when it comes to handling bills, you might find it super uncomfortable to have to pester them for their share of the rent. Or maybe you’re the one who occasionally slips up and forgets to pay your cut of the bills.
Working together on a shared budgeting system with your roommate(s) will help ensure your bills are paid on time and prevent potentially awkward conversations about money. If you plan on living together for more than a few months, opening a Shared Account with Simple could be a good idea. With a Shared Account, your individual spending money is kept separate, but you’ll have easy access to a joint bank account with your roommate—making it easy to manage all your shared expenses in one place!
1. Have an open, honest conversation about your expectations before you move in together.
There is so much that goes into sharing a home with a roommate–in addition to sharing responsibility for rent and splitting bills, you’ll also be sharing common areas, perhaps bathrooms, and living environments. Talking about the non-financial aspects of living together first can help you ease into the deeper waters of talking about money.
Here are some questions to discuss with your roommates to make sure you’re on the same page about how your shared household will run:
- How often do you plan on being home?
- Do you ever plan on working from home?
- Do you like having guests over? How often?
- What is your sleep schedule like?
- How do you prefer to do chores–a little every day, or one big weekly cleanup (or something else)?
- How should we divide household chores?
- What do you consider to be a ‘clean’ home? What are your pet peeves or preferences around cleanliness?
- Do you have any hobbies or interests that might take up space in the common areas?
- Do you have any health considerations that I need to be aware of, like allergies, asthma, or sensitivity to light or sound?
These questions can help you kickstart your budgeting conversation:
- Do you get paid on a regular schedule, or sporadically?
- Is your income fairly consistent, or does it ebb and flow?
- Do you consider yourself to be responsible with money?
- Do you like to automate your finances, or pay everything manually?
- What do we consider to be shared household expenses?
- What kinds of things should we save for together, in case of emergency?
2. Establish a monthly roommate budget for your shared expenses.
Now that you’ve gotten the big-picture stuff out on the table, it’s time to start diving into the details of your shared budget. Although we recommend adding all of your renting and household expenses as Expenses in your Shared Account, it can be helpful to first get everything out the old-fashioned way: On pen and paper.
Sit down together and tally up a list with all the living expenses you plan on sharing, which can include:
- Rent or mortgage
- HOA fees
- Property taxes
- Maintenance fees
- Water bill
- Electricity bill
- Internet/cable bill
- Streaming services like Netflix, Hulu, etc.
- Cleaning supplies
- Household expenses like light bulbs and batteries
- Hygiene products (like toilet paper)
- Shared groceries (if you plan on sharing food)
Since you’re living together, you might have an opportunity to consolidate certain bills that you might’ve each been paying for separately, like Netflix or Spotify. Just be sure to set up profiles within those apps for each of you so that you don’t step on each other’s (digital) toes!
There might be certain purchases that you’ll want to make to get set up in your new place as well, like a vacuum cleaner or piece of furniture for your common room. Talk about whether it makes more sense to split the cost of this purchase, or to have one person purchase the item outright (and then keep it after you both move out).
You may want to discuss how to split food costs and your grocery bill with your roommates. Maybe you all contribute to a pantry of staples (bread, milk, eggs anyone?). Or maybe you don’t want a shared grocery bill, and you purchase your food separately. Will you allow the occasional sharing? Sort out the rules in advance if you can!
It’s also a smart idea to each contribute a small amount to put towards a shared emergency fund—for those unexpected purchases that you might need to make together.
Once you have all of your anticipated expenses tallied up, you’ll be able to determine how much each of you will need to contribute to your shared expenses. If you have any concerns about being able to afford your part, be sure to talk about that with your roommate in advance to see if there are ways you can reduce your monthly expenses.
Once you’re on the same page about how much you’ll each be contributing, the next step will be to determine the logistics of actually paying each of those bills.
3. Decide on a system for managing household finances.
There are many ways to go about dividing shared bills with roommates. You can:
- Each assume responsibility for paying certain bills from your individual accounts, and settle up as necessary.
- Have one person assume responsibility for collecting money from everyone and paying all the bills.
- Contribute a predetermined amount to a Shared Account, and use that account to pay for all your shared expenses.
There are pros and cons to each of these systems, and it’s important to choose a system that will work best for your situation. If you don’t plan on sharing many expenses beyond rent, then you might be able to keep your finances separate and use tools like Venmo or Splitwise to settle up as needed.
If one of you is especially gifted in the art of managing finances, then having that person serve as the house ‘accountant’ might make sense—as long as everyone else does their part to contribute on time.
Using a Shared Account to manage your finances with your roommate is a great option to consider if you’re sharing most or all of your living expenses with another person. Don’t worry, you don’t have to get married or anything—Shared Accounts are designed to be easy to set up and use for any two people who share money: Roommates, family members, or even exes who are co-parenting together.
Here are some reasons why you might consider opening a Shared Account with your roommate:
- You can keep your individual accounts while managing shared money together.
- You can use Expenses to keep track of each of your expense categories.
- You can see all of your shared purchases in one place.
- You can use Goals to save up for shared purchases over time—like a new coffee maker!
- You can pay bills directly from your Shared Account so you have a record of what has or hasn’t been paid all in one place.
- You can truly share the responsibility of managing your shared finances, because you both have access to the information you need to manage your expenses.
4. Make sure everyone is aware of how bills are paid.
Even if you decide to put one person in charge of all house finances, it’s important that both of you understand how and when bills are paid. This is especially important for certain bills, like rent, because not paying them on time could hurt your credit score or even get you evicted (if it happens more than once).
For most of your bills, you should have the option to pay by credit or debit card or ACH, which is a fancy way of saying ‘from your bank account.’
If you decide to open a Shared Account with Simple to manage your shared expenses, then you can use your Shared Account as the payment method for your shared bills. Easy! Discuss with your roommate if you should automate these payments, or if you’d prefer to pay them manually each month. Regardless, you’ll want to establish clear rules for how you fund your account—for example, “We each contribute $750 to our Shared Account by the 1st each month.”
If you choose not to share an account, then one of you will have to be responsible for collecting payment for your shared bills and making sure they get paid on time. You might choose to settle up for each charge, or at the end of each month.
There are a few ways you can both stay in the know about your shared bills, even if one person is in charge of paying them:
- If you automate bill payments, set up notifications so that you both get an email or text when the bill is paid, and if there’s an issue with the account.
- If you choose not to automate bill payments, set up notifications to remind both of you when a bill is available to view.
- Create calendar reminders so you know when to expect charges to come out of your account.
- Create calendar reminders for when your monthly contribution is due each month.
5. Have a monthly money chat to make sure everything is working according to plan.
Just as your personal finances will ebb and flow, your shared expenses will vary from month to month depending on what’s going on in your lives. Most issues between roommates happen because of a lack of communication—so the more proactive you can be about your money conversations, the better.
This is why we recommend setting up a regular (monthly) money date with your roommate, to talk through how things are going. You might think, “We’ll just talk about it if something comes up,” but the reality is that most people will avoid talking about money if they can help it, especially if there’s something uncomfortable to discuss. Setting up a monthly date (and making it official with a calendar invite and everything) can help you get ahead of any issues before they deteriorate into a passive-aggressive Post-It-fueled mess.
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