For many people, having roommates is a natural transition between leaving their parents' house and buying their own home. It can be a great way to trim expenses and save for the future. But if you're not careful, cohabitating can also devolve into constant bickering over finances and dirty dishes.
Roommate tensions are not limited to strangers. When cash-strapped young adults return to the nest, or older parents move in with grown kids for financial or caregiver assistance, long-suppressed family grievances can erupt if you're not careful.
The key to living amicably with others is open communication. All parties must feel free to ask candid questions about their roommate's financial situation and living preferences. Schedule regular meetings to discuss household issues and air any complaints or perceived inequities before they magnify and sour the relationship.Try to agree on as many living arrangement details as possible before moving in together. If you're moving into an established household, make sure you understand and agree with how financial obligations and routine tasks will be divided. A few considerations:
- The lease. Whoever signs the lease is responsible for paying rent and meeting other legal obligations, so you may want to have all roommates sign the lease if possible. That way, even though you'll still be responsible for the rent if someone moves out suddenly, at least you'll have some legal recourse to recover his or her share if they baulk at paying.
- You may need the landlord's permission for a new roommate to move in. The landlord may want to run a credit check and may even ask that a new lease be signed.
- Rent. If one bedroom is more spacious or has a private bath, a 50/50 split may not seem fair. The same goes if assigned parking or other amenities aren't equitable. Try to calculate rent amounts together so no one feels slighted later on.
- Utilities. Find out which utilities are paid by the landlord and which you'll split. Consider usage levels: Say one roommate works from home and runs the heat all day, or another never watches TV or uses the Internet. And, if cellphone reception is good enough, you may be able to do without a landline altogether, derailing arguments over phone bills.
- Food. Some people are territorial about their food, especially when budgets are tight. Decide whether you'll go in together on groceries, cleaning supplies and other household items or each buy your own, and set rules for replacing used items.
- Decide who pays each bill. Many landlords (and utilities) will only accept a single check, so it's up to everyone to settle up and pay each monthly bill on time. You can spread the risk by putting each utility in a different person's name. Just remember, missed payments can damage the accountholder's credit score or even get you evicted.
- Renters insurance. Each roommate should carry their own renters insurance -- or get added to the other's policy; otherwise your possessions and liability aren't covered in case of theft or accident. (See my previous blog, Why You Need Renters Insurance.)
- Major purchases. If your place needs common area furniture or appliances, it may be simpler to buy pieces individually -- and keep the receipts -- so when you move there's no question of ownership. For example, you buy the couch and your roommate buys the TV.
- Keep an inventory. Inevitably, your possessions will get mixed in together. To make it easier when your household eventually disbands, make a list of who owns what -- your pots and pans, her lamp, his vacuum cleaner, etc.
- Rules for recovering your share of the security deposit.
- Rules governing pets, houseguests, parties, noise, smoking, alcohol and other potential disagreements.
- Housecleaning schedule and responsibilities.
- Agreement about how to handle damages caused by roommates or their guests.
- Move-out procedures, including how much notice is required, forwarding addresses, abandoned property and who is responsible for finding the new tenant.
Many web- and smartphone-based applications are available to help divvy up bills and track payments and due dates, including Splitwise, BillMonk and BillsAreIn. Or, you can always use a good old-fashioned Excel spreadsheet. The point is to develop a system and use it so at the end of the month there are no billing surprises.
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.
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