You get along great, but once you begin living under the same roof and sharing expenses, will your relationship endure? Living with friends (or new friends) often involves compromise and communication.
Having the following money conversations before you move in together will likely be the easiest and most effective way to avoid any awkwardness. They can also set a baseline that will help you to resolve potential differences in the future. Use these nine conversation starters to pave the way to cohabitation happiness.
Conversation 1: How Much Rent Can We Afford?
Create a realistic budget for how much rent you and your roommate(s) can afford. A standard rule is to spend no more than 30% of your gross income on rent.
You don’t need to disclose exactly how much each of you earns, but having a frank conversation about what each of you can realistically afford is a smart move. Better to put your chips on the table before you find a great condo that costs more than you can afford. Peer pressure might put you in an awkward financial position.
Another important consideration: What debt are you carrying? If you have student loans, auto loans or credit card debt, those monthly bills can eat into the amount you can afford to pay in rent each month. Likewise, you should consider your overall budget, including utilities, food, parking, entertainment and other expenses.
Remember to factor in the security deposit and any rent payments required in advance (many landlords or owners ask for the first and last month’s rent up front). If you’re splitting those costs, discuss how that shared money will be reimbursed if you decide to part ways.
Conversation 2: Who Pays the Bills? How Will They Be Paid? And When?
Once you establish your housing budget, determine who is responsible for paying the bills. This can be done multiple ways. You may designate one party as “the banker” to handle dispersing monthly rent and utility payments. Or you could decide to divide and conquer, with one roomie paying the utilities and the other the rent and then settling up the difference each month.
Natural gas, water, electricity and internet tend to be fairly consistent month to month and you can ask your utility providers for your rental’s monthly and annual averages so you can budget accordingly. If you can’t get the average from the utility provider, the landlord may know.
If one person is responsible for sending payments, establish how and when the other roommate(s) will pay their share. Venmo, Zelle and PayPal all provide easy ways to transfer funds from one individual to another. (More on peer-to-peer payment etiquette here.)
Or to make bill paying even easier, consider setting up a shared online bank account. You can schedule electronic deposits to cover all monthly expenses and set up automatic payments for those fixed expenses. Each roommate can transfer money into the account each month or send a percentage of their paycheck directly there.
Although utility accounts and rentals rarely impact credit ratings, it’s important to understand the terms of each liability and the repercussions of a late payment—which could mean additional fees or even termination of services. If you miss multiple payments or fail to pay the final bill once you move, the account may be turned over to a collections agency and your sparkling credit rating could be dinged.
Conversation 3: How Do You Really Feel About Sharing?
There are many ways to handle fluctuating monthly expenses, so it’s best not to assume. In determining which method will work best for everyone, consider these three models as a starting point.
● Laid-back: All for one and one for all! You and your roommate(s) are easygoing and not interested in keeping close tabs on who pays for what. In the grand scheme of things, you know you’ll all pay for your share and it will all work out.
● Territorial: What’s mine is mine. You’re particular about the brands you prefer and like to keep strict boundaries on your “stuff.” You would rather not live in a commune. Each roommate maintains their own supply closet.
● Communal: Splitsies. Although you pay for some expenses separately, paper and cleaning products, light bulbs and other items that are all equally shared are tallied up at the end of each month and split down the middle. Or you might decide to contribute a set amount each month to create a slush fund to pay for these expenses.
Conversation 4: Do We Split Groceries and Cooking?
The cost of food can be one of your largest monthly expenses, typically eating up 10%-20% of gross income. Pooling resources can help you save money overall. But what if you love pasta and your roommate is gluten-free? Or your idea of a gourmet meal is an almond butter and jelly sandwich, while your roomie prefers grass-fed filet mignon?
Similar to the convo about household items, having a candid discussion about groceries and prep will be essential before you share a kitchen. If you and your roommate have similar tastes and love to cook, you may divvy up the duties and the grocery bill and let any differences even themselves out over time. But if one of you is less culinarily inclined or has a host of food allergies or dietary preferences, keeping food purchases and prep separate may be the way to go.
Want a happy medium? Shop together and split the cost of the food items you’ll both use (such as eggs, butter and milk), and pay for specialty items separately. For example, your vegan roommate may stock up on organic greens and tofu to take their lunch to work everyday, while you choose to grab a hot dog from the local food truck.
Conversation 5: What About Subscriptions?
Are there TV series you cannot miss? Are you really into sports? Do you need to hear the latest news 24/7? When it comes to Netflix, Hulu, YouTube, Amazon and the rest, you may find some economies of scale in cohabitation. Discuss your subscription usage and whether there are certain services that make sense to consolidate.
Conversation 6: How Do You Divide the Chores?
Dishes don’t wash themselves, nor does the rug get swept on its own. Have a frank conversation about your tolerance (or lack thereof) for clutter, dust and dirt before you move in and determine who will do what to maintain your home.
If your roommate likes to clean the bathroom daily but you’re OK with a once-a-month cleanse, will that create friction? Likewise, what if you are the one who is always mowing the lawn? Chores have an inherent value and should be taken into consideration when dividing up your living expenses. (How much would you pay for a cleaning or lawn service?)
If one roommate has a more flexible schedule and can shoulder more of the chores that make your home pleasant for all, consider providing them a discount on their share of the fixed expenses. If you have a steady gig and stable salary, monetizing chores can be a great way to help ease the financial burden for a great roomie whose income fluctuates.
Conversation 7: What About Your Pet Python?
If you or your roomie already have pets before you move in together, an honest conversation about what it means to live with said dog, cat, parakeet or tarantula should be in the offing right away. With pet ownership comes responsibility!
What will your roommate’s Great Dane do all day while they’re away at work and you’re Zooming with your colleagues from home? What if your cat “accidentally” uses your roommate’s new leather Gucci bag as a scratching post?
Likewise, have a serious conversation before you and your roommate buy or adopt a pet together. Be specific about how you will share food and vet expenses, as well as who will take care of the associated pet chores (scooping poo, going for walks, etc.)
Conservation 8: How Do We Handle Unexpected Expenses?
When you’re renting, expected repairs are typically covered by the owner or landlord. But it’s important to determine ahead of time how you’ll handle a utility bill that soars or what to do if your friends create a gaping hole in the wall while playing indoor ultimate Frisbee.
Take a tip from homeowners and set aside an emergency fund. Saving a set amount ($10-$50 a month) to offset those “oops!” expenses will take the sting out of the unexpected cost. You may agree to do this individually or add this to your joint bank account.
Conversation 9: What If … You Lose Your Job?
No one can predict the future but anticipating financial shifts can help you prepare should either you or your roommate hit a rough patch.
Have a candid discussion about emergency savings (the rule of thumb is to have three months of expenses saved in reserve) and what you would do if your primary source of income ran dry.
If one of you lost your job, would the other have enough to shoulder the financial load short-term? And what resources (family members or lines of credit) might you have that could help cover the cost of rent and other essential expenses should you find yourself unemployed?
Keep in mind that talking about money problems can be awkward. If your roommate seems to be struggling to make ends meet, gently initiating the conversation may be helpful to you both. If you’ve established open channels of communication from the time you signed the lease, you may discover that it’s easier to resolve the shortfall than you might think.
Now Stop Talking and Start Writing
Finally, as you discuss each topic, write down the consensus you’ve reached together and document your agreement. If there are multiple roommates, you may want to have everyone sign and keep a copy. Then keep your roommate agreement as a living document that can be updated or amended should new considerations arise. Even if you’re best friends, honoring your written terms as you would in a business relationship will make it more likely that you’ll remain best friends for years to come.
Brigid Galloway is a freelance journalist who writes about personal finance and healthcare for media outlets, including Marketplace and NPR.
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