5 pieces of financial advice for living with a roommate

Posted on 08 Aug 2016 at 10:22am

Splitting rent with a roommate saves money — and it can be the ticket out of your parents’ house (which means no more sneaking those Grindr tricks in through the basement window). But while living with a gay brother from another mother can be rewarding, it’s important to protect yourself and make decisions that don’t hurt your finances. To make this living sitch work with few financial disagreements, here are five money tips for bunking with your bestie.

Have a separate roommate agreement. If you’re renting an apartment, you and your roommate will have a lease agreement with the landlord. But in addition to this agreement, you should also establish a roommate agreement between the two of you. Before moving into the apartment, you obviously sat down (or should have) to discuss how to handle expenses. Since money can be a touchy topic, the agreement you come up with shouldn’t be a verbal one. Even if you walked away from the discussion on the same page, you need to get everything in writing so there are no misunderstandings down the road. Some roommates choose to split all expenses evenly down the middle, but you and your roommate may come up with a different agreement — perhaps a 70–30 split, for instance. If you don’t get anything in writing, the person paying more may later claim that he’s being taken advantage of. Creating a separate roommate agreement may seem like an unnecessary step, but it can save you from a lot of heartache and stress.

Buy your furniture separately. When furnishing the new place, some roommates decide to purchase furniture together so it’s not a burden on one person. But in all likelihood the two of you will not live together forever … and even if you don’t realize it today, buying furniture together can create problems once you make the decision to part ways. This can start disagreements about who gets what items, and if you and your roommate part on bad terms, these disagreements do nothing but add fuel to the fire. To make it easy on yourself, agree that everyone buys their own furniture pieces. Once you’re ready to move out of a shared apartment or house, each person leaves with what they brought into the living arrangement.

Dont be afraid to be a landlord. When you and your roommate apply for an apartment together, it’s the landlord’s responsibility to confirm your employment and income. But if it’s your home and you bring in a roommate, it’s your job to take over those responsibilities. This can be awkward and uncomfortable, especially if you don’t have landlord experience. You may not feel comfortable asking a stranger or a friend for their financial information. But if you want to avoid potential problems, never choose a roommate based solely on what they say they earn. If you don’t confirm this information, you could end up with a roommate who’s not capable of covering their expenses. You don’t have to get too personal, but you should at least call your roommate’s employer to confirm they work for the company, and get a copy of their most recent paycheck stub. Don’t feel bad; you’re doing what any landlord would do, which is ultimately protecting yourself.

Maintain a financial cushion. Although getting a roommate can improve your finances and help you save money, you shouldn’t blow all your extra cash. It’s important to maintain a financial cushion, just in case your roommate bounces. If your roommate moves out before the end of the lease, and you move out because you can’t afford the rent by yourself, you’re also in breach of contract. This can trigger litigation and credit damage. But if you prepare for the worst-case scenario and build a “just in case” fund, you can possibly save enough to cover the rent until the end of your lease.

Keep your finances separate. Regardless of whether your roommate is a best friend, never combine finances. This person is not your spouse, so there’s no need to combine your bank accounts. Some roommates have one joint bank account exclusively for household bills, and each person deposits their share into this account. To each his own. Just know that this approach can lead to problems, especially if one person isn’t as responsible with money. This person may dip into the account to cover personal expenses or fail to deposit his share, which forces the other roommate to pick up the slack. A better, safer approach is each person writing a separate check from their own checking accounts, and then including both checks in an envelope to the landlord or a utility company. Or if you’re paying bills online, one person can give the other cash to cover his share. Your landlord and utility companies don’t care how you pay a bill, as long as you pay it.

— Mikey Rox

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