We have posted a few blog posts about budgeting wisely… but what if you’re budgeting for two? Splitting bills and finances with a roommate (or two) adds new layers to consider. Don’t sweat it, we’ve got U! Sharing is caring, especially when it comes to expenses. Read on for some helpful tips.
Creating a foundation and maintaining a household budget is key, whether you’re new roommates or you’ve just renewed another lease together.
Tip 1: Talk about it
For some, starting is the hardest part… and talking about money is no exception! In many ways, discussing income and expenses can make one feel vulnerable. By collaborating on a strategy and creating clear expectations with your goals and budget, you are appointing ground rules that will set you up for long-term success.
In every type of living situation — whether it’s a sublet or a long-term lease — both parties can benefit from open and honest conversations about financial expectations and goals.
Tip 2: What to Split
Now that you’ve had a chance to chat about goals and expectations, you should decide on how you’re going to tackle managing money as a household, about which expenses you’ll share, and how you’ll divide it up.
Figure out what each person can truly afford for rent and utilities and what each of you is comfortable spending on things like groceries and any joint entertainment expenses like Netflix. Try starting with your individual budgets (consider the amount of personal debt you each are responsible for) using our tips on envelope budgeting or zero-based budgeting, we even have info on budgeting framework for gig workers — and bring your budgets together to compare and contrast. How will your financial wants and needs differ? What does each of you consider a shared expense versus a personal one? (Do you both want Disney Plus?) You’re going to be sharing some fundamental necessities, so get clear on what you expect from one another.
Depending on your circumstances, there could be a lot that might make sense to share, especially if you’re aligned to work together on a bigger financial goal.
UMe Pro Tip: U can save on streaming services with these tips.
Tip 3: How to Split
After determining what expenses you’re going to share, you should next decide how much you are both responsible for. Most roommates go for an even split, but there can be a ton of different options. And as your individual financial situations evolve, you can (and should) edit the split as needed. If you start a new business, and/or decide to go to grad school — you should reconvene and find an updated way to split your expenses. Here are 3 different ways you can do your split to get you started:
- Halfsies: This one is pretty easy because it’s a pretty straightforward option: Each person splits the bill in half. (Or if there’s 3 roommates — ⅓.) If you both have similar incomes and individual (non-shared) expenses, this could work out quite well. Keep in mind that you’ll probably have to set time aside to have a budgeting meeting to sort out what 50% is each month.
- Income-based contributions: In many situations, one roommate brings home more than the other. It might not be for everyone, but sometimes it makes sense for roommates to do a split based on how much income they bring in. For example, if one person (let’s call them Person A) makes 60% of the household income, with this strategy, Person A would then pay 60% of the total household bills. This makes a lot of sense when one person makes a lot more, like if Person B is a sibling and a student.
- Item-based: With this method, each person picks items or categories they are responsible for and this way it’s not about splitting everything down to the penny. For instance, Person A pays the electricity, gas, and Hulu bill; and Person B pays for the water, home insurance, and Spotify bill. You can still employ the principles of the Halfsies or Income-based methods instead of deciding on which bills to choose.
Tip 4: Co-Managing Your Budget
If all the steps above seem like a lot of work, trust us when we say, it will pay off in the end. Plus, you don’t have to do it all in one day! You can take a few days to work across these steps. Once you have those steps tackled, you are ready to use your new budgeting super-power!
We recommend opening a joint household account in order to pool money efficiently and make paying for your expenses easy! If that sounds like a lot of commitment for U and your new roommate and you’re not ready to do that quite yet, you can utilize a spreadsheet or use an online budgeting app, then transfer money across your autonomous accounts to pay bills as they come.
Here are some common options on how to pool household funds:
- Manual transfer: Set up a monthly calendar alert to remind you to transfer funds into your joint account, and utilize options like online banking or Zelle to initiate a transfer between your individual accounts into your joint account.
- Direct Deposit: You can have your employer directly deposit a certain amount from your paycheck into your joint account, in addition to your individual account.
- Paper checks: Write yourself a check and deposit it into your joint account by visiting our ATM, popping into our branch, or using our handy-dandy UMe app!
Okay, about that joint account suggestion… With a UMe checking or savings account, you should decide how to put funds into your account, just give us a call to set up a new account for U and your housemate. If you’re not already a UMe member, U can open an account easily today — just give us a call or stop by the branch!
The Road to Success
Laying the foundation for your financial responsibilities and goals coupled with clear communication makes for success!
UMe Pro Tip: Budgeting strategies can work for roommates, siblings, co-parents, couples… U name it! If you have a shared financial responsibility, these tips can help U be collaborative!
Dealing with money can be stressful — alone or together. Taking proactive action to manage your money, together and individually, might even be fun because you know you’re being responsible and that alleviates a lot of stress when it comes to joint financial responsibilities. Remember, communication is key. U can do it! For more tips like how to save more money monthly, check out this blog post!
If you have questions or need help that is more customized for U, just give us a call or shoot us an email. We hope this information has been helpful because U matter to Me, to all of us, at UMe!
Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!