How to Split Bills With Roommates

1. Decide Which Expenses to Split and How

Start by creating a list of shared expenses, such as rent, utilities, internet service and streaming subscriptions. Then decide how you'll split things up. It's often easiest to divide expenses equally, but another option is to split bills proportionally based on usage. For example, you might agree that the roommate who has the bigger bedroom should pay more.

Some roommates may want to split bills based on income. For instance, if you live with a partner who makes significantly more money, that person might agree to pay a proportionately larger share of the bills.

2. Create a Roommate Agreement

Putting your payment decisions in writing helps clarify everyone's financial responsibilities. Your roommate agreement should include a list of monthly expenses, due dates for each, how each expense will be paid, who's responsible for making the payment and what happens if someone is late with their share. To make sure you cover all the bases, you can check out sample roommate agreements at websites like Docusign, LegalDepot and RocketLawyer.

3. Decide Who's in Charge

Who will collect the money and pay the bills? To balance the workload, consider putting the most responsible roommate in charge of collecting and paying rent, then dividing responsibility for other shared bills among the rest of the roommates.

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Learn more: What Kinds of Bills Affect Credit Scores?

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4. Set Up a System

You'll need a way for you and your roommates to track when payments are due, when money has been collected and when bills are paid. You can create a shared calendar or spreadsheet for this or use an app. Expense-tracking apps like Settle Up, Splittr and Splitwise help you add and divide up expenses and track payments; peer-to-peer payment apps such as Cash App, PayPal, Venmo and Zelle make it easy to request and send money.

Setting up online bill pay or autopay can prevent missed payments, but be sure you have enough money in your account when a bill is due. Otherwise, your checking account could become overdrawn and you may face nonsufficient funds fees and late payment fees. Giving roommates plenty of advance notice when payments are due can help ensure you've got the funds to pay the bills.

Learn more: Does Renting an Apartment Build Credit?

5. Be Flexible and Willing to Adjust if Needed

Discuss what you'll do if a roommate loses their job, has their hours cut or is otherwise having financial difficulties. For example, will you give them a grace period and temporarily cover their share of expenses (with a plan for repayment)?

Also be ready to revisit your bill splitting agreement when necessary—for example, if one roommate is away for months on vacation, but their bills still come due, or if a roommate starts working at home and your electric bill suddenly soars. A roommate moving out (or in) requires recalculating too. Adjusting your agreement as soon as your living situation changes will help keep your payments on track.

Learn more: Ways to Save Money on Rent

Bill-Splitting Pitfalls to Avoid

Keep your bill-sharing plan running smoothly by watching for these common pitfalls.

• Running short of money: You owe $1,000 for rent but only have $10 in your bank account. Making a budget can help avoid this predicament and is a smart move even if you don't have roommates.
• Irresponsible roommates: Aim to have a good grasp of a new roommate's financial situation before they move in. Although you can't legally check a roommate's credit, you may want to ask them to share a copy of their credit report, which they can get for free at AnnualCreditReport.com or with Experian. You can also ask to see pay stubs or W-2 tax forms to confirm that they can afford the rent.
• Unexpected expenses: You may need to pay for repairs or cleaning when a pet has an accident on the carpet or a party gets out of control. Consider starting a group emergency fund to cover costs in these situations. It's a good idea to build your own emergency fund too.
• Overpaying or underpaying: You can easily lose track of who paid what and when, especially with recurring payments for the same amount each month. Use your chosen tracking system to keep on top of things.
• Lending your roommates money: Frequently spotting a roommate for bills could leave you cash-strapped and resentful. Emergency funds and roommate agreements can help avoid this problem.
• Late payments: You could be on the hook for late fees or even have your utilities shut off if your payments are late. Avoid this by collecting money from your roommates well before bills are due so delays due to weekends or bank holds won't keep you from paying on time.
• Credit score harm: Utility and rent payments generally aren't reported to credit bureaus. However, past-due payments can hurt your credit score if an account with your name on it is sent to collections—even if your roommates were responsible for part of the bill.

Learn more: How Long Does It Take to Transfer Money Between Banks?

The Bottom Line

Rooming together can be a smart way to save, but it's important that everyone lives up to their financial responsibilities. Creating a plan for managing shared expenses can help keep your household harmonious and your FICO^® Score^Θ in good shape.

Landlords typically check your credit when you apply for a rental, and a good credit score could make it easier to get approved. For an easy way to keep tabs on your credit, consider signing up for free credit monitoring from Experian. You'll be able to track your FICO^® Score and get alerts of important changes to your credit report that could signal problems.