How to split living costs with your roommate

Take the stress out of your living situation with these 5 tips to better manage expenses with roommates.

Roommates aren’t just for college students, particularly in regions of the country with extremely high housing costs. Figuring out how to equitably split the rent is one concern, but what about food, cleaning supplies, and other items that may be shared?

Maybe you love living with others, or maybe you see managing expenses with a roommate as a necessary evil until you’re ready to comfortably afford your own place. Whatever the reason you share your bathroom and kitchen with roomies, it can translate into at least one positive thing: real savings.

Just ask Josh Hastings, the founder of a personal finance blog, and his wife Lauren. They own their home and estimate they save $7,500 per year by living with a roommate.

“It helps us with our mortgage and paying off student loans,” Hastings says. “We decided that to subsidize some costs, why not make use of our spare space?”

Graphic showing a house, stacks of coins, and a calculator.

But that doesn’t mean there aren’t financial challenges to living with others. Aside from remembering who cleaned the kitchen last, one of the biggest challenges of communal living is figuring out how to split living costs with your roommate.

What is the best way to split expenses with a roommate? Here are 5 tips to keep everyone happy and on the same page:

1. Decide together how to split costs

To manage expenses with a roommate, you have to determine how to fairly divide up household costs.

Ben Huber, a personal finance blogger, believes it’s important to make sure everyone agrees on how to share costs—even roommates who move into an already established household.

“Each time a new tenant moved in, we sat down early on and tried to come up with general guidelines that would work for everyone involved,” he says. For his three-person arrangement, the deal is to share common household items and split the costs three ways.

However, one of Huber’s key tips for splitting bills with roommates is to avoid splitting the cost of bigger ticket items because of the complications it can create if someone moves out. If you’re furnishing a living room, for example, Huber recommends that everyone buy one or two items that they can own and take with them when it’s time to move out.

Hastings and his wife have slightly different tips for managing your shared expenses with roommates. Rather than split the bills down to the penny when they come in, the Hastings include a fixed amount to cover the cost of utilities in the rent they charge their roommate. They also use that fixed amount to cover shared household items, including cleaning products.

But they draw the line at personal items like blenders or other specialty kitchen tools. “When it comes to personal items, we don’t split costs,” Hastings says. “It is just easier this way in the long run.”

2. Develop an easy way to track expenses

Huber, who estimates he saves $10,000 a year by living with roommates, says one of his most effective tips for splitting bills with roommates is to track everything each person spends on shared expenses.

Two men working out a roommate budget and division of expenses.

To better manage expenses with his roommates, he documents each person’s purchases in a spreadsheet and evenly divides the expenses between the three of them at the end of each month. If someone picks up paper towels on the way home from work, for example, he knows he’ll get reimbursed and that everyone is contributing fairly.

“We all hold a single utility under our name,” Huber adds, “and then e-transfer the difference in our utility payments to one another’s bank accounts on the fifth day of each month.”

3. Skip sharing food

To split the cost of milk, or not? That can be one of the toughest decisions when it comes to deciding how to split living costs with your roommate—especially if you have a small fridge or are a frugal foodie.

“Food is sometimes make or break for roommates,” Hastings says. “I have tried splitting food, and it seems to never work out. People like different things and use different brands.”

Huber and his roommates have accepted that one of the best tips for managing your shared expenses with roommates is being flexible, like sharing grocery bills for special occasions.

“We’ve all chipped in and fired up the grill numerous times for family dinners,” Huber says.

While the Hastings don’t typically share food with their roommate, they still help each other out to prevent last-minute trips to the grocery story. Hastings recently borrowed an ingredient from his roommate so he didn’t have to run out to the store.

“I ran out of canned tomatoes one time, and just replaced them the next day,” he says.

4. Create a roommate agreement

One thing that Hastings suggests to help manage expenses with a roommate is to create a roommate agreement. That’s in addition to the rental contract you have with your landlord. This ensures that all financial and housing responsibilities are clearly laid out.

“Draw up a contract that is flexible, but also has clear cut non-negotiables,” Hastings says. “Creating a contract upfront that addresses rent and utilities is the way to go.”

Your agreement could also address how to split living costs with your roommates and logistics related to cleaning schedules, parking and having guests over.

“Draw up a contract that is flexible, but also has clear cut non-negotiables. Creating a contract upfront that addresses rent and utilities is the way to go.”

Josh Hastings, personal finance blogger

5. Consider unexpected expenses

You might know how to split common expenses, but how do you manage expenses with a roommate when they are unexpected? Agreeing to divide the cost of damage according to who is at fault is another one of Huber’s favorite tips for splitting bills with roommates.

“My longtime college friend and I both have dogs that, being dogs, inadvertently caused damage requiring repairs that went beyond what was covered by our original security deposit,” he says.

Since all three roommates had paid into the security deposit, it didn’t seem fair to use it to cover repairs that were the fault of two people. Huber and his fellow dog owner covered the expense so the third roommate wouldn’t lose his portion of the deposit.

If there is damage and everyone is at fault—ugh, marks on the hardwood floor from the kitchen chairs—then those expenses could be shared equally, Huber says.

To help manage expenses with a roommate and minimize the blow of unexpected housing costs, roommates could consider contributing money to a roommate emergency fund to ensure there’s cash on hand when a need arises.

Two roommates put together a piece of furniture together.

Having the awkward conversation is worth it

While it might feel awkward to talk to roommates about money, these are important conversations to have in order to ensure that you don’t end up arguing about who bought what and who owes what. By following these tips for managing your shared expenses with roommates, you’ll be able to spend less time worrying about money and how to split living costs with your roommate and more time just enjoying each other’s company.

“Living with other adults,” Hastings says, “provides me the opportunity to build lifelong friendships, in addition to saving money for future endeavors. As a fairly extroverted individual, I’ve been able to meet and actually enjoy cohabiting a space with individuals in similar stages in their lives.”

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