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How to Manage Finances with Roommates

Niccole Schreck

For many Americans, living with a roommate is a financial necessity. The cost of rent and utilities can be overwhelming but manageable when split between roommates. However, sharing a space with other people can be challenging. According to a 2011 survey by Rent.com of 1,000 Americans ages 18 and older, 17 percent of people have at one point moved out of a rental unit due to roommate issues.

Arguments commonly erupt over housekeeping, noise, guests, sharing and, namely, money. Splitting rent with roommates can be tricky. Organizing rent, utilities and other shared expenses each month can be a major hassle without good communication and planning. To avoid conflict, here is how to manage finances with your roommates:

Find a compatible roommate. Some people just aren't meant to live together, and no amount of planning is going to keep mismatched roommates from conflict. Cigarette smokers, for example, often collide with non-smokers when it comes to living together. Before you make the decision to move in with someone, sit down and talk about your living habits and expectations. Set ground rules and boundaries you can all live with in with regards to cleanliness, sharing belongings, hosting guests and acceptable noise levels.

Discuss finances before signing the lease. Before signing a lease, have a discussion about how expenses will be divided. Whose credit card will you used for utility payments? How quickly do the other roommates have to pay their share? Will you be buying groceries together or individually? Now is the time to have these discussions.

Splitting costs evenly is one of the best ways to avoid roommate conflict. Your roommate might use the Internet more than you do, but in the same token, you might be the one who takes longer showers and uses up more of the water bill. To avoid a numerical mess, consider splitting these costs down the middle.

Moreover, a number of items in the apartment are best left shared, such as toilet paper, trash bags, light bulbs, dish soap and household cleaning products. To reduce clutter and avoid confusion, make a trip together once a month to purchase such products and split the costs evenly.

Sign a roommate agreement. Once you've come to an agreement on finances, put it in writing with a roommate agreement. While your lease covers the legal responsibilities you have to your landlord, when it comes to rules for your apartment, you're on your own. Therefore, signing a roommate agreement can minimize conflict later on.

Track expenses. You can choose among a number of free mobile apps available to make tracking shared expenses easy, including Splitwise, Billsup, Conmigo, Paydivvy and Track Every Coin. Using an app for managing finances with roommates means less math and an easy way to keep track of who owes what to whom. Plus, some apps let you set up friendly email reminders so you can avoid the awkward "you-still-owe-me-money" conversation.

Niccole Schreck is the rental experience expert for Rent.com, the only free rental site that helps you find an affordable apartment, gives you tips on how to move and then says, "thank you" with a prepaid $100 Reward Card.

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