A roommate’s guide to the money talk

Renting can make a lot of financial sense, especially if you’re going to school, trying to pay down debt, or building your savings. But many roommates make the jump to shared living without having critical discussions about how money will be handled. 

To help roommates get off on the right foot, RBC created the Roommate Money Guide, designed to encourage important money discussions and prevent disagreements that come from sharing budgets and splitting expenses. We’re sharing a few of the biggest takeaways, so you can have a guideline for productive finance chats. 

Before you talk: Know your own budget

It’s hard to have a productive talk about who will pay for what if you don’t have a good idea of your own budget. Start by determining your income. Whether that’s student loan money or grants, income from a job, or financial assistance from family, count up everything. This is your income.

Next, figure out your fixed expenses—the bills you have to pay that won’t fluctuate. For instance, add up things like tuition payments, cell phone bills, and car payments. To make an even more accurate budget, look at the rest of your spending. How much do you spend every month on groceries or eating out? On utilities and streaming services? On transportation?

Now, deduct your expenses from your income to get an idea of how much you have left to put toward housing. If it’s less than you’d like, consider whether there are some flexible expenses you can cut back on.

Knowing your budget before you talk with roommates prevents money confusion down the road and gives you a clear picture of how much you can honestly contribute.

There are more budgeting tools than ever, so find one that works for you. For instance, download an app that tracks your spending and organizes it by category, or stick with paper and pencil if that’s what works for you.

Chat #1: Determine which costs to split

Let’s assume that you and your roommates have found a place to rent. With that big decision out of the way, you’ve got lots of little decisions to discuss. 

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Make a point for all roommates to get together to decide how household expenses will be split. Figure out the answers to these questions in particular:

1. Which bills are shared? It’s usually assumed that rent is split, but will you also be sharing costs for the utilities, internet, or food in the fridge?
2. Which purchases are considered personal vs. household expenses? Some expenses are trickier, like the food situation. Will roommates contribute a set amount to groceries or will each person be responsible for their own food purchases? Same goes with expenses like toiletries. 
3. How will expenses be divided? Are you splitting the shared costs evenly or will some people contribute more for specific bills? Hammer out these details now.
4. Who is responsible for paying each bill? You could designate one person to collect money from roommates and pay the bills, or you might break up the financial responsibilities. For instance, one person could be tasked with collecting money and paying the internet, while another collects and pays rent. 

It’s a good idea to write down your agreed-upon plan and share the information with everyone. This way, no one can later say they didn’t know they were responsible for paying a specific bill or contributing funds for something.

Remember, deciding this before you move in can prevent uncomfortable conversations or resentment down the road. 

Chat #2: Establish house rules

You covered a lot of ground if you and your roommates ironed out the details about who pays for what. Your next money chat as roommates needs to focus on how your decisions actually play out.

Agree on when money is due

Scrambling to collect rent from everyone the day it’s due is stressful. As roommates, decide a date well in advance of when bills are due to collect money from each roommate. You can be as detailed as you like or even draw up an agreement that everyone signs.

Decide how money is collected

Will one person be in charge of collecting money or will the person responsible for paying that expense have to collect it? These are tiny, but very important details. 

It’s also helpful to determine how dues are collected. Should roommates pay in cash? By cheque? Or maybe with practical tools like in-app expense splitting? Again, make it clear which method(s) everyone wants to use.

Establish regular meetings to check in on finances 

Keeping the lines of communication open is really important when you’re sharing a living space and expenses. If you’re not frequently talking about finances, it can make it harder to bring the subject up.

To normalize these discussions, schedule a money talk with your roommates once a month. These don’t have to be long meetings, but having a designated time to bring up any issues or questions can make it easier to stay on the same page.

Chat #3: Navigating money problems

Sometimes, despite your best planning, you’ll still need to have a tough money talk. 

Let’s say your roommate is behind on rent. You’ll need to discuss when they will be able to pay and make a plan for how to avoid late payments in the future. This might mean sharing reminder texts or setting up electronic apps to request the funds the week before rent is due.

Another situation you might run into is silent debt between roommates. This looks like a quick run to the shop to grab something or the offer to pick up the tab for an Uber or takeout order–shared expenses that aren’t repaid by one roommate.

Over time, silent debt can build and cause resentment. To prevent this, avoid paying for one another’s small purchases, and if you do, repay each other immediately. 

The bottom line

These are just some of the most helpful money talk tips mentioned in RBC’s guide. Remember that the more you normalize discussions around money, the easier it is to share costs alongside a living space.

Read more about personal finance:

• How your rent payments can help build your credit history
• Heading to college or university? Follow these smart money habits
• Why healthy money conversations are key to building wealth together

About Jessica Gibson

Jessica Gibson is a personal finance writer with over a decade of experience in online publishing. She enjoys helping readers make informed decisions about credit cards, insurance, and debt management.

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