Money Management Tips for Living With Friends

Living with friends might seem like a good idea on paper, but it won’t always work so well in reality. While you may have plenty of things in common with your friends, are you on the same page in terms of your attitude towards money? The last thing you want to do is let money come in the way of something more important, which is your friendship. There’s a right way to handle the situation and a wrong way to handle it. On the TV show, “Friends”, there is a great episode where Chandler knows that Joey is broke and he feels so bad for him that he goes out of his way to try to give Joey some money. Unfortunately, TV shows aren’t real life, and most of us can’t afford to support a roommate. Here are some tips for staying sane while living with friends.

Planning Ahead

Sitting down and planning some ground rules is essential, because it lets everyone know where they stand from day one. On top of this, it’s a good idea to think about what you’ll do if money problems arise. You can plan the ground rules once you actually move in, but the planning ahead should ideally be done before you become roommates and tie yourself into a lease. If you don’t have any plans in place to deal with unexpected financial situations, you can easily find that your friendship is blown apart by the fallout.

Dividing Up The Bills

Set some clear ground rules for who is going to be responsible for paying what and stick to this. If you or another roommate repeatedly feels obligated to cover missed payments on top of your own, it can quickly create bitterness and animosity. Splitting everything equally is a popular option, because it means that you’re all paying an equal amount and no one can claim that they’re being taken for a ride by paying more than other roommates. There are a bunch of websites out there that help you split up the bills like and BillShare actually sends out email alerts when bills are due, so you don’t need to feel like a nag every time a bill needs to be paid.

What If Someone Can’t Pay?

A flaky roommate who tries to get out of coughing up their contribution is one thing, but how would you manage if one roommate were to lose his or her job or have to take sick pay instead of their normal salary and was unable to contribute anything towards the rent, bills and food costs?  The latter situation actually happened to two acquaintances of mine, which caused no end of problems given that as the biggest earner in the apartment, Friend A had previously been coming up with the bulk of all payments, and as Friend B earned a hardly nothing as a trainee, this put them in a very precarious position financially when Friend A’s usual income was reduced (with sick pay, in this case). Six weeks and one bitter bust-up later, things came to a head, and their friendship is now almost non-existent. What’s the moral of the story? Plan ahead and don’t rush in without discussing how you’ll handle money problems if they crop up.

If you sign a lease, you’re more than likely going to be responsible for the rent and bills if your roommate were to skip town. If you’re worried about this possibility, don’t sign the lease without a written agreement that each of you will be responsible for your share of the rent and bills up until the lease expires to limit the chances of having a roommate leave you high and dry.

Living with friends can be a breeze if your roommates are responsible, but it can all go wrong very quickly if you jump in without thinking things through properly. It’s easy to assume that living with friends will be a walk in the park, because you get along with them. But, it’s likely that the peace won’t last long without some strict ground rules in place to let everyone know exactly where they stand and what will happen if things don’t go according to plan.

(photo credit: Hot Rod Homepage)

  • Kate

    Hopefully you will find another responsible person to live with. Some of my money problems started with a roommate who couldn’t be responsible for bills. Thankfully, I have put that behind me. Just make sure you know who you are living with!!!

    • Winston

      Several years ago back when I was living in NYC, my mom rented one of the rooms to one of her friends. They agreed to split the phone bill. The problem arose when there were sudden hike in phone bills. At first, my mom thought that the phone company made a mistake. After she called the company, she was told that the extra charges were due to many long distance calls. My mom asked her friend if she had made the calls, but she denied it. It was until my mom requested bills listing individual calls made that my mom’s friend confessed that she did indeed made all those calls. And let me tell you that’s not the only problem that we had with my mom’s friend. Because she didn’t have to pay the water and electric bills, she was very wasteful. Even though my mom had repeatedly told her about these wasteful habits, she never changed her bad habits.

  • Mac

    Never thought of a situation like this, but I’m sure it happens quite often when friends get a place together. The basic idea is to communicate before the lease signing and agree about any money situation that may arise beforehand. Though I’m sure that’s something that roommates rarely do.

  • Em D.

    You should always have a thorough conversation before signing a lease. Talk about bills, what kind of utilities you want and just as important chores/cleanliness- and try to get both names on the lease. In general, don’t live with your good friends if you want to stay good friends. It prevents you from treating the situation as a business arrangement. That being said, I live with one of my best friends… but we became good friends when we started living together after college- after having a thorough conversation about expectations :)

  • David/Yourfinances101

    The only other thing I could add to this is–get it in writing.

    It never hurts, for you or the other person.

    No matter how good of friends you think that you are.

  • gina

    I don’t think you ever really know what someone is like until you live with them! I agree, you should discuss the financials ahead of time and possibly have a written agreement.

  • Winston

    If you can help it, never live with a close friends of yours. It has the potential to destroy any close relationship. You might think in the beginning that living together with your friends will be fun and interesting. But after a while, you will come to the realization that it is not as fun as you thought it was. There are a million different things that can go.