Navigating Finances with Roommates
Podcast Transcription
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Hi everyone, welcome to another episode of PFCU's Money Talk Podcast. I'm your host, Maddy. In the last episode, we focused on like, k-12 going back to school but I wanted to talk about college going back to school because navigating college can be difficult. A lot of times college students are balancing classes and work, not to mention a social life, health, family time, sports or extracurriculars, hobbies and as if that’s not enough, you’re also probably worried about your money and maybe navigating having a roommate. And you might see where I’m going with this because many students are heading to college and that oftentimes entails moving in with a roommate or roommates. It almost feels like a right of passage to live with multiple roommates throughout college. And that might seem simple at first but there are a lot of ins and outs of living with someone especially if they have a different relationship with money than you do and chances are, there will be some differences. It might not be something you considered before, you know, in the realm of the different challenges of having a roommate but it will probably come into play at some point during your living experience. So I wanted to walk through some different scenarios of where money could get involved with a roommate and how you could potentially handle those situations. I mean, money is a sensitive topic in just every day life, not necessarily just with a roommate so imagine throwing in someone, a friend or even a stranger who you're living with and throwing money into the mix, it can get a little tricky.
Step #1 is creating your own personal budget. Before we even get into anything with roommates, you want to know where you stand with your finances. You want to have an average monthly income and you want to know how much you're able to afford in expenses. Especially, like rent, how much are you able to afford in rent so you don't get in over your head. Consider how many roommates you're planning to have or you're going to have. How much are you able to afford in utilities so you can still pay for your food, right? These are important things to consider. You want to have all of this set before you get into a situation with roommates.
Step #2 is working through the bills of renting an apartment or house. So this is where maybe you've decided where you're going to live, who you're going to live with. So, how are you going to handle the security deposit? Which utilities are included in your rent and what do you have to pay separately? So, internet, water, electric, trash. How are you going to handle paying the utilities and the rent? Are you going to assign bills to each roommate and pay each other your portions, that's always an option. You want to make sure no payments are missed so maybe keep a calendar in a shared living space of due dates for the bills. Are you going to utilize apps like Venmo to pay each other or are you going to set up a joint account? Make sure that any joint accounts are created with someone that you trust. Remember, if your roommate decides that the money for your bills in that joint account is better used for going out to dinner, there’s really nothing you can do about it because their name is on the account. So, make sure you trust that person.
Step #3 is combing through all those other expenses. So, things like furniture. Unless it comes fully furnished, you’re going to need furniture. This can be easy for your bedroom but what about shared spaces? Unless you’re getting every piece of furniture for free, you’re going to need to figure out who’s paying for what, how you’re going to split the cost if that's what you choose to do. But then what's going to happen with that furniture at the end of the year when you're ready to move out?
Food and toiletries that are shared. Are you going to rotate who buys those items, split the cost every month, pull from a shared fund that's going to be used when things need to be replenished. When I shared an apartment in college, we agreed on what items were shared and we kept other food or toiletries separate. We even had designated cupboards in the kitchen to have our food kept in.
Step #4 is sitting down and discussing expectations and boundaries. This is really important in making sure that everyone is on the same page. Like I said, money can be a hard topic to discuss for anyone but you’re going to save yourself even more of a headache by having these conversations right away. difficult situations down the road by having these conversations right away and getting through that awkwardness. So, this can include significant others or friends coming over and if there’s a point where the expense of extra guests needs to be accounted for, what is the thermostat going to be set at, the use of appliances or hot water. And yes, like I said, these conversations are not going to be fun, they're going to feel awkward but it's going to save you a lot of trouble.
And I just wanted to talk quickly about something that isn’t necessarily about splitting costs but more about keeping your finances healthy. Because everyone has different relationships with money and different family scenarios and income and debt. We don’t know the full picture and they don’t know yours. If your roommate is someone that loves to go out every weekend, which can get very expensive, it can definintely fee hard, like you can feel the pressure of wanting to be included in all of those activities and those outings even if it might not be the smartest financial move for you. If you have to use your credit card because you don't have enough money in your bank account, you need that money for groceries, it's going to be difficult in the moment to pass on some of those opportunities but your future self is going to thank you. Look at your budget, see what you can afford every month for those extras. You might need to skip here and there in order to afford your necessities.
College is already a balancing act and when you throw in the complexities of a roommate, you might feel overwhelmed but just remember to keep the conversation open and do what’s best for your finances not someone else’s.
Thank you all for listening and I will see you next time!
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