There is no one way to do it and, some might say, there is no perfect way either. But splitting living costs with your roommate/s is a necessary evil: something that must be done and must be done correctly and fairly. If there is a perfect way to accomplish this, it's to tailor the process to your specifications. With that said, here is everything -- in two quick steps -- to consider when divvying up dollars and cents among housemates.
1. Figure out Your Expenses
Your monthly bills take many forms: utilities (electricity, gas and water), food, cable and Wifi, rent and, perhaps, a renter's insurance policy . (How to buy renter's insurance may be a more involved process.) Before deciding how these costs will be shared (see step two below), it's important to determine if they will be shared at all. Take food as an example. Grocery store expenses are often difficult to divide evenly, but maybe you and your roomie agree that sharing staples like milk and peanut butter and other essentials (toilet paper, for example) works for both parties, while other foodstuffs are purchased on a per-person basis. The other recurring bills are more black and white. Consider assigning each to an administrator among you; the person whose name is on the account will have to manage it, even if both or all roommates will be sharing the payment. (You can even ask your service provider if they can divide the bill for you.)
Next comes the potential messy part of sharing costs. Before we address this head-on, a couple of tips: Feel free to go the first month of your lease feeling each other's needs out. Say you don't watch TV; maybe canceling your cable package or shifting it into the hands of your live-in friend is the right way to go. Say your roommate is doing more cleaning around the house than you are; sign up for an app like OurHome (formerly Fairshare) to make sure you're doing your part. Say your first electric bill is high; challenge your roommate and yourself to unplug unused electronics -- one of many ways to save on your routine, monthly bills. Another tip: Learn to let go of the little stuff. If your not-so-cost-conscious roommate likes to adjust the temperature, increasing your heating/cooling costs, roll with it. A comfortable roommate is a happy roommate.
2. Figure out How You'll Split Them
OK, so you've established the few or many bills that you and your roommate/s are responsible for as a group. Now it's time to decide who will be paying how much for each. The simplest thing to do, obviously, is to do divide everything into equal shares. But this is not always the right option. Costs can also be divided proportionally: by use, by percentage of income, by bedroom size (or amenities, such as which tenant has the bigger closet). It's important to discuss these options and choose the right solution for you and your roomie/s. One tool that could help: therentistoodamnfair.com's Sandbox tool.
Once you've chosen how to divide up your costs, you need to decide on the mechanization of this process. You can simply pick a settle-up date each month to figure out on pen and paper -- or in a shared Microsoft Excel or Google spreadsheet -- who owes who what. Consider, however, that there are many apps that make auto-payments and settling up as easy as can be: Splitwise, Splittr, Venmo, GroupMe are among them, and they often have their own payment tool or can be integrated with a widely used method, such as PayPal. (The Splitwise Furniture Calculator is another useful tool to decide who gets what and for how much when you inevitably move out.) These apps generally allow you to add other expenses -- say you ran out to stock up on toilet paper -- as they occur. Some of them include rent, but Pay with Lovely and RentShare are other online tools to use for the biggest expense of the month. Itemizing -- and automating -- your expenses this way will save you time and cut down on arguments, but they will also help make sure you're sticking to your budget and your agreed-upon division of cost. Transparency is valuable here.