House shares are an excellent way to save money on household bills and expenditures, however it’s important to learn how to manage household finances, to avoid late bill payments and potential disagreements between housemates.
If you’ve had difficulties with house shares in the past, or you’re sharing a house for the first time, these tips from icount will provide you with the best information on how to manage your household finances more effectively.
Make rent a priority
Rent can be organised in two different ways, either through a joint contract or individual contracts for each member of the household. The most common form is a joint contract for the entire household, which states how much rent in total needs to paid each month. As such, it’s crucial to sit down and discuss how rent is a) going to be split and b) going to be paid.
For example, it could be that one member of the household pays the rent in full to the landlord, whilst the rest of the household simply transfer their part of the rent to them. Or it could be that each member sends their percentage of the rent to the landlord.
Are you all going to be paying equal amounts, or is whoever has a bigger room or an en suite expected to pay more? These are all questions that need to be addressed from the off.
Identify what bills need to be paid and when
Some of the household costs that will need splitting may include: gas and electricity; the tv license; contents insurance and water. You’ll need to identify what outgoings you have as a house, when they should be paid and how much each person should pay. If you’re paying bills via direct debit, it might be beneficial to change the payment dates to the same time of month, so it’s easier to remember when the money will be taken from your account.
Open a household bank account
A simple way of managing household finances is to open a joint bank account between house members and pay all bills from this account. Each housemate can pay into the account and direct debits can be set up to ensure bills are paid on time.
If problems arise, it’s easier to identify the root cause if payments are being made from one central account, however this option carries an element of risk as you are financially linked to the credit rating of those you are sharing the account with. Therefore it’s vital to only open a joint account with people you trust implicitly.
Alternatively, you could opt for a prepaid card instead of a traditional bank account, which still allows you to pay your bills from one central account. Not only that, but each member of the account can have access to their own card to use, which comes in handy if you’re splitting a food shop or household purchases, for example.
Assign a designated billpayer
If a joint household account sounds like too much of a risk, you may want to consider assigning a designated billpayer. This can be yourself or any house member that can be trusted with paying bills on time.
There is still an element of trust needed here, as you must ensure that everyone has paid their share in time for the bill to be paid. However, with this option your credit score is less at risk.
Try a bill splitting service
These days there are plenty of companies that offer a helping hand with housemates sharing bills. Some companies can combine bills such as water, broadband, gas and electricity and TV, into one monthly cost so you don’t have to worry about making separate payments.
Getting involved in a house share may seem like a daunting prospect at first, however there are many resources like this that can give you all the information you need to ensure everything runs smoothly and your finances are managed effectively.