Managing your finances in a house share
Published 24 November 2015 by Kyri Levendi
When moving into a house share, you’re not only sharing a home with other people but potentially sharing finances as well.
If you’re looking to move out of your parents’ house or simply find a new place to live, a houseshare could be what you’re looking for. You don’t have to assume that this type of living arrangement is only for university students – a new report by PwC claims that 60 per cent of 20-39 year-olds in England will rent their homes by 2025, so it’s likely that some of these will be house sharing.
With that said, there are a number of things to consider before moving into a house share – most importantly, how you’re going to manage your finances in this living situation. So that you know what to expect, read our guide.
Whether you’re moving in as a group or taking up a room in an already established house share, one of the first things you’re going to have to discuss is how you’re going to deal with the rent every month.
How you’ll approach this will depend on your rental agreement. In some cases, you may have your own individual contract with the landlord. If this is the case, you’ll be responsible for paying your own rent each month. For most rental properties however, you’ll get just one contract between a few of you. In this case, you’ll have to split up the rent between yourselves and each chip in to make sure it’s paid.
When you’re in this situation, make sure that you discuss how you’re going to divide the rent up and who’s going to pay it.
Split the bills
You should have a similar conversation about utility bills. Try to come to an arrangement of how you’re going to pay bills like council tax, gas and electric, water as well as your phone, broadband and TV licence (and any pay TV).
You could nominate a designated bill payer and then agree to each set up a standing order to pay your share of the bill into their account each month. It would be wise to do this a few days before the bill is due.
Alternatively, you could each take on one bill to look after. We’re not saying you should foot the cost of this bill, but simply register it in your name and make sure it’s paid on time. Giving each person a bill to manage should stop anyone from trying to avoid contributing.
Consider opening a house account
When it comes to paying for things like rent and your bills, it could be much easier to manage if it comes out of one single account. You could consider opening a basic current account for this reason only. Each of you could pay their share of the rent and bills into the account and then you could set up Direct Debits or standing orders to make sure each bill is paid on time. Having an account to keep track of the payments will come in useful if disagreements arise.
If you’re going to be living with a friend or partner, you could open up a joint bank account. With an account like this, you’ll both be able to pay money in, withdraw cash and pay bills, so it’s vital that you trust this person, especially as setting up a joint account will create a financial link between you both. The two of you will be jointly liable for any borrowing (if you go overdrawn) on the account as well.
If you’re looking for a joint account for both you and your housemate, why not consider the joint thinkmoney Current Account? The account comes with a monthly management fee of £24.50 and will help you keep on top of your joint finances.