Home Money How to Use a Roommate Agreement to Divide Costs?

How to Use a Roommate Agreement to Divide Costs?

by Louise W. Rice

Living with roommates is a great way of saving money, but it does come with a fair amount of stress. The reality is that even the best roommates can be troublesome, especially when it comes to splitting costs. There can be extensive debate about who pays for what, and whether certain things should be divided equally.

You may be preparing a roommate agreement to sign so as to avoid disagreements and resentment. While roommate agreements can go far beyond the division of costs, this is one of the factors they are able to effectively achieve.

Here is how to use a roommate agreement to divide costs.

These costs should not be divided

Before going into how you can use a roommate agreement to divide costs, it is important to mention that some costs should not be divided. They should be covered by each individual rather than split among the residents.

One common misconception occurs in regard to insurance. While you can add your roommates to your renter’s insurance policy in some states, it is unnecessary and not recommended. Renters insurance is supposed to cover your possessions and personal liability. It is something each person needs. If you do add your roommates to your renter’s insurance policy, you will still pay close to the same amount as you would on your own.

You should also not divide what you spend on decor for your own personal room. Common areas require an agreement, but your room’s decor only benefits you. Each individual should pay for their own decor.

What is a roommate agreement?

You can use a roommate agreement to divide costs, but what is a roommate agreement in the first place? A roommate agreement refers to a legal contract signed by all residents that outlines the rules and responsibilities of each roommate. It can include things like rules regarding having guests over, noise, pets, and who is responsible for cleaning.

It can also outline who pays for what, including when expenses are shared equally and when they are not.

Here is how you can use your roommate agreement to divide costs.

Communal expenses

There are certain purchases that benefit everyone. These include bulk items that go in the pantry, cleaning products, toilet paper, and certain toiletries. While few people will argue that everyone should pay for these items, you and your roommates may disagree on what is considered communal.

For example, you may consider shower gel a personal item, but your roommates may expect it to be shared toiletry. The same could be true of items that go in the pantry, like eggs, rice, and the like.

It is also important to come to an agreement on spending caps on these things. Your roommate might like expensive scented hand wash while you would rather save money and get a cheap brand. Using your roommate agreement to choose a spending cap will prevent arguments over the amount spent at the end of each month.


Utilities are a difficult expense to split between roommates. The simple reality is that different people will use different amounts of electricity and water. However, calculating how much each person’s usage has contributed to the utility bill is no easy feat.

Let’s say you work in an office, and your roommate works from home. They use electricity and water throughout the day, while you only use these utilities after hours. Theoretically, they should pay more. But how much more should they pay, considering their daily usage may be minimal?

You’ll need to hash this out between you and your roommates. It will require you to look at the bill and come to an agreement as to a proportional split. Chances are that the division will not be entirely equitable. You may end up paying more for utilities than you actually use. However, creating a fixed division in your roommate agreement ensures that the bills get paid without too much friction.

Using your roommate’s agreement to divide costs is a great way of preventing arguments. While perfect equitability is never possible, you can find the ideal compromise.

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