Credit Card Andy

Teaching the Basics of Personal Finance

The Easiest, Cheapest, & Most Efficient Way to Split Expenses Between Roommates

Sharing the RentIt’s time to get high tech with your bill sharing. If you’ve ever split the rent, utilities, or a meal with friends, you know what a pain it can be to pay/receive your fair share. The old systems of _“Do you have change for a 20?” and “I’ll pay you back later” _are flawed. People forget who owes what and feelings get hurt.

No more I say! We have the technology. Let’s use it to improve our living situations.

Here’s what I looked for:

  1. A free and fast way to track shared expenses
  2. A free and fast way to move money between accounts at different banks
    If you are living in a shared apartment or just go out with the same group of friends all the time, take a read. The following solution will save you the awkwardness and hassle of keeping things fair financially.

Tracking Expenses

SplitwiseThe standard Google doc spreadsheet won’t cut it. Sure it’s in the cloud, but it’s too manual and slow. Luckily, there are a few website services that specialize in expense sharing.

The best I’ve seen is by Splitwise. My roommates and I actually used their great rent calculator to give us a second opinion on our rent split (check it out to see if you’re paying too much for your share of the rent). Anyway, their expense tracking service is great. It’s got a simple, polished interface that does everything. We setup an apartment and added all the tenants. Now we can split utilities 3-ways or I can send an IOU to just one of my roommates.

The best part about the service is that they have free smartphone apps for Android and iPhone. Super convenient.

It summarizes who you owe and how much (or who owes YOU). Agree to settle up the accounts every month and record it on Splitwise.

There is no better service right now. It’d be great if it handled the actual money transfers too, but the services that have this charge a fee. I hate fees!

Moving Money

Personal CheckThe problem is, my roommates and I all bank at different banks. When I looked at all the options (Popmoney, PayPal, etc.), I could not find one that beat the old fashion check.

That’s right, a personal check. Surely there’s something better right?

Not really. The fundamental problem of moving money between different banks (for free) is that it takes about 2-3 business days. Instant transfers either cost money or require the sender and recipient to bank at the same place.

If you go through some other service (like Popmoney or PayPal), it takes time to get to this extra account on top of the 2-3 business days. For example, if I send money via PayPal to my roommate, he has to send that money from PayPal to his bank account. This means _more time, more effort, and more accounts. _

Almost all banks today let you deposit checks via mobile phone app. My favorite, Schwab, has it. Bank of America just got it. Ally is supposed to get it soon. Ally at least lets you scan the check at home to deposit.

The fastest way to settle up is to bring a stack of checks (which are totally free with Schwab). Write the check out to your roommate or friend, and they can deposit it immediately at home. It’s as instant as you can get (for free).

Putting it All Together

  1. Pay for dinner, fire up your app, and record it for your roommates
  2. At the end of the month, send a friendly reminder through Splitwise
  3. Settle up the debts with checks
  4. Deposit the check immediately via mobile app
  5. Record the payment on Splitwise
    Now you’re all set for the next month. Who has the time or energy to keep track of small debts? Living with others is difficult enough. Take money out of the equation and you’ll have a happier apartment.

Keep in Mind

Sharing is caring. Just because you and your friends track expenses doesn’t mean you have to throw kindness out the window. Go ahead and offer to buy a pie of pepperoni for the apartment. You can’t buy good company and friends. By agreeing to track shared expenses, acts of kindness really stand out.

Do you think you have a better solution? Let me know in the comments.