Are you making a big move in the New Year? More often than not, when young people move out of their family home, or people of any age move to a big city, they’re not doing so on their own. With rising living costs, house sharing has become more and more common.
Whether you’re moving into a house share with people you’ve never met, getting a flat with some friends, starting your second year of university or taking the plunge and moving in with your other half for the first time, how you divvy up your household costs has the potential to make or break the success of this exciting new venture.
Money has been proven as a major cause of arguments in all manner of living situations, from couples to friends to student house sharers. Heating has also been identified as being behind most household arguments in the UK.
If you’re setting up a new household in 2019, don’t go in unprepared. Make sure you have a plan for managing the financial burden of household bills.
What bills will you be splitting?
Before you decide how you’re going to divvy everything up, it’s important to take stock of what bills you’re going to be paying and how much it’s going to cost you. This allows you to budget accordingly and plan ahead.
The main bills you’ll need to be aware of (on top of your rent, of course) are:
- Gas and electric: Usually paid together as a dual-fuel bill. The UK government have announced an energy price cap starting January 2019 that puts an upper limit of £1,137/year on how much suppliers can charge, although this is likely to increase in April 2019 to reflect wholesale gas prices.
- Water: Supplied through your local water company which determine their own prices. Your water bill can either be charged at a flat, unmetered rate or using a meter to measure you exact usage.
- Broadband: There’s a wide variety of providers to choose from, as you’ll probably know from a number of big-budget TV adverts. Most people pay between £350/year to in excess of £600/year for major providers like Sky, BT and Virgin, but price comparison websites will flag up cheaper alternatives.
- TV License: Currently £150.50/year for a colour TV, which most people will have.
- Council tax: As the name would suggest, the amount of council tax you pay depends on which council area you are a part of. It is calculated using your property’s value minus any discounts or exemptions you may have. Students, for example, do not pay council tax.
Other costs that people, particularly couples or family members living together, may choose to split are groceries, cleaning products, personal content insurance if you share most of your belongings or vehicle insurance if you use the same car.
Should we split them evenly?
This one really comes down to each individual household and what their circumstances are. While most people may chop every bill into even slices of two, or four, or however many people are living in the property, there are sometimes reasons why dividing it up unevenly may actually be the fairest option.
Having one person pay slightly more or slightly less than another housemate is particularly common is student houses with varying bedroom sizes, or where the people living together are from households with very different incomes. It’s also common in couples where one partner earns significantly more than the other, helping to avoid conflict and balance the two lifestyles together.
Again, there’s no one-size-fits-all solution to how much each person should pay. You and your housemates should decide a percentage that seems fair based on the circumstances and each person should agree to what they’re being asked to pay. The negotiations in this situation are often the hardest part, but eventually help keep the peace for as long as you continue to live together.
How can we split them?
Once the split has been decided on, it’s time to decide how you’re going to pay for the same bill all together. There are three main methods that house sharers and couples tend to use, with varying effectiveness:
Person nominated for bill: This is probably the most common way of splitting household bills. Typically in this scenario, one person is nominated to have a bill come out of their account and the other housemates reimburse them. It should work out that every member of the household has a bill in their name, to minimise the possibility of someone getting away with paying nothing towards the house—which still can happen no matter how hard you try!
Joint bank account: Setting up a joint bank account exclusively for paying household bills is surprisingly common and the one method we actively discourage. The only people who it may be a suitable option for are couples, particularly if they’ve been together for a long time. When you set up a joint bank account, you are financially tied to the other named people for six years after account closure. During this time, anything they do can impact your credit score. It’s a no from us.
Bill splitting app: We now commonly use our smartphones to make everything easier, from banking to ordering a taxi to getting a takeaway. It’s only a matter of time before most people are also using them to manage their household finances. The major benefit of a good bill splitting app is that everyone is billed directly for their share of the bills and the app is completely transparent, meaning that no one is left out of pocket when someone else decides not to pay.
acasa is a household management platform designed for anyone living in shared accommodation, whether that’s as a student, with a partner or with a group of friends. With acasa, you can avoid unnecessary conflict around splitting utility bills with our direct billing and balance tracking systems. Get a free quote for your household today from acasa.