Understanding straight away who pays what, by when and how should help you keep your relationships smooth and finances under control. Bills that households normally need to split include rent, council tax (unless you’re a student), water, gas and electric, TV licence and internet.
Adding all the bills up and dividing equally between your household is usually the easiest option. But if someone is home more or has a larger room, you might talk about proportioning the costs a bit differently.
Once you’ve worked out how much each of you owe, there are several ways to pay bills as a household. Different methods work better for different people, so make sure you weigh up the pros and cons of each carefully. We’ve pulled together a few solutions and have highlighted the main pros and cons of each. Make sure you think about the risks of each before deciding which to opt for.
One person leads the finances
You can choose one person to set up all the bills in their name. All the monthly outgoings will leave their account every month and it’s your responsibility as housemates to make sure you give them what you owe on time. You can pay manually when you know exactly what the bills are each month or set up a monthly standing order.
Only one transaction to worry about for most housemates.
Everyone needs to trust each other to pay on time. Just one person paying late could mean you fall behind on bills.
Only the person paying the bills will benefit from boosted credit for having regular outgoings. Equally it’s their credit score on the line if the payment is missed by others paying late.
Harder to keep track of how much you’ve all paid for each utility over time, especially if the amount fluctuates (like energy).
If the bills are in your name only, you might end up being responsible for the total cost if someone can’t or won’t pay.
You’ll want to make sure that there’s no question about whether bills have been paid or not and how much it cost. So, make sure that you have a way of showing/seeing that the bills are paid each month.
Each take a few bills
It might work out simpler and roughly equal to take a bill or two each and set them up in your own names.
Everyone is responsible for their own bills and paying on time.
Everyone with a bill in their name will build their credit score by paying on time.
This can get complicated or unfair as bills go up or down.
There wont be any visibility of whether all the bills are being paid on time, so make sure that - as a group - you’ve got a way of tracking this.
Open a joint account
Sharing a bank account means all of you have access to and visibility over the same bank account. Linking all your bills to one account is often the simplest way to pay but it also involves the most trust and commitment. It’s usually better for people in a long-term relationship, or friends who plan to live together for a long while.
One place for bills makes managing them simpler.
Helps build everyone’s credit scores.
Everyone has visibility over how much is coming in and out of the account.
Savings can build over time to put towards household items or bill increases.
Your credit scores will be linked and affect one another’s ratings.
Can be complicated to change if someone moves out.
Need to trust everyone with the account.
There’s no right or wrong way to split bills. But it’s vital to find a method that works well for everyone so you can be confident the services you need are paid on time and keep running. You’ll still be liable to pay any outstanding bills, even after you’ve moved out. So take control of your household’s bills early to avoid losing your deposit or having to pay a claim to your landlord later.
Shared Pots and Bill Splitting
Lots of new challenger banks and FinTechs have innovative ways of sharing costs that don’t require you to have a joint account. There are lots of different ways that they are doing this, so it might be worth researching to see if there is an option that suits you as a group.
Find the Best Option for You
Remember, the best option for you and your co-tenants will depend on a number of different things. The key is to ensure that you understand the pros and cons and then make a decision that ensures you all know where you stand.