Getting a Roommate? Here Are 4 Ways to Protect Your Finances

Two roommates do the dishes together in their kitchen.
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We all have a roommate horror story, right?

That roommate who ate all your cereal, the one who borrowed your favorite shirt — without asking — and the one who Never. Washed. One. Plate.

That’s the tradeoff though, right? You’ll put up with a few annoyances because having a roommate can substantially cut your living expenses.

But what if your roommate stops paying the water bill or moves out halfway through your lease and you’re stuck paying all the bills?

Deadbeat roommates can leave you owing hundreds — or thousands — in unpaid bills. And if you’re unaware they’re skipping out on payments and your name is on the lease or utility bill, it could potentially wreck your credit score.

While we can’t really help with the irritating roommates (maybe a lock on the cereal box?), we do have ways to split your costs upfront and avoid getting stuck paying more than your fair share.

Ways to Ensure Your Roommate Pays Their Share

In theory, if you have one roommate, you split everything 50/50. But what if you have the master bedroom — do you pay per square foot? What if your roommate has a dog — does that affect the cut for the security deposit?

Putting as much as you can in writing before you move in together will help you both understand the expectations and help preserve the relationship, according to Mark Bauer, a professor at Stetson University College of Law in St. Petersburg, Florida. 

Pro Tip

If you’re moving in with someone you didn’t know before, ask for references from former roommates and previous landlords. Be prepared to provide the same.

“A lot of people think that having a formal agreement, particularly if the person is a friend, is off-putting,” he said. “But a friendly agreement spelling out responsibilities in advance is something that people who trust each other do.”

Protecting your finances becomes even more important when you move out because you are no longer there to monitor what’s happening — and whether bills are being paid.

We’ve come up with four ways to help protect your finances from the moment you find a roommate right through the day you move out. 

1. Ask for Separate Leases

If you haven’t signed a lease yet, this could be an opportunity to protect yourself from getting stuck with the entire rent — typically, the biggest shared expense — if your roommate decides to move out early.  

That’s important since if you and your roommate sign a lease, you’re each responsible for 50% of the rent. But it also means either one of you is responsible for 100% of the rent — legally known as joint and several liability, Bauer explained.

So if your roommate decides to stop paying their share — whether it’s because they moved out or simply stopped sending in their half of the rent — the landlord can come after you for the entire rent.

Pro Tip

If it’s your first time living with someone, consider signing a month-to-month lease. That way, if you find out you got a bad roommate after a couple months, you’re not stuck there for a whole year.

“It doesn’t matter that you’ve been faithfully putting in your 50% every month including when the other person didn’t,” Bauer said. “As far as the landlord is concerned, you were jointly liable.”

Instead, request two lease agreements stating that you’re separately liable — it might result in the landlord having some say over your next roommate (since the landlord can choose another tenant to sign a lease with), but at least you won’t be responsible for covering your roommate’s half of the rent. 

2. Create a Roommate Agreement

Regardless of the lease, creating a roommate agreement can help everyone get on the same page, so to speak, about responsibilities.

Considering you’ll probably be dealing with smaller amounts of money, it’s unlikely you’ll recoup your losses if your roommate really didn’t pay the final month’s electric bill, for instance.

It doesn’t matter that you’ve been faithfully putting in your 50% every month, including when the other person didn’t. As far as the landlord is concerned, you were jointly liable.

“What are you going to do — pay for an attorney to sue?” Bauer said. “It’s just not worth it.

Small claims court doesn’t yield readily-enforceable judgments, so that’s just kicking the can down the road, too.”

For most people, simply seeing everything in writing is enough to prevent most issues — without having to go through the hassle (and money) of making it official.

“Whether it’s legally binding isn’t relevant — the fact is that you’re more likely to follow rules that you’ve agreed to,” said Bauer. 

He noted that spelling out responsibilities in a document “makes it less likely that there’s going to be a dispute that can rise to the level of contract dispute or legal dispute or a judgment from a landlord in the first place.”

So what should you include in a roommate agreement? You can include as much detail as you want — who takes out the garbage, when quiet hours are, the number of guests allowed on the premises — but you’ll want to include some basics as far as financial responsibilities are concerned:


For any agreement, make sure to include all of the tenants. You can include separate sections for beginning and end dates for each roommate if they move in after the initial lease agreement, but at the very least, you should include the following info:

  • Names of the tenants.
  • Landlord’s contact info.
  • Address of the residence.
  • Beginning and end dates for the lease.
  • Dated signatures.

Financial Responsibilities 

For each entry, include the amount due (or indicate each tenant must acknowledge receipt of the amount due if it varies monthly), payment due date, payment submission info, percentage each person owes and the responsible party for submitting payment:

  • Security deposit.
  • Rent.
  • Utilities.
  • Additional shared expenses (for example, food, parking or pets)

Roommate and/or Lease Obligations

Besides the expenses, you can include sections that address rules and regulations in regards to the residence:

  • Responsibility for finding a replacement and notifying the landlord if a tenant moves out before the lease ends. 
  • How to handle maintenance issues, including purchasing common room supplies like paper towels. 
  • Rules for bringing in outside guests or animals.
  • How the security deposit/damage charges should be divided at the conclusion of the lease.

3. Make Sure Anything That Has Your Name on it is Paid

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There’s a lot to take care of when you’re ready to move: figuring out the fastest commute route to work, reserving that four-hour window for the cable company, begging your friends and family to help you move.

You might be tempted to split up some responsibilities with your roommate to save time, but you should be careful that you’re not setting yourself up for potential unwelcome surprises if your roommate relationship goes south.

“Usually they split it responsibly: I’ll call the city to get the water taken care of, you deal with the electric company — that’s a problem if things go wrong,” Bauer said. “I would recommend as many roommates as there are, everyone’s name be on everything because there’s just no other way to secure yourself.”

And if your name is on any kind of agreement, it’s your responsibility to make sure those bills are paid, as overdue bills could affect your credit score or ability to rent in the future, according to Rod Griffin, Experian’s director of consumer education. 

“The next time you try to rent an apartment or lease a home, whatever it might be, a tenant agreement’s report could be used that might show that you’ve broken the terms of the lease” if you — or your roommate — didn’t pay for contractual expenses, he said.

The good news is you can ask to have your on-time payments reported to the credit bureaus to help boost your credit score — which could help when you’re looking for that next place.

“Good credit scores can mean you will pay lower security deposits,” said Griffin, who suggested a free service like Experian Boost.

4. If You Move, File Change-of-Address Notifications

It’s time to move on, and you need closure.

Yes, that might be telling your roommate exactly how you felt about the stolen Cheerios, but it also means you need to formally end your relationship with your residence. 

And that’s where some people get tripped up by unexpected or forgotten expenses that follow them long after they’ve moved on.

Pro Tip

If you receive mail under multiple names — like your married and maiden name — complete a separate change-of-address form for each name.

File a change-of-address form with the post office at least two few weeks before your move to ensure important mail is forwarded to your new address. Additionally, you should notify any creditors and the credit bureaus separately, so that sensitive financial documents don’t accidentally end up at your old address.

“When you look at your credit report, you will see current and former addresses associated with the accounts you have,” Griffin said. “The important thing is to see your current, new address on that report.”

Finally, contact the property management and utility companies to remove your name from the lease and other contracts to ensure anyone remaining at the residence is responsible for bills associated with the address — and their late payments won’t affect your credit.

Making sure your contact information is up to date can help you protect your finances, whatever your next move may be. 

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.