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I am moving in to a rented apartment in London with 2 other friends. Our contract is for 1 year, and we all intend to stay in the property for at least that long.

We are trying to work out a good way to keep track of and manage our expenses. We have discussed a couple of options for this: Setting up a joint bank account or Using an expenses sharing app (such as Splitwise) - but aren't sure which method to use.

I'd like to hear your thoughts on the pros and cons of our expense sharing strategies and what you think we should opt for.

Sharing successful expense sharing experiences or suggesting another expense sharing strategy would also be valuable.

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    Welcome to the stack, Sam! This could be a great question, but any answers will be almost entirely based on opinions, rather than facts, references, or specific expertise. Are you able to edit the question in a way that we're able to give definitive answers? Otherwise, your question may be closed as its answers will be primarily opinion-based. – trashpanda Jan 24 at 8:38
  • @trashpanda I'll edit my question now to make it more specific – Sam Houston Jan 24 at 8:47
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This should be a good procedure:

1 Settle the renting

Good advice would be not to cosign if you are not able to pay the whole rent. If you cosign the landlord can pick anyone of you and he has to pay him the whole rent. You then have to see how you are going to get the money from the others.

Generally it is better for you if one is the main renter and the others to pay him a portion of the rent. The main renter should be the one most likely to stay in the flat and should be able to pay the rent on his own for the time he can’t get out of the rental contract. This is not accepted by all landlords and he will usually try to get you to cosign.

2 Make a budget

You will need to work out how much you are going to spend on rent, additional cost (water, power, internet, tv), groceries, taxes ect. Then you have to figure out how much is to be paid by each one of you.

3 Set up an agreement

Now you guys should be in agreement on who pays what and how much. That's good. Write that down, sign it and everybody gets a copy. It's good to write things down when you are in agreement with each other.

Have a list of who owns what and who owes how much to the community.

Agree on what happens if one wants to move out or if someone new wants to move in. Also set up the rules you want to live by with each other.

Congrats! You have a contract with each other.

4 Set up a means to pay community expenses

I would set up a joint bank account. Get everybody a debit card and organize who is going to deal with the bills and the administration. Usually if one of you is more familiar with finances he will be a natural choice.

You now pay a regular cut of the budget into the joint bank account each month and with this money you will pay the expenses. The debit cards can be used to pay for groceries and the administrator will pay the bills directly from the bank account.

You will sometimes have money left over and sometimes there will not be enough and you have to readjust the budget.

You can also work with a expense sharing app like splitwise if you don't mind the shoveling around money all the time. This also can easily degenerate into one of you paying everything and the others owning him a lot, which tends to stress your relationship.

The steps above have to be taken regardless of how many you are or if you are in a romantic relationship, just friends or even relatives. Relationships can deteriorate and people will change so agree on things before you get into them and have a plan for when it doesn't work out.

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    1. Add "local taxes" to the things to budget for. That will be "council tax" for the OP, but this is a good general purpose answer. – Martin Bonner Jan 24 at 8:58
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    2. In the UK I would expect the landlord to insist on all tenants signing the lease, and forbid subletting. – Martin Bonner Jan 24 at 8:59
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    3. In the UK bank accounts are generally free. – Martin Bonner Jan 24 at 9:01
  • @MartinBonner some nice inputs, edited the answer a little. Landlords usually insist on cosigning but there is a implicit risk there that you have to pay the whole rent. This is a good example of what happens if you do it and the otherone screws you over. So if you really need to then cosign but make an agreement of what happens if one doens't pay. – Lucas Raphael Pianegonda Jan 24 at 9:22
  • Also I would have 1 person sign the lease, a different person sign for utilities and a different person sign for cable (and if it's different phone). That way everyone is on the hook for something. – xyious Jan 29 at 17:06
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I second the answer of @Lucas Raphael Pianegonda. I want to offer an alternative for

step 4.

Only one of you sings the lease. He also handles all the money and collects from the others. He is then essentially subleasing to the rest of you and thus can decide, if push comes to shove, who stay and who leaves. This can be beneficial in situations where one wants to stay longer and others may have a bit more of a fluctuation. He also takes on some risks, so may be wise to get some security deposit from the others.

This is the less "democratic" approach, but in some situation this can work better. Judge for yourself whichever applies to you.

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Here's how we did it (German version):

  • Who and how many are to sign the lease probably depends on local customs and possibly also on who is the landlord. I've met landlords who preferred either one main renter or everyone on the contract for the whole flat or everyone getting a contract for their room + common area.

  • For the rent and utility downpayments: this is a fixed known amount due monthly on a known date.

    • we did not set up an extra account (and a joint one would be quite a lot of hassle compared to the average time till someone moved)
    • we decided who does the payment,
    • and everyone else has to wire their contribution to the "main payer" (possibly specify also by when the money has to be in the main payer's account).
    • specifyin writing how this is split (e.g. according to room size or room size and common areas)
    • same for the shares in the security deposit
    • For the utilities there's one final bill per year which may arrive only considerably after that year is over. Depending on how much the "main payer" can trust that the others are still around to pay their share of that final bill, it may be good to specify somewhat higher downpayments for the others.
    • Also, you may specify that the security deposit of someone who moves out is not or not fully returned before all those bills are in.
    • It makes sense to set up things internally as one main renter subletting to the others and that main renter also having the utility contracts if the other will probably move out sooner and main renter will then look for new flatmates.
      If, on the other hand, everyone will probably move out together, it may be good to have everyone responsible for some of these payments - this way, the differences to settle internally are not as high (although rent will probably be much higher than everything else).
  • We had a regular meeting every couple of weeks where we'd talk things of importance for the shared flat, e.g. check the consumables bills.

  • For consumables I've met two systems which both worked well:

    • in one shared flat, we used a "common consumables purse" where we'd all put in equal amounts of money whenever it ran short. Whoever bought consumables put in the bill and took out their money. You could also implement this by electing a treasurer.
      This approach is somewhat self-limiting in the expenses if only small amounts are paid in when the common purse runs out of funds. Note that over here, cash is still king and it may also help in keeping those expenses within sensible bounds. It may also be more fair than the 2nd approach below if there's one flat mate who is basically the "purchasing department" and who'd otherwise be advancing money for common expenses all the time.
    • the other way was that everyone collected their consumables bills and part of the meeting was to draw up how much everyone had spent for consumables and settle the differences.
      This works well if everyone buys approximately their share of consumables and you take care to not let the sums run too high before settling.
    • Splitwise vs. Excel sheet vs. paper trail vs. gnucash/kmymoney/... is IMHO a matter of personal taste and something for you 3 to decide. Also, there's nothing wrong with deciding to try one solution for a fixed time (say, 3 months) and then get back together and think whether this works well or something else needs to be tried.
    • I'd treat recurring costs separately from consumables with all but proper accounting software, though.
    • Maybe it's just me, but when I tried smartphone based expenses tracking this worked worst with supermarkets, grocery and hardware stores - i.e. where the consumables are bought: in this type of shop everyone is in a rush with paying over here, so you have just the time to pay, grab the receit and get your stuff away. Trying to take a photo of the receit there would turn everyone in the line your personal enemy... I see how such apps can help e.g. in splitting restaurant bills - but common dinners with my flat mates took place in our flat ;-) (and over here it's anyways usual to either have split restaurant bills or have everyone pay their share directly)
  • We found it helpful to talk beforehand about who expects what, in particular,

    • how close knit a community does everyone look for
    • including how much "shared flat communism" in terms of the consumables is intended (I've even shared groceries via the common consumables purse - worked as we all had similar spending and eating habits)
    • what are the duties of someone who wants to move out (how long in advance to give notice, help to find a new flat mate, ...)

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