Sharing expenses with roommates? How to make it work

Andrew Olsen currently lives with his roommates in financial harmony, but things haven't always been so pleasant.

Olsen, a communications professional in Portland, Ore., used to run into "bad seeds who would coast off of our goodwill." Some former roommates failed to cover their share of house expenses, he says, forcing him to pay extra.

But that's all in the past. Olsen and his roommates now hold each person accountable for bills and other expenses. They vet potential new roommates, have monthly meetings about shared expenses and use apps such as PayPal, Square Cash and Venmo to pay one another back. Creating this type of system helps ensure good financial ties between the people you live with — and certain tools let you put your system into practice.

Peer-to-peer payment apps — including PayPal, Square Cash and Venmo — make it easy to repay roommates. Olsen relies on Venmo, as does Alma Cook, a singer and copy editor who lives with roommates in Los Angeles.

If one person ends up owing another a few bucks, Cook and her roommates know they can make those payments with their smartphones.

Getting organized can help P2P apps work for you.

"The first year living here, utilities and other expenses were a nightmare," Cook said. "No one really knew how much we owed each other for everything."

For those who want to go beyond spreadsheets, the free app Splitwise can help keep track of shared expenses. Roommates can't transfer each other money using the app, but it does maintain a running total of how much each person owes and to whom. It can also send e-mail reminders when payments are overdue.

Mobile banking makes it easy to upload checks and monitor your checking account. That way, you will know the money your roommates sent you via P2P apps was deposited.

Mobile banking is a handy resource in general. Text and e-mail alerts can curb losses if you have been hit by fraud, and automatic bill pay can reduce your risk of being charged a late fee. And if you are a customer at one of the country's big financial institutions, chances are good that you have access to Zelle, a new money transfer service that's integrated into a growing numbers of banks' mobile apps. Funds are transferred within minutes if the recipient's bank or credit union also uses Zelle — much faster than with Venmo.

Outside of using tech tools to pay one another back, Olsen and his roommates hold monthly meetings to discuss outstanding bills or payments. Any payment that's overdue by more than two months is cause for eviction, he said.

This kind of system is critical, and writing the rules down is even better. "Shared finances are like running a business," said Chad Smith, a certified financial planner and wealth management strategist based outside of Dallas. "Businesses have procedures and financial ledgers. Having things in writing is a best practice."