When you’re renting a property with other people or have shared housing costs, it’s vital to know what your monthly outgoings will be and work out a system for paying shared bills. If you don’t, you could find yourself in serious financial trouble, even if you’ve paid your share. In many cases you’ll have signed an agreement holding all of you responsible together and individually, for certain costs.
- Why it’s vital to pay your bills on time
- Work out how to share your bills
- Prioritise your bills if you start to struggle
Why it’s vital to pay your bills on time
Did you know?
If you’re named on any bill, you’re responsible for ensuring it is paid in full, regardless of whether or not it was you who ran up the costs.
It’s important to be organised about money when sharing a property.
If you miss a payment or don’t pay your bills on time, you can get a bad credit rating, which will make it difficult for you to borrow money in the future.
For example, to get a personal loan to buy a car or a mortgage to buy a house.
This applies even if the bill wasn’t only in your name and you paid your share.
If you don’t pay your bills, you might also find vital services – such as your heating or your phone line, are cut off.
If you fail to pay some bills, such as Council Tax or your TV license, it could lead to a court summons.
Typical bills you will need to budget for
- Council Tax ( England, Scotland & Wales – usually paid monthly)
- Gas and electricity bills (paid either by a pre-payment meter, monthly by Direct Debit or quarterly)
- Water bills (check with your water company about how often you will receive bills)
- TV licence (monthly or annually)
- Contents insurance (paid monthly or annually)
- Landline phone bill (plus any connection charges – can be paid quarterly or monthly)
Work out how to share your bills
At the start of a shared tenancy, it’s a good idea to sit down with your housemates to work out a fair system for sharing the cost of your bills and ensure they’re always paid on time.
- Write down a list of the shared bills you’ll each need to contribute to and estimate how much they will be every month. Your landlord might be able to help you with the estimates.
- Add up the total cost of these bills and work out a method for dividing it so each housemate pays their fair share.
It might be helpful to draw up a spreadsheet showing exactly what each person needs to pay into the ‘pot’ to cover the monthly/quarterly bills.
Then everyone can see how it has all been worked out.
The cheapest, most simple way to pay your household bills, is by Direct Debit.
You’ll also have peace of mind the bills will always be paid on time, provided there’s sufficient money in the bill payer’s account when payments are due.
Alternatively, you could decide one of you should collect the cash from the other flatmates each month, and pay all the bills at a bank or post office.
However, this relies on everyone being organised and could result in late payments – so pay by direct debit if you can.
Whichever method you choose, make sure everyone understands their obligations, and how to pay.
Your options if paying by Direct Debit
Set up a joint current account just for paying the household bills each housemate pays their share into – and set up your Direct Debits from there. Only consider this option with close and trusted friends.
Nominate one person to be the designated bill payer who will pay all the bills from their personal account.
Everyone then sets up a standing order to pay their share into the nominated bill payer’s account each month.
Make sure standing orders are set up to transfer funds to the bill payer’s account a few days in advance of the Direct Debit date, to avoid problems if there are unforeseen delays with the transfers.
Before opening a joint account
Be aware you’re financially linked to the credit rating of anyone with whom you hold a joint account.
It’s best to take this approach with people you know well and trust.
When you move out, be sure to close this account. In the meantime, make sure you all use it responsibly.
Prioritise your bills if you start to struggle
After your rent, always pay your Council Tax (rates in Northern Ireland) and TV licence first.
If unpaid, these have more immediate legal consequences, whereas the others result only in the loss of services.
If you’re worried about not being able to pay your bills it’s important to talk to your landlord or suppliers right away.
This article is provided by the Money Advice Service.
Some important information about Rest Less Money
We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.
When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.
Key things to remember when using Rest Less Money:
We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.
No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.
Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.
A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested.