Living with friends or living with relatives can be a great help, when you run info financial trouble (especially when you are trying to pay off debt). However, if certain financial details aren’t agreed upon in the beginning, you can run into an extremely stressful situation, which may threaten to ruin the relationship.

Here are three major financial concerns, which should be addressed before you consider living with friends to be a viable option. These items should be important to both the one in need, as well as the one extending the help.

How Long Will You Need To Stay?

The first thing that needs to be worked out is how long you plan to live with your friends or relatives. Whether it’s for a few weeks or six months, you should be able to give them an estimate on how long you will need to stay with them.

Think about it…if your “host” thinks that you are only staying for a couple of months in order to save up for, and find an apartment, they will handle things in a certain way. However, if you actually plan to say there until you go back to school to finish a degree – and you’re only a sophomore – then that might change things a tiny bit!

 

If you need to stay for a year while you finish a degree or training program, or even if you are just trying to stabilize yourself while you get out of debt, state that from the beginning so that there will be no misunderstandings down the road.

Of course, you can’t always be sure of what will happen in the future, but, it is still extremely important that you both be on the same page with this.

If you feel that you will need to stay longer than you originally estimated, make that known as soon as possible. Just be sure that you are always keeping your host in the loop whenever your situation changes.

How To Split Up The Bills When Living With Friends

This is probably the most important conversation that you can have with your future host (because they are probably wondering, how will this affect my finances). There are a couple of reasons why this is so important:

First, if you simply pay what you think is a fair amount, then it can lead to negative perceptions and resentment. If you pay too little, it can make your host feel as though you are simply taking advantage of them, and that you really do not appreciate their help!

For the entire time that you are living with friends, they may resent every time you spend money – no matter how little it is. If you are throwing them $300/month, and then go out and buy an iPad 2 or Kindle, they may have a serious problem with that!

However, if you sit down with them and agree on a fair amount for you to pay, then they may not mind as much when you go out and buy a new laptop (although, that may not be wise if you are there because you are in financial distress and trying to pay off debt)!

The second reason why you need to come to an agreement about who pays what is because your presence will increase the household bills! You are sucking up all of their electricity, heat, cooking gas, water, and other utilities, and you need to be mindful of that!

You should sit down with your host and decide how you want to break up the living expenses before you move in. You may decide to pay for all of the utilities, while your host pays the rent/mortgage entirely. Another option would be to simply pay them a certain amount for rent each month.

Of course, you can decide on a myriad of combinations – you pay gas/electric and buy food, while they pay cable and rent, for instance – but the point is to avoid having any misunderstandings or bad feelings at some point in the future! It would be a good idea to write out an agreement with these details included – simply for clarity.

Discuss Your Financial Plans

I think this one can be optional, depending on the relationship. When living with friends or relatives, it may be extremely helpful for you to discuss your financial plans with your host. If you need to funnel all of your extra money into student loan repayments, or any other category, be sure to make that clear – especially when discussing how to split up the bills.

This can help to avoid any misunderstandings or resentment toward how you handle your money while living there. Also, if they are going to allow you to stay in their home for free, it would be great to show them that your plans include paying them back once you get on your feet!

Remember that communication is key in situations like this! Living with friends or even living with relatives can cause a lot of unspoken problems and tension, and you need to do everything in your power to prevent this from happening!

photo by AR Mclin

Reader Questions

1. Have you ever had to live with relatives or friends due to a bad financial situation?
2. Have you ever had to take someone in as a result of bankruptcy or debt (or any other misfortune)?
3. If you were to be on either side of this arrangement, what other financial issues would you discuss?