Your Budget Guide to Renting with Others

So you did it. You managed to talk your parents into letting you move to the big city and now you’re finally on the road to independence! All that is left is to find a place to stay with your friends and split the rent, easy stuff! Right? 

Wrong! 

Getting your own place isn’t just paying for the rent. You’ve got bills to think of, the water, the gas, the Wifi…But how should you approach this if this is your first time?

Figure Out Your Financial Standing

If this is the first time you’re stepping into financial independence, then this entire situation might be overwhelming. While you were staying with your parents or at the college hostels, things like internet bills probably never crossed your mind. But now, it’s something you actually need to consider!

Which is why it’s vital you figure out your household income. Not familiar with the term? Well, a household income is the total income of all the tenant’s gross income (your salary, dividends, wages, tips etc). So, if you live alone, how much you make at work and your allowances is your household income. And once you’ve calculated your household income, only then could you estimate the recurring expenses:

What are the Recurring Expenses?
  • Utilities: This is your gas, electricity and water. Your gas and electricity will keep your house running since it provides lights and power. Electricity bills are charged based on usage so if you have an air conditioner at home, expect the cost to increase. It also depends on the size of your house. For water, the bills covers the month worth of the water you use in your home; everything from drinking water to what comes out of your shower to wastewater. Other utilities also include the Internet and cable or streaming platforms.

So, let’s estimate the cost together. Let’s say the average cost for the monthly gas, electricity and water bill in Singapore is $200, and when you add the usage of air conditioner with it, it will total up to $350. Don’t forget your Internet bill as well which could be $45, and your Netflix subscription at $20. So in total, your utilities all cost around $415

  • Groceries: Food is your fuel and it costs money. In Singapore, the average cost of groceries is $200 while in Malaysia, it’s RM400. Although, don’t underestimate the wet markets our mothers love to frequent. Wet markets are a great choice if you wish to get fresh produce since they are fresher than the ones at the supermarkets. Also important to note that certain products at wet markets are cheaper too. For instance, 15 eggs at a wet market costs RM5.41 while at Tesco, it’s RM6.49. 
  • Renters Insurance: Insurance will keep your house protected so don’t forget to get a renters insurance. This is to protect your personal belonging in situations like robbery, fire and other awful circumstances such as break-ins and burglary, or natural disasters like floods, or even fires due to overloading of electrical appliances. It’s better to be safe than sorry.

Additional  costs to consider are household items.  If you’ve rented a place that doesn’t provide any furniture, then you definitely need to include this in your budget. The dining table, a bed. Do you have enough kitchen essentials, as well? What about your dining ware and utensils? Hangers to hang your clothes? An iron board? List all necessary items you need in the house and roughly calculate the budget from there.

Fees such as parking and administration fees should also be added in your calculations, especially for the first move. In Singapore, admission fees are known as maintenance fees. Parking fees are usually only applicable in multiunit or multi-storey buildings. If the units does not come with its own parking lot, the tenant will need to come up with extra funds for it.

There is also the security deposit to consider. A security deposit is to protect the unit’s owner against any damage caused by a renter. In case there is any damage to a property, the unit owner has the right to deduct the cost of repairs from the security deposit when the tenant moves out. The security deposit also protects unit owners from tenants who move out without notice.

And last but not least, your rent

So How Should You Split It?

So you’ve calculated all of that and you’ve got yourself a whopping RM4,000 in total or $5,500. The good news is you’re not going to pay all of that alone, remember? You’ve got two other tenants with you and now you need just split them all evenly. 

Not necessarily.

Splitting the rent evenly between the tenants is the norm but there are, in some cases, where the rent is divided by who gets the bigger room or their own bathroom or the big closet. Those do happen and are often split into ratios of 60/40 if there are two tenants, or 40/30/30 if there are three. Money is a sensitive issue so do discuss with your roommates on how to handle this so everyone is satisfied! 

The same applies to recurring expenses. Perhaps one of the tenants works from home therefore he should pay the majority of electricity bills? Regardless of the issue, remember to have a discussion with everyone.

Groceries is a tricky matter. If you agree to split the groceries evenly, you might encounter situations in which one of your roommates eats more than the others. To solve this, set some easy-to-follow ground rules. Agree on certain grocery items like eggs, cooking oil, or sugar etc. This way it’s much more fair and you’ll save a lot of money. (Alternatively, you can also read more on how to save groceries here!)

What about big purchases like furniture? In this case, do not split it! It will cause confusion and tension when one of you moves out so instead, volunteer to buy one while the rest can buy other things. Then you guys can simply share it together. 

Who Should Pay the Bills?

It’s easier to elect one person to pay all the bills while everyone else pay their share afterwards but it’s not always fun. So, to make it fair, make sure all the tenants in the house are in charge of certain bills. You can divide them like this:

  • Rent
  • Electricity 
  • Water
  • Gas
  • Wifi
  • Cable/Streaming platforms
Always Pay Your Rent & Bills on Time

It’s really important to be financially organized especially when you’re renting a property because late payment can lead to unfortunate circumstances – eviction, anyone?

To ensure this doesn’t happen, ask for payment in advance so your roommates will be prepared. Trust is important but a little reminder every once in awhile wouldn’t hurt, especially if it means you won’t get kicked out or cut off from electricity, water or the Internet. Another option is to make another smaller deposit between yourself and the other tenants as an extra measure. Too intrusive for your liking? Then a simple agreement would do. 

A roommate agreement can include how much each tenant is responsible for paying and when they should (three days before monthly rental is due, for instance). 

Don’t Forget Maintenance 

Sometimes we get so caught up calculating the rest of the expenses that we forget an important part – the maintenance. Something in your house is bound to be broken, it’s inevitable. It could be the lights, the pipe, the refrigerator etc. Which is why it’s important that you save some money for maintenance. 

If you’re lucky, you’ll get a landlord that will cover maintenance for you but if you’re not, it’s all on you. So, to be prepared, open an account to keep a three months worth of emergency money. Much like a personal emergency fund, this account is solely for the house so all the tenants will need to contribute to the savings. 

This way, if the air conditioner suddenly breaks down, you and your roommates won’t have to panic about the cost since you’ve already made preparations. 

Always Prioritize Your Protection

But most importantly, ensure your own protection by getting a personal insurance. An insurance can provide you maximum protection for your well-being, family, assets, home and many others. You would miss out a lot if you don’t have any kind of insurance. Look up for great personal insurance online or contact your insurance adviser today to find out more.

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