Money Matters to Consider Before Getting a Roommate

Splitting rent saves money, but a roommate can jeopardize your finances and happiness.

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A roommate can be a built-in best friend, a sounding board or just a fellow human being who shares the rent and household duties. Roommates are the best – until they're the worst.

Emad Rahim, a 35-year-old executive in DeWitt, N.Y., experienced that firsthand when he was attending a community college in Syracuse, N.Y., about 16 years ago. Rahim discovered that his roommate's belongings were gone, and soon learned that the roommate split without paying his share of the rent and utilities. Everything was in Rahim's name since his roommate pled bad credit.

Two months later, the police showed up, and Rahim learned that his ex-roommate had been stealing from people, breaking into cars and apartments. He had used Rahim's apartment to store stolen goods.

Rahim noticed his roommate owned multiple car stereo systems, PlayStation games and lots of sneakers and jackets, but his roommate said he worked part-time at a toy store and bought and sold used car stereos to make extra money. Rahim didn't realize he was stealing the items and selling them for profit. "I had assumed he was a sneaker addict and loved clothes," Rahim says. "I just thought he was a wasteful spender."

Rooming with someone you don't know well – and even someone you do – can be a risk to your financial security and happiness, but arguably, you're much better off if you do some pre-planning before sharing living space with anyone. If you're thinking of taking on a roommate to save money, you'll save even more if you consider these issues first.

[Read: 8 Simple Ways to Save Money When Renting.]

Do you really know your roommate? Even if you don't want to spend $25 or $30 on a background check, running your prospective roommate's name through an online search engine is better than nothing. You may not turn up anything, but you never know what you might find. In 1986, Sherry Thomas worked at Macy's in New York City and took in a struggling model as a roommate.

"She ended up being a kleptomaniac," says Thomas, who now runs an etiquette and professional image company in Palm Beach, Fla. "She stole everything, from my sapphire diamond ring right down to my underwear." Designer showrooms often called about missing accessories. The final straw was when the roommate took the last check in Thomas' checkbook and forged her signature.

"Sad," Thomas says. "Made me really skeptical of ever having a roommate again."

And don't assume you know someone just because they are in your circle of friends. In Rahim's case, his roommate was the cousin of a friend. After the police left, Rahim called his friend, who said his cousin was known for stealing clothes and car equipment – but he never stole from friends and family.

"He thought I had known this already," Rahim says.

Rent. You split it obviously, but it can get tricky if one person has a larger room. In that case, you may want to divvy up the rent based on square footage. But that may be the easier part of paying the rent.

"As I explain to my students, whether or not there are two, three or five of them in an apartment, the landlord is going to expect one check in his or her hands on time. Therefore, someone is going to have to play banker," says Mitchell Weiss, an adjunct professor of finance at the University of Hartford in West Hartford, Conn. He adds: "What if a roommate's check bounces?"

Weiss suggests roommates come up with a hard rule that "all checks are to be tendered no less than one week before the rent is due. That way, there will be enough time for the individual checks to clear, or a problem to manifest itself."

[Read: 6 Ways to Avoid Losing Your Security Deposit.]

You may also want to have multiple bankers – one person handles the rent, for example, and another handles a bill, such as cable, suggests Kristen McGregor, a producer, writer and researcher in New York City who lived with roommates for 10 years before moving in with her significant other.

Everyone still splits the costs equally, of course, but this way, "everyone's a stakeholder and invested in taking care of the place economically," McGregor says.