We all know that money is that last taboo topic causing more embarrassment, secrecy and shame than even conversations about sex.

So, if you’re making plans to live with a roommate, it’s a good idea to acknowledge that fact up front and make a commitment to tackle the subject openly.

Just as in a marriage, you’re entering a relationship with two people living under one roof, and in that living situation, money is the most common source of friction and misunderstanding.

So, make sure that you talk about the money stuff before you or your roommate move one box or scrap of furniture into your soon-to-be shared home.

The First Thing – Bring the Subject of Money Out into the Open

Many people who are looking to share their home with a roommate and those who hope to find a place to share report that they find it easy to talk about most of the aspects of lifestyle that contribute to compatibility, but when it comes to money, their worry factor goes way up. Will my potential roommate think I’m being too picky? Too detailed? Greedy? Stingy? Unfair? Untrusting?

My advice is to remind yourself that if the other person is a decent and fair human being, she won’t be put off by your desire to lay everything out clearly; in fact, chances are she’s just as worried as you are about ruining your rapport by talking about money. She’ll probably be relieved and grateful that you raised the subject.

You can view this conversation as insurance; you’re undergoing the relatively small pain of discussing uncomfortable topics now, to avoid the far more upsetting and unpleasant potential scenario of fighting over money after you’ve moved in together.

Rent

First, of course, is determining the rent to be paid by the person moving in, or by each of you if you’re moving into an apartment and paying rent to a landlord.

If you’re a homeowner and you’re sharing your home, then research the “going rate” for room rentals in your neighborhood and use that figure as a guide, adjusting for the size and condition of your house and the nature of the rental (kitchen privileges or not, private bathroom or not, etc.).

If it happens that full homes are available for long-term rentals in your area, and you’ll be offering your roommate equal use of the entire property, you might decide to set the monthly rent at half the going rate for renting an entire house. In the alternative, you might start with that number and then adjust for factors such as who has the larger bedroom or who will be using the extra room/office on a regular basis.

If you’re a renter yourself, and you’re going to sublet your house or apartment, use the same guidelines for splitting the rent as above, with one extra consideration factored in. If you’re the only one named on the lease, that means that you’re the one holding the bag if your roommate is late on the rent or leaves before the lease is up. You might charge a bit more than half the rent, to compensate for your disproportionate share of the risk.

Utilities

It’s usually easy to agree that you’ll share the water, gas, and electricity bills 50-50, but it’s a good idea to iron out two details regarding these expenses. First, who pays what? Will each of you assume responsibility for paying one or more utilities throughout the year? Or, will you each pay equal amounts into a pot of money from which utility bills will be paid?

Second, what are the agreed rules for consumption? Will you agree to set the heating/cooling within a set temperature range to avoid running up costs, or do you both agree that comfort is paramount, regardless of increased bills?

Are there low-rate hours for water or electricity usage, and if so, will you agree to run the dishwasher and washing machine only during those hours to save on costs? In other words, agree on the division of expenses and how those expenses will be paid, and agree on how much of those expenses you will incur.

Food and Sundries

Here’s where lots of resentments can form, simmer, and ultimately explode: A roommate who never, ever buys toilet paper, or who always asks you for a tube of toothpaste when she runs out, or who repeatedly helps herself to leftovers that you not only cooked, but whose ingredients you purchased yourself.

Think about anything you will share such as paper towels, cleaning products and food, and work out a clear agreement regarding purchase and consumption before you move in together.

Décor

Décor is an area of disagreement that sometimes takes roommates by surprise: One roommate will decide that it would be “nice” to have some new throw pillows for the couch and a lovely set of candles for the coffee table. She buys said items, then asks her roommate, after the fact, to chip in for half of the cost.

To most of us, this would be obviously inconsiderate on a couple of levels – taking over a common area of the home to suit one’s own tastes and preferences without consulting the roommate, and effectively spending the roommate’s money without prior agreement. You might not expect your roommate to be so self-centered and unreasonable, but make sure you prevent such behavior by adding something to your agreement to prohibit such unilateral actions.

What advice would you give to anyone – young or old – about choosing a roommate? Do you think it’s better to pool your money for common expenses, or separate out “your bills” and “my bills” and each pay those individually for household expenses? What’s your take on bartering? Would you consider paying a larger share of the rent or mortgage payment in exchange for your roommate doing more chores around the house? Please share your thoughts in the comments.