Student Finance: Sorting Out Household Bills

As we are approaching a new academic year, at the forefront of returning students’ minds (aside from pulling themselves out of bed to attend 9am lectures), is how on earth to sort out household bills. Organising multiple bills is a nightmare, even more so when there are many people living together.

What’s available?

Many people opt for the bill-inclusive packages offered by their landlord or letting agent. It’s an extra expense added onto rent that covers bills. Having a fixed amount to pay each month, which can include everything from electricity to a TV license, means students can have that cheeky afternoon drink (or two) without worrying about whether they can afford their share of the utility bill due at the end of the month. That said, the hassle-free option is usually more costly as agencies will charge for more than they expect students to use, and then keep anything left over at the end of the tenancy. Property letting is a profit-driven industry after all. One alternative is companies such as Huddle Utilities which offer bill packages. Based on the number of occupants, the company estimates gas, electricity and water usage and then offers a weekly rate that is combined into a monthly payment made to them by each individual. This service is slightly more tailored and can be cheaper than the agency packages as they only charge for actual usage, rather than predicted. If actual usage is less than predicted usage then they’re refunded the excess at the end of the contract. In other words, students might have a few extra coins in their pockets to spend during the summer festival season. Another option, although not as common, is to pay utility suppliers directly. It’s likely that this option is sometimes avoided for two reasons. Paying actual bills feels like adulting, which is something that we university students are trying to put off for a few years, and deciding who’s in charge of the bills can be tricky. Still, the plus side of going directly to the supplier is that they can offer discounted rates and tariffs with no admin fees. Pricing and charges are also more likely to be transparent as there is no “middleman” involved to slip in additional fees. If this approach is taken, it requires that either one person take responsibility for each or all bills and collect payments from each housemate or, two individuals share responsibility by opening a joint account that each housemate pays their share of bills into.

Share the cost

Opening a joint account no longer requires you to visit a physical branch and can be done from the comfort of your own home. There are challenger banks, such as Monzo, that offer virtual joint accounts via their mobile-based apps. The main benefit of this, especially if you are in a two-man house, is that managing funds is extremely straightforward. Responsibility is not solely placed on one person. That said, bear in mind that this creates a financial link between the account holders which can affect their credit rating, especially if one has a poor credit history. Monzo’s quick account-opening process reiterates this risk and reminds the account holders to ensure they know one another well before beginning the onboarding process. Another way for students to keep on top of bills is to use a tools that can help you to better track them. For example, Truebill is an aggregation service that can display upcoming bills and subscriptions in a calendar-view and notifies of recurring bills. Leveraging this service is a way to encourage better financial management by those of us who have never set-up and managed a bill! But while it can help students keep on top of what’s coming up, it doesn’t really help with the problem of multiple payees. Which solution sounds best? Personally, I opted for an inclusive bills package when sorting out bills, but with any bills package you are essentially paying for convenience. Had there been virtual joint accounts at the time, this definitely would have been an option that I would have considered. However, the products on the market are designed for couples, which is hardly suitable for 8-bed student houses. Perhaps with Monzo and other challenger banks aiming to convince students to switch accounts at university that will change in the near future. Keep an eye out for my next post which will look into the products that students could find useful when managing bills.