I’ve been told this is very “millennial” of me, but I’m a big fan of splitting expenses evenly when mixing friends and finances. I just think it’s easier that way – then no one feels like they’re being forced to pay an unfair amount. Sure, sometimes when I go out to dinner with a friend, we just split the bill down the middle or with very close friends, we just take turns paying, but when it comes to group things, I just like things to all be fair.
In the past, traveling with friends was a bit of a hassle. Typically, one person would run a spreadsheet of expenses and everyone would email that person what they spent. Then that poor person (who was never me) would do the math, figure out who owed what to who, and everyone would pay their part. It was complicated. Then we discovered the Splitwise app.
Splitwise – How Does It Work?
Basically, Splitwise does exactly what my friend’s spreadsheet did, only better.
You setup a group in Splitwise and invite the travelers. Then, as group expenses are made, you input the expense and who it benefitted. (So if you’re traveling in a group of six, but one night, only 4 of you get tickets to a show, the cost for that show is only applied to those 4 people.) Splitwise keeps a running total of what each person owes and who that money is owed to. You can then settle up through the app via Paypal or Venmo, or you can do it outside the app, whatever you prefer.
I love this method. It’s incredibly transparent and no one ends up spending more than their fair share. No one gets frustrated because they picked up all the groceries for the condo and didn’t get paid back. No one feels like they paid too much because they had to pay for a part of the trip she didn’t participate in. Another perk is that it helps us figure out who should pay when a bill comes at the end of the night. If I owe money to a friend, I can offer to pick up her tab one night, enter that into Splitwise and reduce the money that I owe her.
Splitwise also has calculators on their website to help you figure out situations that aren’t as cut and dry. If you go on a trip where some people are only there part of the time, you can use their travel calculator to help figure out the costs for each person. Unrelated to travel, they’ve also got a great rent calculator to help you figure out how to split rent in a place where the rooms aren’t equally sized or one room is occupied by a couple.
Why use an app?
While you could figure this all out yourself, what I like is that it’s bringing in an outside expert to tell you what is fair and equitable. It takes the emotion out of it. Money can cause all sorts of headaches in friendships and relationships. By using Splitwise, that emotional side gets taken out of the equation and everyone pays their fair share.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.