Last Updated on January 28, 2024 by Asfa Rasheed
Homeownership is an exciting step in your life, but it comes with its own set of expenses. These include upfront fees like the down payment and closing costs as well as ongoing expenses like homeowners insurance, property taxes and maintenance. A good home warranty plan is useful in a budget as well. If you are asking yourself, “What is home warranty?” Then educate yourself on different types of warranties and see if the coverages are beneficial to you.
Be prepared for these expenses with a budget that takes into account all aspects of homeownership. Here are six tips to help you stay in your budget when you own a home.
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1. Don’t Be Afraid to Make Changes
Homeownership is a big step, and there are a lot of new expenses that come with it. It is important to be prepared and plan accordingly. A good way to do this is by building up your savings account. It is recommended to have 3-6 months of living expenses saved up, as unexpected costs can pop up at any time.
Another important thing to consider is homeowner’s insurance. While many people think that this is just another expense, it is actually essential in order to close on your home. Homeowner’s insurance protects you against unforeseen circumstances and damages, such as theft or fire.
Also, be sure to budget for ongoing maintenance and repairs. It is a good idea to have at least 1 percent of your home’s purchase price each year saved for these expenses.
2. Stay in Your Comfort Zone
Buying a home requires a new level of financial discipline. Once you close on your purchase, it’s important to review and adjust your budget regularly to account for hidden costs of homeownership.
These include property taxes and insurance, as well as maintenance and other expenses. These can significantly impact how much money you have left over each month. To ensure you’re staying on track with your budget, consider a budgeting app like SoFi Insights. This allows you to link your bank accounts and monitor your spending, savings, and planning goals in one place.
Another way to stay in your comfort zone is to cut costs across your budget. You can start by looking at your discretionary spending and seeing where you can make cuts. For instance, putting your gym membership on hold can free up funds for other needs. You can also generate additional income by getting a raise or starting a side hustle. Taking steps to get out of your comfort zone can be scary, but it can also be very rewarding in the long run.
3. Don’t Be Afraid to Ask for Help
You’ve worked hard to become a homeowner, and it’s important to stick to your
budget. This will protect your personal finances and your investment in the home, leaving you better prepared for unexpected circumstances.
Remember that your mortgage payment is only the tip of the iceberg when it comes to homeownership costs. Other expenses to consider include closing costs, property taxes and homeowners insurance. Also, some towns and neighborhoods require homeowners to pay HOA fees, which help maintain community spaces.
If you are working with a real estate agent, be sure to set a realistic home buying budget. Some agents will try to push you into a more expensive home, so it’s important to stand firm and stay within your price range. If they keep pushing you, consider finding a new agent. This will help you avoid overspending and debt as a new homeowner. Also, it’s a good idea to have an emergency fund and savings for home maintenance.
4. Don’t Be Afraid to Stay Flexible
It’s important to stay flexible as a homeowner, but that doesn’t mean you should lose sight of your financial goals. “Financial flexibility doesn’t mean letting your guard down and throwing caution to the wind, but rather striking a healthy balance between planning for the future and enjoying life now,” says Ashley Russo, a certified financial planner.
When you first become a homeowner, there are a lot of expenses that may come up that you didn’t account for while you were renting. Things like moving costs, furniture and renovations are all new expenses that you’ll need to take into account when creating your budget.
It’s also a good idea to have money saved well beyond your mortgage payment in case of unexpected home repairs or maintenance issues. This will help you avoid getting “house poor,” which is when too much of your income is tied up in your house. To make this easier, try using a money tracker app to help you organize your finances and see all of your expenses in one place.