Congratulations! You bought a house, put down the welcome mat and call it home! Now, that you’re through the stress of home buying, it’s time to focus on your new household budget as a homeowner.
Budgeting Basics
Creating your budget as a new homeowner will help define the hidden costs of homeownership and help you stay on top of it. Let’s review the budgeting basics. The 50/20/20 budgeting approach is a good place to start. This is where 50% of your household income goes to needs, 30% to wants, and 20% to debt payments and savings.
New Regular Expenses
When you buy a house as opposed to renting, you’ll have some new expenses to cover. There will be the basics like utilities, internet, and mortgage payments but there are some unique expenses that were not in your household budget before.
- Real estate taxes and homeowners insurance: Usually these are included in the monthly mortgage payment, but keep in mind that your amount can fluctuate from year to year because of the changes in taxes and insurance premiums.
- Homeowners association: When you live in a planned neighborhood, you could be a part of the homeowners’ associations where you pay dues. If your community doesn’t have a homeowners association, you might have HOA fees.
- Home maintenance: Instead of calling the landlord, now you have to take care of repairs and updates, which can get expensive. Staying on top of maintenance is essential. Not only does it make your house beautiful, but if you ever end up reselling it, keeping up with the housework will be beneficial.
Long Term Goals Savings Accounts
Your long term financial goals should be reviewed after purchasing a house. We all know it’s necessary to have an emergency fund and a retirement account. These accounts might experience some fluctuation, and that’s okay. Remember, budgets are a guide; it might not be perfect every month. It’s a good rule of thumb to have about six months of living expenses in your emergency fund. Think about your household expenses when contributing to your retirement fund, are you putting enough into it to afford your home and house maintenance when you are done working?
Regularly Review Your Household Budget
This might seem like a lot to consider, but remember you are chipping away at your mortgage, it’s not a race. That being said, pay off your debt first rather than contributing to extra mortgage payments. Once you’ve added up the costs of owning a home, you’ll want to review your budget and adjust accordingly. Review your budget at least four times a year to make sure you are on track!
DEXSTA | Homeowners Resources
Here at DEXSTA, we have some resources to help you. Whether you’re looking for a mortgage for your home or loans to get that big house project done, we are here. Stop by, call, or visit one of our branches to see how DEXSTA can help you!