While homeownership comes with plenty of benefits, it also comes with many costs. Once you become a homeowner, you’ll have expenses related to the upkeep of your home, as well as the responsibility to ensure that your mortgage payments are made on time. The best way to be prepared for whatever homeownership expenses come up is to budget for them. Here are some budgeting tips if you are a homeowner.
Price out your day-to-day needs.
While you’re saving for your homeownership needs, you still have to pay your mortgage, and for other needs like food, medicine, and gas. Write down how much money you have available each month after you pay for those necessities and put some of that toward the other fees associated with your house.
Anticipate increases in utilities.
The average family spends more than $2,000 a year in utilities. While those are likely already in your budget, remember that most services increase in price over time. As you’re setting your budget for the year, allot additional funds to account for cost increases that are likely to occur. Also put aside more for extremely hot or cold times of the year, or ask your utility provider to put you on a budget plan.
Assess your savings and debt.
Maintaining financial health is important to long-term success. If you were to lose your job or experience another type of financial emergency, you want to make sure you have enough money to continue paying your mortgage. Strive to keep your debt as low as possible and to build an emergency fund that could pay for two months of expenses. Budget some money to go toward debt and savings goals.
Consider maintenance and repairs.
Being a homeowner means you’re responsible for appliances when they break down or for fixing the roof if it leaks. Experts suggest putting away between 1% and 4% of your home’s value a year for maintenance costs. That means if your house is worth $300,000, you budget at least $3,000 a year for that purpose. If you can’t put aside that much, simply save as much as you can in a special account for home maintenance.
Track your progress.
Throughout the process, make sure you’re staying on track by monitoring your spending. A budget only works if you follow it.
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