There’s no question that buying a house can be stressful in many ways. However, once all this stress has passed, it’s time for new homeowners to hang up their welcome sign and settle in.
However, when this new journey begins, so does the need for budgeting. Once all the closing costs are paid and the movers have been tipped, it is time to learn how to properly budget as a new homeowner. While a new homeowner can find some help from https://www.bright-homes.com, the tips here can help.
The Basics of Budgeting
For those who aren’t sure how to create a budget, now is the time to learn. A good foundation is to follow the 50/30/20 budgeting approach. With this, approximately 50% of the household income will go to needs, approximately 30% should go to wants, and 20% should go to repaying debts. It’s smart to use a budget calculator or to track spending using a budgeting app.
Even for those who aren’t new to budgeting, there are several more things to think about after a person becomes a homeowner.
Consider Regular Expenses
Usually, people have been covering household expenses before they owned a home. This includes things like water bills and electricity, but there are other homeownership costs in addition to the new mortgage payment.
Those costs include real estate taxes, homeowner’s insurance, homeowner’s association fees, and upkeep and maintenance costs. More information about these specific costs can be found at Bright Homes.
Anticipate Bigger Project Costs
Figuring out how much will be spent on home maintenance is challenging. A good place to start this is at the one-percent to two-percent range. However, high-value repairs may push a person’s annual home maintenance spending past this range.
When revisiting the expenses each year, consider the upcoming expensive projects that may occur. For example, it may be necessary to replace an older roof or a deck. Be sure to include the projected expenses in the budget along with the one to two percent that is required for general maintenance.
Revisit Life Insurance and Savings
While many people may already have an emergency fund set up, a life insurance policy in place, and a retirement account, it is a good idea to review it annually — especially after buying a home according to information from https://www.bright-homes.com/contact/.
An emergency fund should contain plenty of cash to cover about three to six months of total expenses. This includes the “needs” in a person’s budget. With life insurance, a policy should cover the entire mortgage costs for a few years. With retirement accounts, make sure there will be enough to cover household expenses after the individual leaves the workforce.
When it comes to creating a budget, there are more than a few factors to consider. Be sure to use the tips and information here to minimize issues and plan the best way to save money. This is going to pay off and help ensure that a person knows what they have to spend and what they should save.
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