Moving into your own space and establishing your initial home environment is an incredibly exciting time, but don’t let enthusiasm keep you from being realistic about all the costs that accompany a new home.
Failing to account for the new line items in your budget can leave you relying on credit and spiraling into debt.
The following is a list of things you’ll need to incorporate into your monthly, quarterly and annual financial plan to make sure your beginner household becomes established and secure.
1. Consider your recurring homeownership expenses.
This includes your mortgage, real estate taxes, utilities, homeowners association fees and homeowners insurance.
If this is your first foray into home ownership, most of these expenses are probably new to you. Hopefully, you’ve considered them all before making the new home purchase.
2. Think about how you will furnish your home.
If these weren’t included with the purchase of your home and you don’t already own them, you’ll need to furnish your new space with basic appliances, furniture, lights, cookware and anything else you may need to get settled.
Consider starting out with the bare necessities and adding the extras over time to help space out the costs of these big-ticket items.
“A failure to plan can
throw your budget.”
3. Take maintenance into account.
In addition to paying for any necessary repairs and general maintenance, you’ll also need to buy tools for the maintenance you’ll be doing on your own – cleaning supplies, lawn mower, ladder, tools, etc.
Experts suggest homeowners budget at least 1 percent of their home’s value for annual maintenance. That would be $2,000 a year on a $200,000 property. That’s $166 a month at a bare minimum.
4. Create a financial buffer.
Lastly, you’ll want to create a buffer for unexpected problems and emergencies. This may sound optional, but it’s not, as the unexpected is inevitable. Once you have a pest problem or a leaky roof, you won’t want to put it off.
Consider adding a 10 percent buffer onto your monthly maintenance budget, if not more.
A failure to plan for any of these things can throw your budget from balanced to busted in a matter of moments. Put a plan in place now to transition into home ownership without a hitch.
Photo source: lerablog.org