Beginners Guide to Budgeting for New Homeowners
If you’ve reached the homeowners stage, you most likely have a general idea of your finances. Making the transition from budgeting as a renter and budgeting to save for a home to being a full blown homeowner can be more of a transition that some realize. Luckily many have come before you and taken note of costs and budgeting tricks they’ve run into. Here’s a place to start when determining your brand new homeowners budget.
Know what stays the same.
As far as your budget is concerned, some things will stay the same. Make note of these expenses so that can properly be accounted for right off the bat. These expenses might include health insurance, annual car registration fees, online subscription fees, etc.
2. List your variables are and consider how they’ll change.
Gas and food are good examples here. Depending on where your new home is compared to work, school, and the grocery store, how much you spend on gas per month will need adjusting. Food, on the other hand, could stay exactly the same or change significantly. If your new home offers more freezer space that allows you to stock up on bulk items and meal prep, you could save yourself from eating out as much as you used to. The big takeaway is just to be aware of your spending habits and how your new homeowner status might change them.
3. Understand all your fixed housing expenses.
While you may be used to paying rent and utility bills, the process and amounts and going to change. HOA fees, property tax, homeowners insurance, and mortgages are all expenses that might not be used to accommodating. You might also have to get used to having all the utility bills fully in your name, some of which can fluctuate in amount significantly throughout the seasons.
4. Prepare to fix what breaks.
As you probably already realized, if your washing machine breaks or the heater stops working, it’ll be up to you to pay for the repairs and replacements. However, keep in mind there are so many more little and big expenses that could come your way. If your roof starts leaking and there’s severe water damage on top of needing your shingles replaced, that’s on you. If your lawn gets infested with weeds and dies, it’s up to you to fix. Be prepared for life to happen and plan ahead with your budget.
5. What about the fun stuff?
You’re in your brand new house and all your mismatched, old furniture just doesn’t seem right. We’ve all been there. New house means you probably need a few new things (sometimes because you actually need them, sometimes just because you want them). Before you go and rack up credit card debt, take a minute to make sure you don’t dig yourself in a whole for later (See #4). Use your budget as a time to prioritize your wants and needs for the new house and make a plan for how and when you can get them.
6. Take a deep breath.
After sitting down and looking through all your finances, the enormity of buying an entire house might hit you in a whole new way. Sure, there will be an adjustment period of stabilizing spending habits and organizing your new bills, but you’ll be just fine. Do your best to get organized early on and enjoy your new home!