Tips on Managing your Finance After You Have Bought a House
The feeling of taking your first steps in your new house is unmatchable. The bliss that comes with knowing you have finally entered the house you can call your own takes away almost every burden from you, knowing you have eased yourself off a big responsibility of buying a place to belong. Nevertheless, your dream of buying a house of your own may have come true, but that does not mean that there will be no hassle related to money. Of course, you are going to have to get your head around how to plan your monthly installments and manage all other finances.
Here we are to help you with the planning of what to expect once you have bought your own house and how to manage things smoothly at the memorable development in your financial life.
Mastering Your New Monthly Budget
You must notice an increase in your expense after you have bought your first house. You will be spending more money than you previously used to as there will be small unexpected expenses you will need to deal with, this includes, landscaping, minor repair work and housekeeping. If you have recently shifted from rent to becoming a home-owner, you will be in awe at learning how many things you will be in charge of – like getting a bump in the wall fixed or a leaking in the sink repaired.
If you are going through the same case, establishing a home-owner oriented financial plan after you have bought your first house is an important step you must not skip. Be detail oriented and organized while writing down your new monthly budget. Make sure it covers up all the costs you are dealing with after owing the home. Count in every minor and major expense. Include the mortgage payments, utility costs, condo fees, repair work, maintenance etc.
On an average, the yearly maintenance of a house costs $2,000 which of course is not much as it only includes minor maintenance costs such as repair work, housekeeping, minor electric work, lawn care etc. While being an owner of the house, you might have to encounter other costs like replacing a damaged roof or (HVAC), these can cost anything starting from $5000 and above.
Building a Homeownership Savings Fund
Before becoming a first time home-owner, it would be wise to build a homeowner saving fund plan designed to tackle major expenses such as repair work, and since the costs for bigger repair work surpasses $5000, the homeowner saving plan should be kept from $4,000 to $11,000, ready-cash money that should be handy, in case you encounter an expected breakage.
Remember, you will also need to save some money for other renovation work such as updating bathrooms or kitchen. Although, you could also use credit cards to bear your renovation expense, it would be better to use cash instead to avoid high interest and getting heavily indebted to your bank. According to surveys by Houzz & Home Annual Renovation Trends, homeowners spent $15,000 on home renovations in 2019.
Make sure to stay debt free by keeping your credit cards loans, students loans and car loans clear. This will help build more space for you to add more funds to your home saving plan, which will ease your budget up and you will be able to live in peace.
Go Slow On Purchasing
As first time homeowners, we would love to fill our house up with new furniture, decorations, rugs and matching curtains. However, holding back on desires and giving ourselves some time to figure out what we really need will save us a good amount of money. Using some cost-cutting tricks like shifting to energy saving appliances will also help save money by lowering the cost of electricity bills.
Recheck your Insurance Plans and Update Them
Getting an insurance plan for your first house is something you should never skip, however, there are also other insurance plans you must keep in consideration, such as life insurance, which can help in paying off some of your monthly expenses such as covering up the fees of children’s studies if you are a parent. Life insurance is vital, since it can also help pay off mortgage if you pass away, and in case you are married, it will save your spouse from getting stuck in paying off your debt.
Picking an Insurance Plan
There are several types of life insurance plans, such as term life, which can help cover up expenses for only a limited period of time. This plan will suit you if you are a first time homeowner looking for help to pay for mortgage. Also, since it only covers up your expense for a specific time, it is the cheapest one.
Universal life or permanent life insurance can be expensive since it offers cash value life insurance.
A disability insurance will pay you regularly in case you become injured or fall ill and develop a disability. However, there are several types of disability insurance plans.
In case you are uncertain about choosing an insurance plan that will fit you the best, we suggest discussing your case with an insurance broker.
Keeping a Check on your Retirement Plan
Indeed, it is easy to come up with a payment and go ahead with buying a new house. But what’s important is that you make sure that you do not end up going hand-to-mouth having made the leap of investing a handsome amount in buying your house.
What you must do is first build a strategy by having a quick glance at your future, from a financial aspect of course. You must check if you have enough savings to go by, once you have bought your house. The saving should be big enough for you to spend your coming days peacefully and happily without being broke. According to a survey by GOBankingRates, at least 64% of Americans end up with almost no savings at the time of their retirement and you definitely don’t want to go through that. Make sure to check your contribution in your employee 401k matching or you could use Roth IRA as a substitute in case your company doesn’t offer 401k.
Once you make sure that you have saved enough for your coming years so that you can retire with dignity, then it is wise to go ahead with buying the house.
A simple Tip to The Youth
We consider it incumbent upon us to drop an advice to our young readers. One of the ways that will help not only in buying your own house, but will also lighten you of your financial burdens after you have bought your very first house, is to start saving as early as possible. Some people in their early 20s don’t pay much attention to saving for the future, although that can be a golden period to start building your wealth since you don’t have any heavy expense in your early-years.
The bottom line is to always take into consideration your financial plan for the future so that you can enjoy every moment to the fullest, knowing that such a big purchase has not incurred anything unpleasant for your present or for your future. This way you can not only secure your future, but also enjoy your present with a free mind knowing your future is safe.