Managing your finances is a balancing act that takes time to get right. For homeowners, this task is made seemingly more impossible, as the true costs of financing a home can be overwhelming. Being swept up in the general excitement of becoming a homeowner is a wonderful experience, however homeowning takes time, effort and a dedication to financial commitments. Managing your cash flow can be a daunting challenge, as your income will have to be divided into multiple areas to ensure important payments are made, in addition to having enough money to live. Houses expenses are your biggest outflow, and without preparation and planning, it can quickly down spiral. If you need some advice and tips in regard to managing your finances as a homeowner, then here at We Buy Any House have provided a simple guide to the financial world of homeowning.
Breakdown of the Costs:
Before you start panicking about how much money you will be spending on homeowner expenses, work out your figures and dates first. Take the time to sit down and work out an average for how much will be spent per month and compare it to your monthly income. By doing this, you will be able to work out how much you can realistically afford, and if there are going to be any financial or lifestyle changes to make. Be realistic about how much you spend, as skating over the truth will only cause chaos later on down the line. Consider things such as how your lifestyle and general spending habits will impact the expenses that go towards your home.
Emergency Money:
Although you may have broken your finances down into outgoings and other expenses- don’t always rely on this following a working order each month. It’s a good idea to have an emergency fund to help cover unexpected costs- such as a broken washing machine, excessive food shop or leaks in the house. Although you can ensure that things such as the roof and heating system are working properly during your house visits- there’s no guarantee that they won’t break.
Plan Regular Budget Reviews:
It’s a good idea to plan a review every few months. Regularly reviewing and adjusting your spending and savings plan is an important thing to do, as expenses are constantly changing. Whether change happens due to the season (for example, using more heat in the winter will inevitably affect your bills), frequent repairs or a pay rise- it’s vital that you keep on top of all your expenses to ensure that you are not overspending, and that you are managing your savings progress.
Invest in Banking Apps:
Although people don’t think too fondly of money saving apps, they can be great for budgeting and keeping on top of saving your money. By doing this, you can closely monitor where every penny is going, and change certain settings so that a certain portion of your finances are directed to certain accounts- which will encourage you to keep saving and observing your bank accounts closely. Banking apps also alert you if you’re going into debt with things such as being in your overdraft or being overdrawn, so you can instantly correct these mistakes.
Compare and Cut:
There’s always a way to be financially savvy and cut your costs. Whether that’s finding a cheaper way to do your food shop, internet and broadband, electricity and gas- there’s always a way for you to switch to a cheaper provider and knock some of the cost off your bills. It may only be a little each month, but in the long run it will make a huge difference.
Strip the Subscriptions:
There’s no doubt that we all have our hobbies in which we are paying monthly subscriptions. Whether that’s music outlets, extra food deliveries or certain TV packages like Disney Plus or Netflix, the small monthly charge adds up, and costs you a considerable amount of money at the end of the year. As a homeowner, an executive decision is needed as to whether these things are used frequently enough to be considered a necessity in the home. Small financial charges add up- and although it may be hard to part with Netflix, your pockets will certainly thank you for it.
50/30/20 Rule:
Created by Elizabeth Warren, this budgeting program- also known as the 50/30/20 rule helps homeowners or renters manage their finances properly and efficiently. The numbers are representative of three categories: needs, wants, savings. This means that 50% of your overall income should cover your needs- and if this isn’t enough, you may have to cut certain things out such as branded food or a larger TV package. The 30 stands for wants- personal items, hair appointments or socialising, and finally, the 20 should be taken by your savings. Having this structure in terms of your finances can provide reassurance and stability regarding your finances. The beauty of the program is that it can also be flexible, so if you really need to make mature changes to those numbers, you could still spend wisely and save well.
