Yesterday, I wrote a post about the hidden costs of home ownership that first time home buyers might not have thought about. It wasn’t meant as a discouraging article, it was meant to enlighten potential first time home buyers so they know what is in store for them. Today, I’m going to give some budgeting tips to go along with those costs. Following these tips could help first time home buyers reign in spending so they can buy the home they want and take good care of it.
Recognizing spending habits and making a budget is vital for first time home buyers. The responsibility of owning a home requires good money management skills and control over impulsive spending. For first time home buyers, creating a budget is the first step in saving money for a down payment before a home is bought and keeping ahead of finances after purchase. Additionally, if a first time home buyer runs into financial difficulty, knowing how to properly budget can mean the difference between keeping that first home or losing it. Here are some budgeting suggestions for people seeking to buy their first home.
- When you create your budge, include all of your income and all your expenses. Plan your budget according to what your income is now, not what you expect it to be.
- Don’t copy someone else’s budget, their spending plan isn’t going to help your situation. Develop a spending plan specifically suited to your family’s or your individual income, expenses, necessities, and future needs and goals.
- Do what you can to plan ahead for the whole year. By having this long view, you will you have sort of a “road map” to where you are going financially. Having an extended budget will also help you determine how well you are following your budget plan.
- Take the time to decide what your most important goals are for the future. After you’ve determined your goals, it’s much easier to spend your money on things which mean most to you or your family.
- Develop a personal savings plan and pay yourself first. Try to save 10% of your income each month. If you can’t cope with saving10% right away, save a smaller amount, but do so regularly.
- Stop wasting money on products or services you don’t need, including things like extra cable or cellphone features, magazine subscriptions, and health club memberships.
- Don’t spend impulsively. Make purchases wisely by defining needs versus wants, comparison shop for lower prices, and have an understanding of value based on quantity and quality. This will help you determine if what you’re paying is worth it for the end result. If you take the time to think hard about it, you may find out you don’t really want to make that purchase.
- Plan, budget for, and stockpile a savings account exclusively for home maintenance projects and repair. As a homeowner, you will need this money to cover any home repair emergencies you may have in the future.
- Keep good records of what you spend, but don’t make it a complicated process. Remember, you’ll have to follow through with keeping records. Many people have no idea where their money really goes when it comes to accounting for each dollar. Trying to track every penny you spend will help you take control of your spending habits.
- Review your budget and financial plan once each month. Scrutinize your expenditures and make any alterations to your budget which may be needed.
Most importantly, when you create your budget, try to keep to it. If at first you don’t succeed, try, try again. It’s important not to give up. If you are determined, you will eventually teach yourself how to keep within your budget.