Making a budget for home expenses is one of the first steps a new homeowner should take. While the extensive planning and budgeting for closing costs and buying the home might be over, your new financial life at home has just begun.
To help you get started, here is a basic guide to creating a budget for your home expenses:
Identify your goals
Make note of any financial goals you hope to achieve and when. For example, you might have a goal of paying off your mortgage early, or financing a major renovation project.
Record your expenses
Track your spending for a month to identify the details of your cash outflow. Make sure to include fixed expenses like subscription services and your monthly mortgage payment. Varied expenses, like entertainment, maintenance costs and transportation should also be included at least in estimation.
Record your earnings
Find your exact income amount by identifying all possible sources of money. This could include regular employment as well as gains from selling or renting any assets. Use your net monthly income rather than gross monthly income to account for taxes.
Do the math
To find a basic budget, simply subtract your total monthly expenses from your net income. The formula is: net income - total monthly expenses = budget.
Find ways to improve
Depending on your results, adjust your goals and habits accordingly. For example, you might want to change your spending habits or put aside more money into savings for an emergency fund.
These are only the basic first steps to creating a household budget. You can use this process as an example for building your own budget and managing your finances in your new dream home.