The process of managing your home finances can be an intimidating task, especially if there are several expenses you are responsible for. Car payments, credit card statements, student loans, and retirement plans are all potential costs that may be associated with your lifestyle, but household finances may take additional time to nail down due to how much goes into upgrading or maintaining your home.
With this financial guide, you will be ready to take on managing your household costs with more ease. Let us check out several simple to follow tips to help you manage your home finances!
Stick to an Attainable Household Budget
The first thing to consider when getting your home finances in order is to develop a realistic household budget. While this could be time-consuming, it is worth your while in the long run. There are a few things you will want to factor in while creating a budget, such as the number of people in your household, lawn services, pet expenses, cost of mortgage or rent, utilities, new furniture and decor, home inspections, and other essentials. You could also look deeper into your current financial situation to determine if you are in a solid place financially, or if there is a spot in your budget where you can tighten things up.
If you are living with a significant other, communicate with each other about a spending plan so you are on the same page about what you both feel comfortable spending each month on your home expenses. Setting a spending limit will help keep you on track and identify where you may need to scale back or where you could splurge a little more.
As a pair, discuss how much you both plan to save, and how this can positively contribute to a successful savings plan. The process of saving money is always a smart idea in case you have a financial emergency that appears out of the blue. If feasible, you may want to add extra money into your retirement savings for later in life or for a special vacation down the road.
Organize this task by discussing your “needs” versus your “wants”. What are things you can’t pass up, need in order to live comfortably, and what things could you live without? For example, maybe you do not need to buy that 70-inch TV, but you will need to pay for your heating bill because it is the middle of a chilly winter. Whatever it is, weigh the pros and cons to help your final decision and factor them into your budget.
Remember, as family needs change, so does your budget. Maybe you find that you budgeted too much for utilities or lawn care for example. It is important to go back and reevaluate and then make adjustments where necessary during the time you are creating your household financial plan. The first few months are a crucial time for this as you get more comfortable with budgeting as a whole.
Set Home Financial Goals
Having a budget and future spending options mapped out will give you an overall better idea of your financial situation. Once that is all said and done, it is smart to set your financial goals. These goals should be measurable, have a why, a timeframe, and reasoning behind them. Put them in writing and review them as part of your regular routine to make sure you are working toward fulfilling them.
The important part of financial goals is that they help hold you accountable for any actions you take with your money. If you are newer to budgeting and financial planning, it is a great idea to keep these goals in mind. Financial goals will give you measured results and show you where you have been successful or unsuccessful in your budgeting efforts. These goals can be updated once you get a better idea of your monthly spending but should be utilized to keep yourself on track.
Having financial goals will keep you motivated and eager to improve regularly. They will also help you gain a better relationship with money. Sticking to your goals will show positive results and make you feel better about managing your home finances.
Track Spending Habits
A trick to help you stay within your means is to track all spending and to develop a plan of action. Keep receipts during the first month, and write down your spending in each budgeting category. It is also a good idea to consistently monitor your credit and debit cards. The majority of banking apps allow you to see where you are spending your money. This will give you a better understanding of your expenses. It also teaches you about how frequently you are utilizing your cards and where you are spending money.
If you are new to budgeting, it is smart to do your research and find a personal finance app that is best for you. A budgeting app will help guide and lead you to financial success. Not only that, but a financial app will track your spending and give you a clearer picture of where the majority of your money is going. These apps will also help you stay organized and on top of payments. If an app isn’t for you, consider utilizing an excel spreadsheet or keeping a budgeting binder. This way, you can still keep yourself on track. Tracking home costs is also very helpful at tax time, as some home costs can earn you tax credit.
Develop an Emergency Fund
When developing your financial plan, you will want to factor in a section that is focused on emergency spending. This will be called your emergency fund. An emergency fund is a fantastic way to save extra cash for unexpected financial scenarios. There are several ways to prepare for and build an emergency fund for home repairs, such as HVAC malfunctions, sewage backup, roof leaks, and any issue caused by storm damage.
Emergencies happen, and it is smart to be prepared for when they arise. Putting aside extra cash for these situations will benefit you financially. Make a list of potential problems that may happen, research prices to fix those issues, and add them into your financial plan. Even if you do not have to use it, having the money set aside will be a good safety net.
You could also utilize an emergency fund to prepare for a new season. Maybe you want to get your gutters cleaned or insulation replaced before the winter months. This money could help you pay off those expenses with ease and is a smart way to stay on track with managing your home finances.
Recognize that things like an animal or bug infestation or basement flooding can happen, and you could also utilize this fund to pay for those fees. Along with these, it is imperative to factor in potential household hazards that may come to fruition the longer you live in your home as well. If mold, asbestos, lead, etc. are found throughout your home, you will have to get it removed. These removals could be costly, so do your research to find out average costs and adjust your emergency fund as needed, especially if you have an older home.
It is also a good idea to have a person you trust and a contact on hand for home repairs. When you have someone you can go to whenever there is a problem, you know you are getting the best bang for your buck — and protecting your emergency fund. Sometimes, you may even get deals if it is someone you consecutively work with when you have issues with your home. Having these connections are also a great way to get potential estimates and tips for when it comes to planning bigger price tag fixes.
Factor in Home Improvements
Your home says a lot about you. It is the place where you have complete control over the style, design, and personality. As everyday wear and tear takes a toll on your home, or as home trends change, you will find yourself wanting to make improvements. These home improvements are things you will want to incorporate within your household financial plan.
Home improvement costs can be very expensive, which is why it is smart to plan in advance and not wait until the last minute. Planning in advance will help you stay on track with your spending and take the stress out of planning under pressure. Develop a home improvement section within your financial plan and lay out various costs you intend on spending. From there, do some research on costs of products and services to help give you a better idea of what you should be budgeting.
Depending on the price of your home improvements, you can consider dipping into that emergency fund, putting a little extra on the credit card, or discover how a HELOC or personal line of credit can help you. Considering these various payment methods in advance can help keep you on track and money-conscious when it comes to your home.
Managing your home finances has never been simpler! If you are looking into upgrading the more visually appealing aspects of your home, like kitchen cupboards, windows, furniture, or outdated appliances, it is important to factor in those improvement costs. These can be both big and small!
If the weather is nice, you may want to add on the screened-in porch you have always wanted or complete your annual deck upkeep to prepare for outdoor gatherings with family. On the less simple side, larger, more costly improvements could be things like gutting your entire kitchen, bathroom or even adding to your home to give it a new aesthetic.
Both types of improvements are good to think about when you are evaluating your household finances, because nothing is worse than going through with an upgrade with costs that you did not expect. Do reach out to and ask different service providers their prices so you know exactly what to expect out of your upgrades.
If you strive to be environmentally friendly, invest in solar panels. Solar panels will lower your electricity bill over time and help give your bank account a rest. When you are picking out new appliances, consider purchasing environmentally friendly ones. These appliances do not only help our earth but your wallet too.
Another kind of home upgrade you may want to explore are smart devices. Although they can be costly at the time, they may save you more money and call for less maintenance down the line. Not to mention the convenience they offer you. Nowadays, smart devices can be accessed right through your phone. You can control things like temperature, your lights, your security system, and your garage door right from your phone.
Home updates are important, and if you wait too long to make them, you may kick yourself. Whether they are big or small, it is good to understand your home update options when it comes to financing. Planning can help save you money and stress.
Protect Your Home
You worked hard for your home and the items in it, so it is important to protect them. While developing your household budget, factor in the costs you will be spending on your home insurance and potentially security service providers if you go that route.
What many new home buyers do not realize is the importance of homeowners insurance. Homeowners insurance is there for whenever disaster strikes. Whether it be damage from the weather, a fire, theft, or vandalism, homeowners insurance will protect your home and assets. This type of insurance eliminates the possibility of paying out of pocket if something happens to your home. This will ultimately benefit how you manage your finances when it comes to your saving and spending goals.
Before purchasing the insurance, look into all of your options to make sure you are choosing one that works with your home budget. If you already have insurance, you can always research to see if you are getting the best deal. Insurance is something that you will want to make sure you include in your monthly household budget, so knowing that you have an insurance company who will fit your financial needs is a step in the right direction.
If you are taking the extra step to keep your home safe, and considering a home security system, camera, or safes, allocate specific funds toward this expense so you can readjust your budget accordingly. Having a security system will allow you to see all that is happening around your home while you are away. Having a security system is an extra safety blanket for items that may not be covered by insurance.
Depending on the system you purchase, you may have monthly subscription costs, so it is important that you factor that cost into your financial plan. Adding the price breakdown into your budget will help to ensure that you are staying on the right path financially.
Get Creative With Your Savings
With all this in mind, it is important to get creative and smart with your home savings. It is a good idea to make managing finances a family affair. Get everyone involved and incorporate the kids. You can do this by watching YouTube influencers, reading articles by budget gurus, or by following money saving influencers on social media. Through these avenues, you will get a healthy dose of money tips and have the ability to implement them into your strategy. Making finances fun is a great way to teach young ones about the importance of money management for later in life.
Another way you could save money is by turning those home improvement plans into some fun home DIY projects. DIY will help save you money and allow you to completely customize and make your project your own. DIY projects are a great choice when you are trying to be more money cautious. If you need some inspiration for your home’s makeover, consider surfing Pinterest for some home improvement ideas.
You may find that you are having a lot of success with your budgeting efforts. If that is the case, and if you have some extra money to put into your savings, maybe splurge a little on home goods, or pay off more of your mortgage. You could even get ahead on your bills. Or, if you are sticking to a big savings goal then, save, save, save.
The task of buying and owning a home comes with a lot of responsibilities and can be pretty costly. Taking these steps can ensure you are staying on track and will allow you to factor in all possible upgrades that may come down the road. Feel confident and reassured in your home-owning efforts and gain control over your financial well-being. Managing your home finances is just the first step in the right direction to feeling confident with your financial standing.
