Tips For Budget Planning - Home Expenses

The first group of expenses you need to add to your budget is your home expenses. As we all know, home expenses are a priority. “ I don’t think I can afford it this week, the rent is due” or “ I’m trying to save money, because my house payment is due next week” are common responses we hear from our friends and family. Hopefully, by laying out a budget that includes your home expenses you will be able to see how much you are spending in this area of your budget and recognize the importance of making these payments.

The first part of your home expense portion of your budget is your mortgage/ rent payment. This is the part of your budget where you figure up how much you pay monthly. If you have a mortgage payment and are also paying back a home-equity line of credit that you’ve taken out against your home, you should include this as part of your monthly mortgage payment. Whether you pay it separately or tack it on to your traditional mortgage payment, it should be included here.

While some mortgage payments include your home insurance, most people pay this separately, so the next thing you need to include on your budget is your home/renters insurance. The bank requires home insurance on any home they lend money towards. Even if you are lucky enough to own your home free and clear or if you are just renting, it is extremely important to keep home/renters insurance on your home, because the minute you loose your home/apartment to a natural disaster is the minute your well-organized budget will have to go out the window as you are trying to find a way to replace all of your possessions. A perk of home insurance, is that if you can get it through the same company that insures your car you can often get a discount on your car insurance.

Tax time is the worst time of the year, but thankfully it only comes once a year. The best way to avoid the stress of property taxes is to set aside some money every month to pay your property taxes at the end of the year. The best way to do this is to take your last property tax payment and divide by twelve and then round that number up to the next whole number. This will insure that you have the money next year at tax time, but by rounding the figure up to the next whole number you are allowing yourself some wiggle room in case state or county taxes increase.

The final amount should be a combination of home maintenance, repairs, and dues to your homeowner’s association if you have one. You should be setting aside money every month toward home maintenance and repairs because it will give you piece of mind having that little bit available in case you have to purchase a new toilet, or washing machine. Homeowner’s Association dues are paid either monthly or yearly. If you pay them yearly, just divide the number by twelve and budget how much you should be saving every month to have the money to pay your dues at the end of the year.
These are all important parts of your home expenses portion of your budget. This section of your budget is often where you spend the biggest chunk of your budget, and by getting these numbers out in open you are recognizing the need to make this part of your budget a priority.