![]() ![]() Hopefully with these budgeting tips, you can feel confident in your #adulting skills as a homeowner. Each month, compare your spending to your budget, and continue to tweak your spending behavior as needed to ensure you are putting enough money aside for savings. If absolutely necessary, you can cut into your savings, but try to do that as a last resort. You can also look for ways to lower the costs of your necessities, like eliminating your cable or removing some subscription or streaming services. Make sure you build in ways to have some fun, too, even if it means doing so on a budget. What if your necessities are above 50%? If that’s the case for you, you may need to cut down on your “wants,” but try not to cut out your wants entirely. to find an average in each category.Ĭonsider whether you need to adjust your spending in these areas in order to ensure you get your “wants” category down to 30% to leave more to go toward savings. For example, look through your transactions for all of your clothes shopping, dining out, entertainment, etc. Go through the same practice of finding your average expenses for your non-essential expenses as well. Note that if that time period had any unusual activity (for example, if you did a cross-country road trip or bought food for a big party), you may want to leave those expenses out of your usual expenses here. ![]() You can use that dollar amount as your average. Finally, find the average by dividing the total dollar amount by the number of months. Then, add the total over a period of a few months – in the example below, we’re adding up three months. Add up each transaction for each category to get a total. For expenses that can vary from month to month, like gas or groceries, you’ll want to find an average.įor example, review your transactions from the past three months. Here is a tool that will help you set your budget using the 50-30-20 method.įirst, track all your regular monthly expenses, including your mortgage payment.įor fixed expenses, it’s pretty simple – track the monthly payment. The final 20% of your budget should go toward savings. Wants can include things like clothing, dining out, and entertainment. ![]() Next, 30% of your budget should go toward your wants. What is the 50-30-20 Budgeting Philosophy?Īccording to the 50-30-20 philosophy of budgeting, 50% of your budget should go toward essentials – things like your mortgage, cell phone bill, groceries, gas, and other bills. We’ve got a way to get you there with the 50-30-20 budgeting philosophy. Shoot for a few thousand if you can to stay prepared for unexpected expenses.Īnd if you’re not there today, fret not. So how much should you put into savings? Having six months of in savings is ideal, but that can be a challenging number to achieve. You’ll also have to assume that over time, costs in general will go up – inflation will increase what you spend on groceries, clothes, and other items, and while the payments you make toward principal and interest on your mortgage will remain the same, your property tax rates are likely to increase from one year to the next. If your furnace dies or your roof needs replacing after a bad hailstorm, having money set aside will make these expenses more manageable. Keep in mind, that while there are regular expenses, you’ll also want to have money in savings for unplanned expenses. Earlier we talked about how to prepare for regular maintenance costs, but what about when the unexpected happens. Not sure which to choose? Try budgeting for the higher number so you’re prepared – and if it costs less? Put it in savings!Īs a homeowner, you want to be prepared for several things. If your home has 1,500 square feet of livable space, you can expect to spend about $1,500 annually. With the square foot rule, you can expect to spend about a dollar for each square foot of livable space in your home. For example, if your home is worth $100,000, you should budget for around $1,000 per year in home expenses. In the 1% rule, you take the worth of your home and assume that your annual costs for home maintenance will be about 1% of that. These costs can be hard to predict, but there are two methods you can use to get an idea of what to budget for: the 1% rule and the square foot rule. You can expect some regular home maintenance costs – the costs that come up throughout the year like landscaping, home décor, appliance maintenance, plumbing, electrical, and more. Now that you have your new home, you may be wondering – what kind of expenses should you plan for? ![]()
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