Money BasicsManaging Money

New homeowners: How to budget your expenses

The stress and excitement of applying for a home loan have come and gone. Now that you've moved into your new home, another journey in budgeting awaits you.

Here's some good news: there's no need to be afraid of extra expenses if you're prepared. To help you with homeowner budgeting, we've listed the following best practices to ensure your payments are never late and you have a little left over for fun.

Determine your new disposable income

When it comes to homeowner budgeting, your home loan payment is just the tip of the iceberg. There are other things to budget including utilities, maintenance and repair costs, and possible remodeling expenses.

The hidden costs of owning a home affect how much money you have after your bills are paid each month. That could mean having less disposable income each month.

To better adjust your spending plan, you need to differentiate between your needs and wants. Sometimes, it’s as simple as living within your means. Your disposable income can even be gradually reduced so you can put your money toward better use.

Know where to cut costs

One of the best budgeting practices is cost-cutting. It's important to sit down and look at where your money goes each month.

Grab those credit card statements, paystubs, and bank statements, and get ready to take some notes. Don't be surprised if you find non-essential spending in the mix. Non-essentials can be a much-needed joy, so you should account for them in your budget. The key is to know how much you can allot per month for discretionary spending, so it doesn't ruin your homeowner budgeting.

For instance, look at your bank statements from the past couple of months and highlight the unnecessary purchases. Did you impulsively check out from e-commerce sites for novelty items? Did you order food delivery when you could have made home-cooked meals?

Take a closer look at those types of expenses and see if you can reduce or even cut them out. Keep in mind that these cuts don't have to be permanent. At some point, you may get a raise at work, or some of your expenses will drop off. A little sacrifice goes a long way until your finances become more stable.

Set up a rainy day fund

When you're still figuring out how to budget a home loan, it's important to set up a rainy day fund, also known as an emergency fund.

When your home is in need of unexpected repairs , they will hit your wallet hard. If you have savings, you can easily tackle these emergency costs without causing a dent in your monthly budget.

Emergency expenses aren't limited to leaky roofs and broken pipes. Falling ill, losing a job, or fixing a broken car are unexpected costs, too.

A good rule of thumb is to have at least three months' worth of your salary in your emergency fund. You can save for it by setting aside 20% of your monthly income or you can start smaller and build it up over time.

Once you have enough to cover for emergencies, you can set aside money for other priorities and investments.

Plan for the future

Beyond your monthly essentials, make sure your homeowner budgeting plan includes money for your future.

For instance, if you have children, it's smart to think about college sooner rather than later. You can invest in an education plan to secure a better future for them.

If you're keen on getting the most out of your money, you can also invest in a Unit Investment Trust Fund (UITF) for as low as PHP 1,000. A Metrobank UITF can help you grow your wealth so you can have a meaningful future in your new home.

Stick to your budget

These budgeting practices work only if you live by them. As long as you stick to your budget, you can enjoy life and your new home, even with the additional homeownership expenses.

Remember, you are qualified for the home loan based on your existing debts and income. This means you are capable of creating a realistic budget that allows you to save for long-term needs while keeping your household afloat. However, you may not be able to indulge as often as before.

At the end of the day, it's all about setting priorities. Your discretionary spending should be weighed against all the costs that add up after your monthly expenses. Once you've set your priorities, you will be in a much better position to succeed with proper homeowner budgeting.

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