How to budget for home expenses: The basics

by Bob Hummer 04/11/2023

As a new homeowner, one of the first important tasks to accomplish is making a budget for home expenses. The homebuying process had a budget, but now it’s time to think about taking care of your home and enjoying it to the fullest.

To help you get started on making a household budget, here is a basic guide:

Identify your goals

Deciding on financial goals can be an excellent way to build your budget. Some examples of financial goals to consider might be paying off your mortgage early or financing a major renovation project.

List your expenses

Track your spending habits for a month to examine the details of your cash outflow. Include fixed expenses, like monthly mortgage payments and property taxes. Variable expenses like entertainment, maintenance and transportation costs should also be included.

Record your earnings

Figure out your exact income amount by listing all possible sources of money. This could include regular employment and also gains from selling or renting assets. For budgeting, use your net monthly income rather than gross monthly income to account for taxes.

Find your starting point

Once you have your total monthly expenses and net income numbers, you can do the math. A basic formula for finding a starting budget is: net income - total monthly expenses = monthly budget.

Expect adjustments

After finding your results, you may find opportunities to adjust. For example, you might want to set aside more money into an emergency fund regularly, or find ways to limit your daily spending.

These are only the first steps in creating a workable household budget to account for ongoing costs of homeownership. Use this process as an example for building your own personalized financial plan for your life in your new home.

About the Author
Author

Bob Hummer

Bob Hummer brings a wealth of experience with him; a practitioner in real estate in Northern Virginia since 1978, a Life Member of both the Million Dollar Sales Club and the Top Producers Club with over 2,500 Satisfied Families and President, Prince William Association of REALTORS in 1991. His experiences range from helping buyers and sellers attain their goals; to renovating historic homes on Capitol Hill; to counseling and assisting homeowners facing the loss of their home due to foreclosure. Since 1996, he has presented his free monthly Home Buyer and Home Seller seminars at the Woodbridge campus of Strayer University. In June 2023 he completed the Certified Probate Real Estate Specialist course and was awarded the designation CPRES. His goal is to assist individuals who inherited real estate and wish to sell. A former "Military Brat" and a retired Air Force Hospital Administrator, Bob has made more than 26 moves during his life and is extremely familiar with all aspects of a family relocating - whether it is across the street or across the nation.