Congratulations on your first home! By now you’ve gone through a whole range of emotions and jumped through more hoops than an acrobat at the circus to get here. You’ve made sacrifices all along the way and your budgeting skills have gone from strength to strength. So what’s next?
Besides that obligatory unpacking of the boxes and changing everything into you own name/s. You guessed it! You’ll now need to update your budget Yeee-Haaaw 😉 and just as in Personal Budgeting Part 1 it really is not that daunting! You have already completed all that hard work and now you just need to adjust to your new responsibilities.
At this stage if you haven’t already I really urge you to read Preparing for your 1st Home article I wrote and that you probably ignored in Personal Budgeting Part 2 Putting you budget into use: Saving for a house deposit. This has some really handy tips about your first shop and preparing for hidden expenses.
Now that you are a responsible home owner (as you puff out your chest – yeah I am!!) you will need to budget for all those nasty bill’s that are associated with homeownership. Some smartarse once said “Failing to plan is planning to fail”. But never a truer word was spoken, especially when it comes to your cash flow!
So what added expenses can you expect? And you will need to adjust for?
The following is a list of expenses that are normally associated with home ownership. You will need to find out the yearly cost and the frequencies paid associated with each:
- Mortgage whether Interest Only or Principal (for further information read What is the difference between Principle vs Interest Only Home Loans?)
- Council Rates
- Emergency Services Levy (ESL) – if applicable in your state
- If you are on septic (no mains sewer) the pumping change – if not included with Council Rates
- Gas (whether on mains or bottled)
- Internet/Phone (land line)
- Land Tax (if applicable – read Land Tax in Australia to see if you need to pay)
- Body Corporate Fees (if Strata or Community Title)
- Sinking Fund Fees (if Strata or Community Title)
- Insurances – such as Building (or commonly referred to as Home) and Contents Insurance. For a break down I highly recommend reading: Insurance – Just a Dirty Word? 4 Key Real Estate Insurance Policies.
Once you have found out the yearly amount that is forecasted and their frequency, you can add these expenses into your spreadsheet. This will now give you a picture or snapshot of your future spending. I might add it’s worth talking to your friends and family and even the Real Estate Agent for an idea on utilities such as Water, Electricity and Gas. As these are a pay for use type bill, you will need to guestimate until you get your first few bill’s and can average your own usage out.
This is also a great time to really think about any luxuries that may not be necessary. After all now that you’ve moved out of home, you don’t need to eat out every night to escape the parentals…
Again though, I must reiterate be realistic with your budget! Don’t put $100 per week for groceries if there are two of you… Your budget is only as good as you make it!
A handy hint and tactic that I personally use is to pay your utilities ahead and as you are paid. For example I know that we personally use approximately $800 for the summer quarter in electricity (running the air conditioning etc.). So if we break it down; $800 divided by 12 (3 months x4 weeks) it equals a weekly average of $66.67. From here each fortnight when we receive our pay I will automatically BPay $133.34 to our Electricity provider. By doing this it helps relieve the pressure of having to find a ghastly amount each quarter.
Don’t get me wrong there are quarters that we go over but also times we are under. But by planning your bills ahead you can be prepared. I must add this is a personal preference and that some argue that if you know what your bills are roughly going to be, add this money to an offset account and simply pay the bill as it arises. The thought process here is that why pay bills in advance when you can help reduce you home loan (Even if just marginally)? It really does come down to the old sleep test – whatever makes you comfortable at night is the best solution for you!
Final parting thoughts: You have done sooo well getting this far and you can truly be proud of what you have achieved! As the common theme throughout these 3 part Budgeting Articles; your budget will be constantly evolving as your lives evolve. So revisit regularly, adjust often and prepare for the future!!
Don’t forget to visit our “Tips & Blog” page for further information on all things Real Estate! And why not download the FREE “The Property Buyers Guide App” while you’re at it 😉