Creating a financial plan for your home can help you feel more secure in budgeting for the future. A financial plan will spell out how much you need to pay and when, so you know exactly how much money is going toward your home. Without a plan, you could find yourself overwhelmed by unforeseen expenses like emergency repairs that you didn’t budget for, or unable to make updates to your home because of a lack of savings.
Luckily, you can create your own financial planning checklist to get a better look at your expenses and savings in the years ahead.
Where to start
First, write down recurring expenses like your mortgage payment, taxes, and homeowner’s insurance. Note when each of these payments is due, and how much it is.
- Follow that list up with more occasional expenses like seasonal lawn care and maintenance or replacement dates for major appliances, plumbing fixtures, and the roof. Note that these dates don’t need to be exact, but searching for the average lifespan of a water heater, for example, will help you identify future expenses you’ll need to save for.
- Lastly, write down any voluntary expenses like adding a pool or finishing the basement. By listing the things you want to add to your home and estimating their cost, you’ll be able to see what is financially possible and when.
Ways to save
With an idea of how much you need to spend in the short and long-term of your home, you’ll be able to turn your attention to places you might save money in order to be prepared for the future.
If you’re planning on staying in your current home forever, pay more than the minimum monthly mortgage payment. Paying more upfront means saving thousands in interest later down the line. Plus, it just feels better to pay down your home sooner.
Another oftentimes overlooked area to save is by checking with your insurance agent to make sure you are covered enough, but not too much. Over-insuring your home means you’re paying more than you need to on a policy that you’ll never see the full benefit from. Likewise, under-insuring your home will leave you paying out-of-pocket should you need to make a claim. Everyone has to pay property taxes. However, you may be able to reduce your tax burden by getting a reassessment. Do your homework first: Are comparable homes taxed less than yours? If so, you can contact the local assessor, challenge the assessed value of your home and possibly reduce your taxes..
With a little planning, you’ll have peace-of-mind knowing that you’re in good financial shape, and the fear of surprise expenses will be greatly reduced. If you’re looking for a new home, contact the Three Rivers Association of Realtors at 815-744-4520 to start your search today.