How to Budget for a House

Posted by Amelie McNab Leave Comment »

Difficulty: Easy

Instructions

  1. 1

    Get budgeting software. Before you start creating a budget, consider your long-term budgeting plans. You don’t want to have to re-enter the data. Get a software program that will work for you in terms of usability and features. Popular software programs include Quicken and Microsoft Money. Many programs are also available as iPhone and Android apps.

  2. 2

    Identify all current expenditures. You can’t create a future budget without knowing what you really spend now. Use all your checking account and credit card statements. Identify expenditures of any cash withdrawals from the bank.

  3. 3

    Separate necessary and optional expenses. Necessary expenses include obvious things, such as mortgage payments, utility bills, health insurance and educational expenses. Be realistic about what you consider an optional expense. This includes cable TV, a premium mobile phone plan, coffee drink purchases and dining out. You probably don’t want to live like a monk, but knowing your disposable income will help determine your savings plan.

  4. 4

    Set a savings plan. CNN Money advises to spend no more than 90 percent of your income. Consider retirement savings plans offered by your employer, such as an IRA or a 401(k) account. If your employer doesn’t offer one, talk to your bank about setting up an automatic savings transfer from your checking account to your savings account. If you have children or plan on having children, budget for expected future outlays for their education.

  5. 5

    Make more before you spend more. Avoid paying excess interest on credit cards, car loans and mortgages. Don’t take out an adjustable rate mortgage with the expectation that you will be making more money in the future. Always have enough cash on hand in case of unexpected unemployment, health issues or other major catastrophes.

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