Three Budgeting Tips for First Time Home Buyers

So, you bought your first home. Congratulations!

Throughout the proces, you likely gave a lot of thought about budgeting for your down payment, closing costs and mortgage payments. Crunching numbers and defining a home purchase budget is an important part of the process.

Now that you've finalized your purchase, and perhaps already moved in, those expenses are over. But it's still a smart idea to continue to create and adhere to a strategic budget.

Here are three categories every new homeowner should include in their budgets:

1. Ongoing expenses

Once you purchase your home, you will have several recurring expenses, such as:

  • Homeowners insurance.

  • Utilities.

  • Property taxes.

  • Homeowners association fees.

  • Mortgage payments.

The cost of each of these will depend on many factors, including the area in which you live, the size of your home, and more. You should be able to get a good idea about how much each of these will cost during the home purchase process.

Certain things, like homeowners insurance and property taxes, may only be paid annually or bi-annually. Prepare for these bills by regularly setting aside money to plan ahead.

2. Unexpected expenses

Most homeowners will encounter a surprise expense sooner or later that will need to be addressed. The best way to prepare for these situations is to continuously set aside money for them.

Allocating 1-2% of your income to a general savings account to cover these sudden expenses is a smart way to get ready for these events.