There are an abundance of resources out there to help prospective homeowners budget for their first foray into the real estate market. It’s funny then, that there is significantly less available on how you handle your finances right after you’ve just bought your dream home.
The first few months of home ownership can present a sobering reality for even the savviest of spenders. In truth, there are a good amount of ongoing costs associated with maintaining your own home that you may not have been aware of before purchasing your property.
But rest assured, even if you have found yourself in a situation where you’re needing to adjust your budget or lifestyle to accommodate the expenses of home ownership, knowing exactly what expenses you’ll have to pay and when can help you not only stay afloat, but even live comfortably as a young homeowner.
Here are just a few key expenses that you’ll need to budget for upon becoming a homeowner for the first time.
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Accounting for home insurance
Although your monthly mortgage repayments may take up the bulk of your attention, securing a home insurance quote or two before making your final decisions may help you save some serious funds every calendar year. This is because your insurance needs may change upon the end of your contract.
If you don’t assess and reassess your policy, you may find yourself paying a higher premium and maintaining cover for a larger amount than you may require.
Homeowners are also urged to consider whether they’d like to pay their home insurance premium monthly or as one bulk annual payment. There are arguments for or against either arrangement, but generally speaking, it can be easier for homeowners to budget from month to month if they’re not expected to juggle both their mortgage and insurance payments.
Be sure to also consider if you’re eligible to claim a portion of your insurance premiums back on tax as a home-based business expense. We highly recommend consulting with your financial advisor or a tax professional first, however, just to make absolutely certain that you’re not over-claiming on your deductions.
Quarterly utilities and other bills
If you were renting before becoming a homeowner, then chances are you’re already very familiar with budgeting for your household bills. Utility bills like your energy, water, and gas are calculated and mailed out on a quarterly basis.
You can maintain cost estimates for these bills by tracking your household usage against previous bills or even by using your service provider’s provided cost/usage metrics.
Your internet or home broadband bill should also be factored in here, as well as any other monthly utility or service bills and monthly entertainment subscriptions.
This includes your streaming accounts with Netflix and other streaming services, your cable TV bill, and any other entertainment expenses. Be sure to also review these entertainment expenses periodically to promptly eliminate any payments for services that you may not be utilising.
Body corporation fees and council rates
Strata title owners must bear the additional expense of body corporate fees that are paid annually or quarterly, alongside paying their council rates (but more on this later).
The fees collected by your body corporation go towards an array of different maintenance tasks for common property, shared utility bills, administrative costs, and other expenses associated with managing a strata scheme.
Your strata managers may also charge one-off special levies or sinking fund levies to cover unforeseen expenses like emergency repairs. If you’re uncertain about exactly where your body corp fees are going, you should be able to find a breakdown of strata costs in the minutes for your strata scheme’s annual general meeting.
As for homeowners who maintain standalone properties that aren’t part of a strata scheme, you will still need to pay council rates to your local council offices.
These rates cover a mixture of public services offered by your local government, including curbside garbage bin collection, sewage and other waste disposal services, the maintenance of roadways and civic infrastructure, as well as the development and delivery of community groups and other social services.
You may be able to pay your council rates on a quarterly or annual basis, depending on the payment due dates and structures maintained by the governing body of your municipality.
If you have any questions, it’s best to direct them towards local council authorities ahead of time, either by making a phone enquiry or even by visiting their website to access more information on paying your council rates promptly.
Home and garden maintenance costs
Whilst renters don’t need to be concerned about the costs associated with home maintenance, homeowners are expected to keep a proactive approach when it comes to keeping their home in good repair.
As a result, homeowners are advised to schedule routine maintenance appointments for all the fixtures and appliances in their home, ranging from their smoke alarm system, to their heating and cooling appliances, dishwasher, plumbing system, and any other element of their home that may require ongoing maintenance to perform at its best.
Garden care is also an evergreen concern for homeowners who are tasked with managing front and back garden spaces as well as fences around the perimeter of their property.
Homeowners should maintain a list of routine garden maintenance requirements (i.e. clearing your gutters, mowing lawns, raking leaves, etc.) to ensure that these tasks are seen to promptly either by yourself or by a professional gardening service.
Be warned that you may accrue warnings or even fines from your local council authorities if your grass is overgrown. Trees with low overhanging branches that are positioned on your property should also be trimmed back to reduce the risks of injury to pedestrians.
Finally, as is the case when developing any personal budget, it’s well worth taking the time to determine what you’re looking to budget for. Are you hoping to put together another deposit alongside building equity in order to purchase a second property? Or are you hoping to fund some renovations or improvements for your existing property?
If you’re able to develop these financial goals and keep them in mind as you budget, you’ll find that curbing your spending and staying afloat financially will begin to feel less like a chore and just as fulfilling as it may have been back when you were still just a long-time renter and prospective homebuyer.
