Though there is no simple solution for creating financial security, there are a few bad spending habits that homeowners can and ought to avoid to achieve greater financial freedom.
Owning a home can be a great way to increase a person’s wealth, but it can also be an easy way to fall into some serious financial trouble if the homeowners are not realistic about their financial position. It takes careful planning, budgeting, and saving to reap the financial rewards of homeownership.
Below is the three homeowning habits that can lead to unnecessary financial pressure on any household and how to avoid them.
Purchasing beyond your means
Buyers should always purchase within their means and should leave themselves a bit of breathing room in case of interest rate hikes and other unexpected events. This needs to be an informed calculation rather than a shot in the dark. Buyers should do research to find out what they can afford. MyProperty has a great online affordability calculator that can provide this information free of charge. Beyond this, future homeowners should speak to an estate agent to find out what they can expect to pay on rates and taxes on a property that falls within their budget. This amount then needs to be factored into their monthly budget to make sure they can truly afford the repayments and everything else that goes along with it.
Failure to create and stick to a household budget
It is also recommended that homeowners organise their finances in the form of a real-time budget rather than working off an estimated one, or worse: none at all. Start by recording your current expenses for the month, that way you can see how much you are actually spending. Thereafter, you can work out realistic goals of how much you want to spend on each item, from groceries to entertainment and everything in between. This also makes it easier to identify where you can cut back so that you can start saving. The hardest part is to stick to this budget once you’ve created it.
Neglecting to provide emergency savings
Lastly, homeowners should also make room in their budget for unexpected emergency expenses. One of the things that stress homeowners out the most is not having funds available for when things break or need repairing. If you are unable to make room in your budget for these sorts of expenses, make sure you’ve got some form of credit or overdraft facility set up to use in case of emergencies.
As challenging as it may be to follow the above advice, the rewards will make it worthwhile. Living within one’s means might be a challenge, but it is better than the alternative of possibly having your home repossessed by the bank for failure to keep up with debt repayments. By purchasing within your means, living within a budget, and saving for emergencies, you can enjoy greater financial freedom and reap the long-term rewards of owning an appreciating asset such as a home