Your journey to own your first home is far from over after moving in. The financial responsibility increases with numerous additional costs added to your budget. Homeowners often find it intimidating to change their lifestyle to manage the cost of living in their house.
The list of house-related expenses will include mortgage repayment, house maintenance, and a new interior. You may end up becoming house-poor if you ignore the impact of these expenses on your financial health. In addition, the various costs should be included in your overall budget for hours to ensure a stress-free move-in.
The Concept of Home-Poor for New Owners
You become house-poor when you spend on the new house way outside your budget. People ignore their affordability when they decide to invest in their own house after years of savings. This leads them to invest heavily in the property, its interior, and upgrades to the existing structure.
It will get extremely tough to manage the finances because of extravagant spending on your home. You need to find an affordable amount for housekeeping, in mind the expenses accompanying the purchase. However, you can go for borrowing options to survive the situation. If you have a lower credit profile and your bank is denying you a loan, you can explore the alternative of direct lenders. They may provide you with loans for bad credit in the UK, depending upon how you qualify.
How to Manage the Finances for the First Year as a Home Owner
You try to create a more effective budget for your house once the concept of house poor is clear. However, the right strategy doesn’t seem easy to find with the many expenses and a limited budget. You can utilise the given below tips to plan your finances as a homeowner for the first year.
- Prepare for More Bills
You may think of utility bills the same as your previous accommodation in the rented space. However, it will increase when you move to your own house for many reasons. The foremost reason is the bigger space that requires more electricity and water consumption.
In many situations, people move from a shared accommodation to own their house. Now, you are the only one responsible for paying the bills without support from your roommate. Therefore, prepare your budget for an increase in utility bills if you are moving to a bigger space.
- Budget for Mortgage Payment
A mortgage is a long-term financial commitment with instalments to pay every month. You are adding another expense to your budget for the next few years. Thus, it will require a significant change in your budget and spending habits.
Do not let the mortgage repayment affect the timeline of other financial goals, such as retirement funds. Try to curb the expenses to manage the instalments within the limited income. Also, create an emergency fund to manage the instalments during a tough financial phase.
- Find the Right Décor
The interior décor and furniture are the expense where you will find great potential for savings. You need to find the right décor for your house within the budget to increase its appeal. However, it doesn’t require the services of an overenthusiastic interior designer.
Explore the internet or visit the houses of your loved ones to find the inspiration for your décor. Also, try to find cheaper alternatives to expensive new furniture from garage sales or online marketplaces. In the end, a few minor details in your interior can wait until the next paycheque to avoid unnecessary credit card bills.
- DIY Lawn Care
Your lawn will require proper care to prevent the wild grasses from ruining the appeal of your house. The regular mowing and gardening practice will take a few hours from your busy schedule. You can store adequate funding in the long run by avoiding the services of professional gardeners.
Furthermore, gardening is a great activity to release stress from your busy professional life. You can use the time to plant fruits and vegetables for fresh, homegrown produce. Also, the garden area can host many family games and grills to enjoy some quality time together with your loved ones.
- Renovate in Instalments
Homeowners need to understand that the renovation can take place after a few months of moving in. You don’t have to put unnecessary stress on your budget to make the preferred changes to the property right after the purchase. Make yourself comfortable with the sudden increase in essential expenses first.
You should make a list of renovations and start saving money for them to upgrade the house. It will help raise the property value to get better returns in the future.
- Set Aside Money for Repairs and Maintenance
You must create an emergency fund to manage the unforeseen repairs in your new house. Many people ignore the damages during the inspection process as the previous owners are very good at hiding them. The damage can spread and cost more if you ignore it to save money.
Furthermore, the house will require maintenance to avoid spending money on major repairs. You can go for urgent doorstep loans to cover these unexpected repairs, which are easy to repay as well.
- No Sudden Lifestyle Change
Many people change their lifestyle with more amenities to increase their overall comfort once they move into a new house. It is the result of living in a different neighbourhood and the change in social circle. However, sudden changes in your lifestyle can have a terrible impact on your finances.
Furthermore, you should wait for at least a few months to start a family or new business or make another major financial decision. It will help reduce uncertainties and complications for the new house owners.
Conclusion
To sum up, the first year as a new homeowner can get intimidating with the long list of expenses. You will face unforeseen situations that create financial troubles. Therefore, it is important to secure your finances with an emergency fund and a detailed budget to hold the ground after buying a house for the first time.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.