Buying your first home is an incredible accomplishment, but it undoubtedly takes a toll on your finances and comes with many new financial responsibilities. From monthly mortgage payments to unexpected maintenance costs, managing your money wisely as a homeowner is essential. You can, however, save money, rebuild your bank account, increase your home’s market value, and avoid unnecessary debt by adopting strategic financial hacks.
They include the following:
1. Create a Household Budget
This is known to be one of the best money hacks you’ll ever come across. You need to create a weekly, monthly, and yearly household budget. The average person might think that budgeting requires some level of expertise, but the truth is that anyone can do it.
Using budgeting apps or a spreadsheet, you can write them on a notepad. All you have to do is draft it based on your household income and your household expenses. However, you must first identify these two criteria.
Household Income
Your household income is earnings from wages, government benefits, or investments. It’s important to consider how often you receive your income while creating a budget. The timeline will influence how quickly you will spend it.
Household Expenses
Your expenses are the things you spend your income on. Sorting them according to the week, month, and year is usually the best option to help you maintain a consistent financial plan. Plus, dividing your budget into multiple categories will give you a comprehensive short- and long-term overview of your saving habits and can help you build wealth.
2. Set Financial Plan/Goals
Setting your financial goal is one of the most essential financial hacks for manifesting your dreams. You can create a vision board stating what you want to achieve in the following week, month(s), or year(s).
This financial hack will help you stay motivated to achieve your financial goals. It will also help you manage your finances efficiently and save money without stress.
ALSO READ: How Do Short- and Long-Term Financial Goals Differ?
3. Stop Trying To Keep Up With the Joneses
If you want to play your part in building your wealth and take more financial control, then it is time to stop comparing yourself with others. These people could be your neighbors, siblings, friends, or social circle you own. Comparing yourselves with them by who owns the latest trendy luxury items, nicest house, biggest TV, newest car, or who vacations the most can set you back.
Trying to look cool, keep up, and stay on top could also drain your finances, especially if you don’t really need these things. Although this is more of a mindset financial hack, you need to be more accountable for your actions without letting others determine how much or how little you spend. So get yourself together, stop the comparison, and stay on top of your finances.
4. Automate Your Savings
Mortgage brokers typically recommend that new homeowners save 10-20% of their income into a war chest or separate account if they need to cover their monthly mortgage fees. You can apply this hack and try the 50-30-20 rule for guidance on utilizing the rest of your income. In the 50-30-20 rule, 50% of your income can cover your needs, 30% for your wants, and 20% for your savings.
If you tend to forget, you can automate your savings using apps. You just have to set the amount you want to be deducted from your main account and transferred to a separate account, and it will be processed. With this financial hack, you can stay disciplined while generating enough money to manage your new home without breaking the bank.
5. Don’t Rely on One Stream of Income
As a new homeowner who needs to cover a monthly mortgage or who is cash-strapped, having spent all your savings buying a home. The monthly mortgage and the cost of maintaining a new home can cause a lot of financial pressure if you continue to rely on one income stream.
So, if you want to generate more income to cover these costs and support your long-term financial goals, having multiple streams working for you is very important. Some ways to create additional income include working extra hours, taking on a second job, having investment returns work for you, or starting a side business.
ALSO READ: Millennial Homebuyers: Challenges, Key Stats, and Expert Tips for Homeownership
Essential Money-Saving Hacks for First-Time Homeowners
For many first-time homeowners, owning a home often comes with many unexpected expenses. From property taxes to repairs, the bills can add up quickly. That’s why finding money-saving hacks is essential. Here are some of the best ways to keep more of your hard-earned money:
Regularly Carry Our Preventative Maintenance
Regular home maintenance is one of the most innovative financial hacks that work for new homeowners. Investing your time and money in simple tasks like cleaning gutters, servicing your HVAC system, and sealing windows can prevent costly repairs down the line. This will save you a lot of money in the long run.
Get Your Home Insured
Take time to compare different home insurance policies and coverage options. Look beyond the monthly premium and consider deductibles, coverage limits, and add-ons. Finding the best deal on home insurance can save you a significant amount of money over time.
Upgrade to Energy-Efficient Appliances
Installing energy-efficient appliances, such as a programmable thermostat, gadgets, or low-flow plumbing fixtures, can reduce your monthly utility bills. You may also qualify for tax credits or rebates for energy-efficient home improvements, making this one of the best money hacks for homeowners.
Smart Financial Tips Every New Homeowner Should Know
Buying a home is just the beginning of your financial journey. When you get the keys to your new home, several financial tips can help you manage your finances and maximize your investment.
Here are some smart financial tips you should consider:
Build an Emergency Fund for Home-Related Expenses
Fixing a leaking roof or a broken water heater can cost thousands of dollars. This fund ensures you won’t depend on loans or credit cards when something goes wrong.
Consider Refinancing When Interest Rates Drop
Refinancing your mortgage when interest rates fall significantly could lower your monthly payments or reduce the total interest you pay over time. This is a financial hack worth considering, as even a tiny drop in interest rates can save you thousands of dollars over the life of your loan.
Pay Down Principal Early
If you have some room in your budget, you should consider making additional payments on your mortgage principal. By doing this, you may even be able to pay off your mortgage years earlier and lower the overall amount of interest you owe.
Buying a home is a significant achievement, but it also requires a lot of financial commitment. With these financial hacks, you can ensure that you’re managing your money wisely, saving where possible, and making smart investments in your property. Remember that as a homeowner, staying within your budget and planning for unexpected expenses is vital to long-term financial success.