I’m coming to the end of my new house budgeting kick. But I couldn’t leave the topic without commenting on a few other budget considerations when buying a new place.
I’ve explored taking into account the costs of purchasing a home and moving in. Now it’s time to consider the expenses of living in your new space.
I think this portion of your budget plays a key role in keeping you in love with your place. Making sure you can afford your home and still maintain a lifestyle you enjoy will prevent your dream home from becoming your financial nightmare.
I had to make several adjustments to our previous budget when I was creating our new spending plan. Of course, it included stuff you already figured: a higher mortgage payment (including real estate taxes and insurance) and association dues. But I also had to take into account some things that didn’t immediately come to mind.
- Higher Utilities: Our new place is over 50% bigger than our previous one. And while it’s great to spread out the living space, our utility bills will go up. You can make adjustments for higher utilities by paying close attention to home listings. Many of them now show the average utility bills, although the average may not be what you spend. I’ve already seen a partial electric bill for our place, and I’m pretty scared to see what the full bill will look like.
- Maintenance costs: People have tried to warn me about how much it costs to own a home. Our home maintenance and repair bill has already increased substantially. While it’s hard to anticipate future repair costs (I’m just waiting for our 14 year-old water heater to break down), some experts suggest setting aside 1% of your home’s value for yearly repairs. That usually equates to multiple thousands of dollars a year, something you will definitely have to save for.
- Amenities: We used to live in a high rise that had its own gym. So it made it very easy to workout for “free” whenever I wanted. (I say “free” because obviously the cost of the gym was built into the rent.) Now both Ben and I have to find a gym, which will be yet another added cost. The same applies if your previous place had a pool or game room. You’ll have to account for the additional costs of entertaining yourself.
- Transportation costs: And don’t forget additional transportation costs, especially if you are moving to a different area that may be further away from work. Whether it’s the cost of gas or public transportation, you’ll have to figure out how much more or less your commute will run you.
- Household Services: Lastly you should account for the increased costs of household services. If you have someone cleaning your house or doing your gardening or yard work, more space = more costs. And even if you’re doing it yourself, buying a lawnmower, weed whacker, or toolbox will be additional expenses you’ll incur.
All of this talk of increased costs makes it sound like I’m a little down on buying a place. That’s the furthest thing from the truth (at least right now :). I really enjoy being a homeowner so far, and we’ve chosen a great space that we’ve made our own.
I just think an important part of staying in love with the place beyond the honeymoon period involves knowing what you’re getting into from the beginning and doing the best you can to make sure your new house doesn’t burden you.