So, you have bought your first time, have packed the boxes and your furnishings are well in place. Now it’s time to think financially how you can move forward from your current position.
After buying a house, you may well be wondering how to move forward after spending so much time saving for your deposit and planning your finances towards the mortgage. Now is the time to consolidate your finances and move forward in a productive way. If you have disposable income that used to go into saving for a deposit, then have some fun with it by all means, but also make sure you are investing and planning for the future.
Think about your budget
The saying goes, “new home, new budget”.
You are now in the mortgage rather than rent category, and your expenses may well change, with higher house insurance, having to deal with your own maintenance, and perhaps some higher utility bills. Draw up a clear and concise budget, so you know exactly how much money is coming in and going out each month.
Don’t forget your council tax
If you’ve moved home, then you need to work out how much your council tax will be each month. These taxes are hefty, and you will have been paying it when renting, but if you have moved to a bigger home then it may well be a higher financial outlay each month.
Work out your disposable income
After doing all of your budgeting and looking at council tax, you can work at your disposable income each month. Make sure you factor in things like how much you spend on clothing, birthdays, work on the house, and transport.
A smart way to increase your income is to rent out some part of your property to tenants, especially if your new house is too big for your current needs. You can easily demarcate and receive rental income on it, but be sure to draw up a proper tenancy agreement in order to avoid future problems with your tenants.
Prepare for future big payments
If there is a big milestone birthday coming up, or money for the unexpected, such as the loss of a job, an illness, unexpected hefty bills or repairs on your new home, a trip that you know is going to happen in the next year or two, then start putting money aside for it. The last thing you want to do is start building up credit card debt or taking out loans for these payments when you could take a portion of your disposable income and plan carefully towards those events.
Set new financial goals
You may have been consumed by saving for your mortgage over recent years. Now you need to set new financial goals. You may like to have a certain amount of money going into your pension and plan your retirement. You may want to set aside a certain amount of money going into stocks and shares each month in a trading account. You may also set a goal to put a certain amount of money into children’s accounts each month so that you are saving for their future.
Although interest rates are fairly low at the moment, the compounding interest effect of saving now for many years in the future can be very powerful and can mean money really does work hard over the years on your behalf.
Make sure your emergency funds are back in place
Most people, when they take out a mortgage end up dipping into their emergency funds to make the deposit. Start building this war chest back up again
Get advice and take life insurance
Now you are a homeowner; it is more important than ever that you have life insurance so that you are covered should you get ill or die. It’s not a very nice topic, but it’s important that your family and your partner are covered if something bad happens.
Life insurance normally doesn’t cost that much, but get some advice from a financial adviser and get your insurance in place. It is one of those purchases that might feel like you’re throwing money away, but if something does happen to you, you’ll be glad you made the payments.
On a final note, as a new homeowner, you have new responsibilities, new goals and a whole new chapter in life. You need to take stock and make some new plans and refocus your mind on the future. Don’t get carried away buying everything for your house in the first few weeks even if you can afford to do so and plan an exciting journey as you build up your new home into your dream home.