Managing finances while paying a monthly
mortgage for your house is easy – no need to break the bank or sacrifice for
your dream home.
Buying
a house is an
accomplishment and should be celebrated! If you find yourself stressed,
cash-strapped, and unhappy, here is a no-frills guide to balancing your
finances as easy as 1-2-3:
Follow the Money
Follow the Money
It
sounds simple enough, but tracking your cash flow is one of the most overlooked
ideas by many people. You have to know where your money comes from and goes to
– in other words, budget!
Start
with the incoming flow of money. Whether you’re a salaried employee, a
freelancer, a businessperson, or some hybrid of those, you need to know where
your money comes from and how much you make. For people with predictable
paychecks, you already have an idea of your usual take-home pay; for those with
varied paychecks, figure the average monthly income you earn.
Then,
track where the money goes. You can use apps and software for this, or go into
an Excel spreadsheet (there are many free templates online that automatically
compute things based on what you type in). You can, of course, go old school
and use a balance notebook if that’s more your style.
Classify Expenses
Classify
your purchases to make things easier to manage.
Fixed living expenses include not just your monthly home mortgage, but also car payments, insurance premiums, and
any other expenses that are the same every month like phone, internet, and
cable bills.
Necessary costs are the opposite as they fluctuate
month-to-month such as utilities (electricity and water bills), gas, and
groceries.
Lastly,
also note other expenses, especially non-necessary ones like dining out,
entertainment (going to the movies, watching concerts, etc.) and so on.
Budget and Pay
Budget and Pay
Once
you have figured out your cash flow and where your money is supposed to go,
create a budget and pay what you need to on time. If you find that you don’t
have enough to pay bills, take a step back and evaluate which costs are
important, especially in keeping your job and staying healthy. There are many
ways to set up a budget such as the envelope system (dividing and allocating
money to envelopes, using that money only for that purpose), and the 50-30-20
budget (50% of take-home pay is spent on needs, 30% spent on wants, and 20%
spent on savings and paying off any debt). Budgeting apps are abundant, so tips
for budgeting and calculating things is in the palm of your hand.
If
you do have just enough to cover your bills, take steps like making automatic
payments to your electricity and mobile phone bills, or turning on email or
text message alerts from certain providers. Some banks let you enroll automatic
payments for certain services like Meralco and Sky Cable. Some streaming sites
like Netflix and Spotify allow automatically debiting from a Paypal account or
your credit/debit card. You could even set up alerts on your mobile phone or
use post-its and notes on your refrigerator – whichever system works for you.
Remember
that paying bills on time also means avoiding late fees and penalties, and in
some cases allow you discounts, perks, or sometimes even a free month of
something for being such a loyal and punctual customer.
Lastly,
make sure there is enough for an emergency fund – never touch that money unless
it really is an emergency such as a medical situation or a debt you are being
cornered into paying.
Bonus: Grow Your Disposable Income
Bonus: Grow Your Disposable Income
In
relation to budgeting, find a way to grow your disposable income. As you play
around and experiment what budget style works for you, you slowly become aware
of your spending habits and your financial situation. This allows you a chance
to grow your disposable income.
For
example, identify which things are more of a burden than an asset. If you find
yourself no longer using that video streaming service or neglecting to go to
that high-end gym, cut these costs! You’ll be surprised how much you can save
and allocate for house mortgage or other expenses.
As
you start managing your finances better, you’ll find that your paycheck becomes
money well spent – eventually, paying for your monthly home mortgage becomes a
cakewalk and you’ll have more time and money that can be saved or used
elsewhere.