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Money Advice for Life
Expenses of Homeownership
Owning a home has more costs than just your mortgage payment. It includes insurance, utilities, maintenance, and more. Some you can’t avoid, others you may not expect, and some you have a choice. Here are a few examples of, and advice on how to manage, the added costs related to owning a home.
House insurance: as a homeowner house insurance is a must, it protects you from unexpected emergencies such as fire or flood.
Note: if you’re purchasing a condo you’ll be required to get Condo Insurance which is similar to House Insurance but has some key differences. To learn more about purchasing a Condo give this post a read: Conexus - Condo or condon’t? Is condo living right for you?
Property taxes: every year, you’re required to pay an assessed amount to the city or town you live in. This payment can typically be made as a lump sum or monthly installments. For more information on how property taxes are calculated, click here.
Utilities: having water, heat and electricity in your home is essential. Prior to or shortly after moving into your new home you’ll have to pay a fee for the initial hook-up and transfer of these services to your name. These bills are typically charged monthly after the initial hook-up.
Advice: These are all expenses that are necessary when owning a home and additionally are continuous either being charged monthly or yearly. To help budget for these expenses you can set up a separate chequing account and make regular transfers to cover those payments. If any of your payments are automatic, you can have them come straight out of that account.
These are typically maintenance costs to replace, fix or add specific features/utilities in your home. Keep all these in mind when looking through your house inspection and watch for red flags. In some cases, you might have to decide if you’re willing to take on the maintenance or renovation cost.
Heating, ventilation & air conditioning: how old is the furnace? Is the thermostat outdated – will you want to replace it? Do the ducts need to be cleaned?
Electrical: how big is your panel? Will you be needing something bigger?
Water softener: did your house come with water softener installed? Is there hard water where your house is? Will you want to install water softener?
Water heater: is your water heater a rental? Or will you own it? Believe it or not your water heater needs regular maintenance, so whether you rent or own include upkeep costs in your budget.
Roof damage: it’s common practice to have asphalt shingles replaced every 15-20 years.
Wall bracing: does the ground shift in the location of your house? Are there any noticeable cracks in your foundation? If so, wall bracing may be something to consider.
Advice: Have a home inspection done before you purchase your home. A home inspector will investigate all these things and more, they will also provide you with a report outlining any possible issues with the home and when they may need to be addressed.
Lots of the expenses that come with owning a home are unavoidable or maintenance related but there are some that are optional. These expenses are totally in your control, you get to choose how much you want to spend or if you want to spend anything at all.
Cable & entertainment subscriptions (Netflix, Disney+, etc.)
Landscaping & renovations: painting, adding new cabinets, and changing out appliances are all things that add value to your home but are not necessary to keep it safe or functional. Therefore, you can be pickier with these projects, decide what’s important to you and budget accordingly.
Advice: A lot of the optional expenses you experience as a homeowner are related to what’s important to you. For example, if having a nice place to sit in your yard is something you value you may be spending more on landscaping. By making a list of what you’re most looking forward to doing in your new home you can uncover possible projects and budget accordingly.
Did some of these expenses surprise you?
It’s a lot to think about and can be overwhelming. Here’s a great way to keep track of them all:
Make a list of all the expenses, unavoidable, unexpected, and optional.
Separate them by the “one and done” payments and the “ongoing” so you know what your onetime only expenses are and what will be a regular payment (monthly/yearly).
This is something that can be done with multiple tools. Try using a spreadsheet, document or maybe there’s even a tool in your phone you can use (reminders, notes, etc.). Once you find a way that works best for you it will be easier to manage and give you some peace of mind.
If you have questions about being a homeowner, managing your expenses, or would like to discuss your financial well-being connect with us!
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