How to afford your new home
When buying a new home and making the jump to owning something a bit bigger, this inevitably comes with additional costs. Suddenly your home improvement projects, and even your lifestyle, needs to be reassessed to account for these higher costs.
The average South African spends around 23% of their after tax income on housing, either for rent or home loan repayments, according to Octogen, financial well-being experts. Along with higher monthly mortgage repayments, you still need to factor in annual home maintenance costs and the ever-increasing price of your monthly essentials. Suddenly, the idea of applying for a personal loan seems like a good idea. Hippo.co.za gathered some practical advice and tips from local bloggers on how to manage these higher costs while still living maintaining a comfortable lifestyle.
1. Budget properly
After taking on any new financial responsibilities, whatever these may be, it is increasingly important to draw up a budget and evaluate your spending habits, so that you know exactly what you can (or cannot) spend. It’s never too late to start a monthly budget.
There are four main steps to creating a budget.
- Write down your monthly income after tax. This is how much money comes into your bank account every month, and ultimately, it should determine what you spend.
- Make a note of all of your expenses and split these into necessary and unnecessary columns. Costs like Medical Aid and bond repayments are, of course, necessary, but dining out and cellphone costs could be reduced. Don’t forget to include expenses you incur on an annual basis such as servicing your motor vehicle, funeral cover, or an annual vacation.
- The third step of evaluating your spending is the most difficult, but also the most enlightening. You may discover that you’ve been spending R600 a month on takeaway snacks, or that a substantial amount of your salary is going into paying your monthly cell phone bill.
- The final step is to create your new budget, with adjusted spending goals negotiated with your partner or spouse. This step is important because it will help you stick to your budget. It’s often easier to resist the temptation of unnecessary spending if you know that your budget doesn’t allow it.
2. Be money savvy
When was the last time you took a close look at your bank statement? Do you even know what your bank charges cost every month? Is it worth migrating to a more competitive, all-inclusive package? Imagine being able to put money saved on costs into a savings account to let it earn interest for you.
Another monthly expense to consider is the cost of insurance, and that’s where Hippo.co.za can help you save by offering a variety of options. Not only can you reduce the monthly amount spent on insurance, but also time, which is a valuable commodity on its own.
Reduce your monthly expenses with simple, yet effective measures like maximising the peak and off-peak electricity schedules, reducing water use and recycling. These go a long way in not only saving the environment but increasing your cash flow. I have slowly reduced debt in my home, thus freeing up a little more each month to add to my bond.
3. DIY maintenance
Moving to a new or larger property usually means increased costs to maintain your home in tip-top condition. To help you curb costs, we look at ways to keep maintenance costs as low as possible, while ensuring your investment retains its market value. To keep costs down, there are many home repairs and maintenance projects that you can quite easily tackle on your own.
With some DIY savvy, tackling annual maintenance, or fixing smaller repairs immediately, will reduce the possibility of these becoming more serious and more expensive repairs to fix later on down the line. It's important to undertake an annual inspection of your property from top to bottom, inside and out. You only need to put aside one day every year to do a thorough inspection of the structure and be able to pick up any repairs that need to be attended to. If you do discover any defects or faults, you can then decide whether or not you have the know-how to tackle these as a DIY project, or call in a professional.
While your new home may present higher costs, by evaluating your spending habits, creating a budget and thinking smartly about how you spend means you need not necessarily compromise on your standard of living. In the event that you need to borrow money in order to make ends meet, compare personal loan quotes on www.Hippo.co.za to help you find the best deal for you.