Budgeting for Homeowners

Budgeting makes homeownership less stressful.
i Comstock Images/Comstock/Getty Images

When you buy a home, you can build equity instead of line the pockets of a landlord. The money side of homeownership encompasses more than the mortgage payment, however. Making the transition from renter to homeowner means assuming total responsibility for seasonal maintenance, repairs, appliance replacement, utilities, insurance and property taxes. Even though you kept an eye on expenses to save for the down payment and closing costs, Consumer Action counsels that a budget is equally critical after the seller hands you the keys.

To protect your investment, your budget should accommodate recurring, anticipated big-ticket and emergency living expenses plus those not related to housing: car/transportation, credit cards, student loans, health care and discretionary costs for food, entertainment and clothing.

Recurring Housing Expenses

In addition to the mortgage payment, you will incur monthly expenses for trash collection, phone, gas, electricity or both, water and sewer, Internet service, satellite/cable and possibly dues for your condo or homeowner’s association. If your mortgage payment does not include monthly escrow deposits for home insurance or for property taxes, you must budget for them. Denise Rose, marketing director for Virginia-based Rose & Womble Realty Co., cautions new homeowners that failure to pay premiums and real estate taxes can jeopardize your investment.


Keeping your home in good repair protects its resale value. Lawn care, window cleaning, snow removal, landscaping, weatherization, HVAC routine service and pest protection represent typical upkeep costs homeowners face. Dan Steward, president of the Pillar To Post home inspection franchise, recommends that homeowners apply the “1 percent rule” to budget for maintenance. This rule states that annual maintenance costs equate to one percent of a home's purchase price. For a $150,000 home, maintenance and repair expenses would total $1,500 per year, or $125 per month for budget purposes. Having funds available to handle minor repairs as needed means you may avoid more expensive issues later.

Saving for Emergencies

Every household should prepare for unanticipated income loss or medical bills. Dearborn & Creggs Investments, like other financial advisers, recommends keeping the equivalent of six months of your expenses in a dedicated emergency fund to avoid reliance on credit card debt should disaster strike. Consider building your fund with automatic transfers from your checking account. As it grows, so will your peace of mind.


The cost of homeownership may be daunting, but, according to the University of New Hampshire, taking advantage of payment options from utility companies can help. Most gas and electric suppliers offer budget billing with a set monthly payment. Using your home inspection report to calculate when items such as the furnace will require replacement will enable you to prepare for big-ticket expenses. Another way to address budget challenges entails what the Association for Women Homeowners calls “discretionary tradeoffs” — allocating money you would have spent at restaurants for a home improvement project.

the nest