4 Habits of a Financially Fit Homeowner

4 Habits of a Financially Fit Homeowner

Buying a home is one of the biggest financial milestones of a person’s life. However, getting the keys comes with a lot of expense and added responsibility. In light of that, we’ve brought you four habits of a financially fit homeowner. Read over all of the tips below to see which suggestions make the most sense for you to adopt in your daily life.

How to become a financially fit homeowner

1. You’ve created a monthly budget.

Creating (and using) a monthly budget is one of the best financial habits you can develop as a homeowner. Put simply, using a budget allows you to effectively track your income and expenses, which can help you ensure that you have enough money to pay your bills and reduce the amount of surprise spending that occurs.

The first step to creating a budget is tracking your spending. You can use an app or a spreadsheet. However, whichever method you choose, be sure to log all of your expenses for a month or two. This will give you a much clearer idea of how much you realistically spend on a monthly basis.

After you have a pretty firm idea of your expenses, the next step is to assign a target amount to each of your spending categories. Then, use your budget and see how it goes. Don’t be afraid to make changes to your budget as needed until you land on an arrangement that makes sense for you.

2. You’re working on building an emergency fund.

Once you’re a homeowner, making sure that you have enough savings in the bank at all times is paramount. After all, you never know when there will be an unexpected maintenance project that will crop up when you least expect it. With that in mind, it’s a good idea to have at least 3-6 months’ worth of expenses saved up for emergencies or other maintenance costs.

If you’re just getting started saving, it’s a good idea to take a look at your home budget to decide how much money you can afford to allocate to savings on a monthly basis. Then, once you’ve figured out a good amount, set up an automatic deposit with your bank. Make sure that the deposit occurs on a regular basis and that the money gets transferred into a dedicated savings account as you work toward becoming a financially fit homeowner.

3. You make an effort to keep your credit healthy.

Having healthy credit is absolutely a key to being a financially fit homeowner. Those with excellent credit scores are often offered the best rates on credit cards and loans, not to mention the fact that having great credit is often a point of pride for many. With that in mind, below are a few tips to help you ensure that your credit stays in tip-top shape:

  • Make your payments on time, every month: Payment history accounts for 30% of your overall FICO score. By making your payment on time each month, you will ensure that your score stays as healthy as possible.
  • Pay as far above the minimum payment as possible: Paying down your debt will reduce your credit utilization rate, which should help improve your score. Whenever possible, be sure to pay off your credit card in full.
  • Limit how many applications you have at a time: New credit accounts make up 10% of your credit score and they stay on your credit report for at least two years. Try to limit the number of new accounts that you open at one time.

4. You’re working with a financial planner.

Last but not least, if you truly want to make sure that your finances stay healthy for the long, one of the best things that you can do is start working with a financial planner. At their core, financial planners are there to help you create a road map from where you are financially to where you want to be.

When looking for a financial planner, the first thing to do is get recommendations. Ask family and friends if they know of anyone who might be able to be of assistance. Alternatively, look online and be sure to read reviews. Once you find a few viable professionals, interview them until you land on the person who feels like they might be the right fit.

The bottom line about being a financially fit homeowner

Becoming a financially fit homeowner usually doesn’t happen overnight. Rather than trying to adopt all of these new habits at once, it’s a much better idea to try to tackle one at a time. Then, once you’ve gotten one habit in good shape, move onto the next option. Over time, if you work at forming these new habits, you’ll be surprised at how readily they will pay off.

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Tara Mastroeni

Tara Mastroeni is a real estate and personal finance writer. She has a BFA in Media Production from Emerson College. Her work has been published on websites such as Forbes, Business Insider, and The Motley Fool. She has also been featured as a subject matter expert on Innovators with Jane King and the American Trends podcast. Find her at TMRealEstateWriter.com or on Twitter at @TaraMastroeni.