Home Budgets are essential for all homeowners. Businesses run on budgets and homes are no different. Home Budgets are never taught in school and my realtor sure never warned me to put together home budgets when I bought my first house. There are all types of software out there but the simplest program I have found for building my home budgets is MS Excel. If you don't have Microsoft Office there is a free version of a spreadsheet you can use in Google Docs that mimics Excel. There are also home budgets worksheets here if you want to grab a quick online version.
Home budgets are a great way to figure out where your money is being spent. Preparing home budgets begins with gathering all the monthly expenses you currently have. I include and itemize all of the following expenses in my home budgets: Mortgage, taxes, insurance, gas & electric, water and sewer, garbage pickup and oil (if applicable), other utilities if they apply to your family such as a home phone, cable television or internet bills. Once you have gathered all of these, begin a home budgets worksheet and itemize each expense down the first column. The second column I have entitled “Budget” which is the amount I put aside for that particular expense each month. The third column you see is “Actual” and the fourth is a calculation that reflects the difference between the two. The number left over in the fourth column can be carried down into the repairs section and added into the budget line for that month.
Home budgets for emergency
Home budgets definitely need a section for the emergencies that happen in your life, but home budgets can also be created for a pre-determined repair that you know will need to occur in the coming months. Let's say your roof has been leaking and you know you need to replace it during the next two years, this home budgets area is for just that kind of emergency or repair. Each month you will deposit money into your home budgets for these items. I actually have a separate bank savings accounts that I use for my home budgets. In addition, I keep the items separated on my spreadsheet so I can keep a running log of how close I am getting to the amount needed. In the example above, it will take me about a year of saving $350 to save the estimated $5000 it will cost replace the roof.
If I have extra funds during a particular month that I can allocate to this emergency fund, I will do that. If you live in a newer home and don't expect any repairs, you should still start this separate fund so you have a stash down the road. When you are prepared for something unexpected, like a water heater that needs to be replaced, you eliminate the need to use credit cards. In addition, creating house budgets allows you to keep track of all capital improvements so you can keep a running tally of money spent on your house during your years of ownership.