Now, you may be thinking $200,000 isn’t a whole lot to spend on a house. But here’s the deal: You may have to adjust your expectations when you’re buying your first home. House prices have gone up a ton in the last few years, so you’re probably not going to wind up with your dream home right out of the gate. Don’t feel bad about buying a smaller, more affordable starter home if that’s what you can afford. And if you have to compromise on location, that’s okay too. Trust me: You’ll be so thankful you didn’t overspend on a house just because you wanted it to look and feel a certain way. Plus, you can always upgrade down the road when you can afford to! Step 2: Write Down Your Income Once you’ve set your savings goals, the next step in budgeting for a house is writing down your income. After all, you can’t make a budget if you don’t know how much money you’ll have to spend! So, sit down and add up every source of income you get each month. That includes your salary, any side hustles you have, and any other money you plan to make during the month. You want to account for every dollar you’ve got to work with.
Here’s what this step will look like for our example couple:
Paycheck #1: $3,125 Paycheck #2: $3,125 Total Income: $6,250
Step 3: List Your Expenses Now that you know how much money you’ve got coming in, it’s time to figure out where it’s all going to go by listing your typical monthly expenses. If you’re already living on a budget, then you’ve already completed this step! But if this is your first time making a budget, I promise it’s not as difficult as you think.
When it comes to the four expenses you'll cover first, start with food, transportation, housing and utilities aka the stuff we all have to pay for.
After you account for those four budget essentials, think about any other major categories you spend money on each month. This can include subscriptions, clothing, entertainment, routine car maintenance, eating out, and (most importantly) generosity. And since you’re saving for a house, one of the categories on your budget will need to be “house savings.”
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