5 Ways to manage finance after buying a home


Posted on 17 Feb 2021



Owning a property is probably the biggest investment we ever made in our lifetime. It is an arduous process not only in terms of hunting but also financially. To think that once you buy the property your financial burden will lessen is an irrational thought because you just made the biggest and worthy purchase.

Mostly, when it comes to managing finance for the property, our plans are only restricted till we acquire the property and after that, we think it’s easy to draw a certain amount as EMI from monthly income. Wish it was this easy in a realistic world, but it's not!! Because the future is uncertain and our responsibilities keep increasing with time. Buying the house is fascinating, but life keeps rolling and costs keep appearing after you close the deal, many potential buyers in the fit of owning a home forget what comes after.

The day you get the keys to your dream house, you must ideally have funds for at least the next six months for along with a new house many maintenance costs come that needs to be fulfilled at the beginning itself.

Your bank account drains once you buy the house, obviously, it's a panic situation but with the right planning you can get your finances under control. Below are the effective ways to manage finance once you buy the house.

  • Rebuild your contingency funds - Once you move into your new home, once again rebuild your contingency funds as soon as possible ( it would be better off to start immediately though), don't delay it for you never know when the emergency knocks on your doorstep. Indeed you will not be able to contribute a huge amount right after buying a home but it takes a small amount to make a huge fund. Try to contribute every extra penny, someone gives you cash as a blessing on the inauguration of home, put it in contingency, got 10Rs.note in pocket and put it in contingency. No matter how small the amount is, what matters is you are contributing regularly. The sooner you start contributing, the quicker you can relieve learning you are covered financially.
     

  • Revisit the budget and stick to it - Buying a home changes your financial position, so even if you already had the budget, revisit it and modify it! For this, go through your budget to determine the balance, make a list of every expense be it grocery or clothes or bills. Once you make a list segregate it into two heads viz. essential and non-essential and try to curb your non-essential expenses. For instance, every month paying for bills and groceries is a necessity but buying clothes every month isn't. To make your financial position stabilize, it is very crucial to control unnecessary expenditures.
     

  • How about 50/50 way - One of the conventional forms of saving, which is still effective is 50/50 way. Meaning, put half of whatever you earn as a saving. Now obviously, with the increased inflation and expenditure 50/50 may not work but you can always change the ratio. Make it 55/45 or 60/40 or 70/30 or any other ratio but do it!! This is a very effective way to control expenditure while saving a fixed portion of income every month. Look over your budget to determine what amount you can put in contingent. However, if you have taken the home loan, before drawing out savings from the income put EMIs aside as it is more important to pay EMIs on time.
     

  • Use cash instead of credit cards for spending - Study shows that when a person uses credit cards to buy things, he/she tends to spend 12-18% more compared to when they use cash. You can also opt for cash, especially for smaller purchases and when you know how much you will be needing to shop. It is a psychological way of controlling expenditure because with limited cash in hand you will not be tempted to do unnecessary shopping. You yourself will see the difference because as a human when we get something more than needs we get carried away.
     

  • Opt for debt snowball method - Although it is advisable to clear off all the previous debts before taking a home loan, still if you couldn't then you can consider opting for the debt snowball method. Under this method, is a way to reduce debts by clearing out the smallest one then second smallest and so on. Once the first debt is clear; roll out the money to the second one. This method will help in managing multiple debts and regular expenses simultaneously. Nonetheless, if you haven't taken the loan, you can use this same way to cut down your expenses.

Final thoughts
Managing financial position just after buying a home is quite complicated and for this one needs to set a realistic goal while compiling it with accurate strategy. It will take time to get back on track but not much if you know how to manage your income effectively. If you have spare time you can always look for another source of income to be in a flexible position.

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