February is finances month at ListPlanIt.com. We wrote last week about creating an auto fund for your budget, and this week we’ll consider ways to have enough money in your home fund to cover your rent or mortgage and anything else that you might need for your home. How much should you add to your home fund each and every paycheck so you are prepared for that big payment? Make it as painless as possible by spreading out your payments instead of carving out a big lump from one paycheck a month. Members to ListPlanIt can use our Home Fund Worksheet (see our new video tutorial on Home Fund Worksheet) to help calculate the amount you will need for your home fund in Financial Planning.
Rent or Mortgage – Unless you own your home outright, your largest monthly payment is likely to your landlord or bank. This payment can really hurt if you are just paying your bills as they come in or on the due date. A great way to ensure that you have enough to cover for rent or mortgage each month is to distribute your total payment over your pay periods. For example, if you are paid twice a month, simply divide your monthly payment by two. Take that amount and put it into your home fund each and every pay period (payment = $1200/month, $1200/2=$600 per pay period). What if you are paid every 2 weeks? Multiply your payment by 12 to find out how much you pay in one year. Then Divide that amount by 26 ($1200 x 12 = $14,400, $14,400/26 = $554 to home fund on every payday).
Taxes and Insurance – If you have a mortgage, then you have to decide whether or not to make taxes and insurance part of your escrow or to pay them yourself. If they are part of your escrow, then they will be added to your mortgage payment. If you decide to pay them yourself, then you will need to add this to your home fund with each paycheck. Determine the cost of your yearly taxes and insurance, and then divide that by the number of pay periods you will receive in one year. Now put that amount from your paycheck into your home fund each and every pay period. When it comes time to pay them, the money will be there waiting for you.
Maintenance/Repairs – Oil changes, car washes, and tune-ups are all important for maintaining the health of your vehicle. You want your car or truck to last for as long as possible. To figure out how much it might cost for yearly maintenance, take a look through your bank statements and add up all of the maintenance costs for last year. That should give you an idea of about how much you will need for this year’s budget.
Utilities – As gas prices fluctuate, you can never be quite certain of the cost of gas. Some pay periods may see heavy driving and others may find you staying close to home more often. If you put the same amount in your auto fund for gas each paycheck, then the lean driving week will feed the heavy driving weeks and the heavy driving weeks won’t break the bank.
Home Improvements –
ListPlanIt.com has everything you need to not only track what you spend, but budget your money so you are prepared for future purchases and expenses with registers, budgets, and worksheets in Financial Planning and in ListPlanIt’s Finance ePlanner.