Tag: budget

How to Determine Your Home Buying Budget

by Sandra Hayes

How much house do you think your family can afford?

Houses are typically the most significant purchases that a family makes. Figuring out how much you can afford is one of the first steps toward a home buying budget.

If you follow these steps, then you can get an approximation of how much house you can afford right now.

Step #1: Know Your Monthly Income

Start your budget by determining how much you, your partner, or another co-buyer earns each month. Unless there are specific reasons why you shouldn’t include them, all revenue streams like investment profits and alimony should go into this figure.

Step #2: List Your Costs

Now you will want to make a list of your total housing costs. This figure should include property taxes, insurance policies, and the estimated mortgage interest rate that you will pay. Most families pursue a 30-year mortgage, but there are different lending products available. A shorter loan will result in a larger monthly payment, but smaller interest payments and better rates.


You’ll want to make sure that your total down payment gets figured into this rate.

Step #3: Tally Your Expenses

This part of your budget is the money that goes out to other creditors each month. You must be accurate about how much you’re spending because this will dictate the amount of house that you can reasonably afford.

Additional Steps to Take for Your Home Buying Budget

Maximizing your income to buy your dream house is the worst decision you can make. There must be enough room in your budget to manage unexpected expenses, emergencies, and still save something for your retirement.

That means most families should not be spending more than 28% of their gross monthly income on housing expenses. You should also not have more than 36% of your income already claimed by debt of some type. That means student loans and car payments can impact the amount of house you can afford.

Depending on where you live, your income levels might cover a mortgage or cause you to fall short. Even if a lender is willing to write a loan that takes up a significant portion of your wages, it may not be in your best interest to pursue a house. Work on raising your credit score, improve your debt-to-income ratio, and save up for a down payment of 20% if possible.


When you can follow these steps, then your home buying budget will be easier to implement.

Financial Planning and Wealth Management for Retirement Tips

by Sandra Hayes

If the average couple wants to retire in the United States at the expected date they quit working and achieve the median lifespan, then $1.25 million is needed at a minimum. That’s in addition to any Social Security benefits that may be available.

That figure assumes that a retirement income of $50,000 per year is necessary. If you can live on less, then you don’t need to save as much.

Most Americans don’t even have $1,000 in their savings account right now. The only way to reach the amount needed for retirement is to start focusing on financial planning and wealth management today.

Financial Planning Tips for Success

Making decisions that improve your financial situation isn’t always comfortable. The basics of wealth management always stay the same. If you can get these tips right, then you’ll see your money start growing.

1. Spend Less Than You Earn

It is impossible to get ahead if your spending is out of control. Even if you live paycheck-to-paycheck, look for cost-cutting opportunities to put a little bit away each month. The savings will start to add up over time.

2. Keep to Your Budget

If you don’t know where your money goes, then it is a challenge to stop paying for things you don’t need. Set savings and spending goals in every budget category so that you can figure out where there are some places to trim.

3. Get Rid of the Credit Card Debt

This problem is the primary issue that holds everyone back from financial independence. Use your credit cards for emergencies only unless you can pay off the balance each month to take advantage of a rewards program. If you have $4,000 on a single card with an average APR, then you’re paying over $500 per year in interest payments alone.

4. Contribute to a Tax-Advantaged Retirement Plan.

If you don’t contribute to a 401(k) plan from your employer, then you’re walking away from free money. Try to maximize your contributions to an IRA and other tax-advantaged programs. It’s a simple way to put 5% of your paycheck into savings, and it can sometimes come before taxes come out of your wages.
When you can maximize your employment benefits and income, then you can grow your wealth if you keep spending in check. Resolve to get the basics right this year by following these steps so that your money worries can come to an end.