Taking on a mortgage as well as all the other expenses that come with owning a home can feel overwhelming when it comes to money matters.
As new homeowners, managing your finances together effectively is essential to ensure mortgage payments, utility bills, and other expenses are paid on time, leaving you to enjoy your new home without financial worry.
Whether you are starting this journey with your partner for the first time, or you’re refining your approach, a clear financial plan is key.
In this article we’ll walk you through five essential tips for handling your money together after buying your first home.
Tip #1. Set Up a New Joint Budget
You might have had a budget sorted when you were saving for that all important house deposit, but now that you have a mortgage to pay, as well as all the extra expenses that come with being a homeowner, you’ll need to reconfigure things.
Start by adding up all your income, including salaries, bonuses, freelance work and any other source of money.
Understanding your total monthly income helps you set realistic spending limits.
Write down all your income sources and figure out how much you bring home after taxes. This will give you a clear picture of how much money you have to work with each month.
Take this time to discuss your financial goals and priorities with your partner. Make sure both of you are on the same page about saving, spending, and investing.
Having an open conversation about your income and financial expectations will help prevent misunderstandings and keep things running smoothly.
Tip #2. Focus on Essential Expenses
Next, figure out your essential monthly expenses like the new mortgage payments, utility bills, groceries, transportation and insurance.
Make a list of these must-pay items and add up their total cost.
These are the non-negotiable expenses that should come first in your budget.
To manage these expenses better, set up automatic payments for your mortgage and bills. This ensures you never miss a payment and avoids late fees (which can affect your credit score).
Keep an eye on your utility bills for any changes so you can adjust your budget when needed.
By focusing on essential expenses, you create a stable financial base. This lets you use leftover funds for savings, fun activities and other financial goals.
Keeping these priorities in check helps maintain a balanced and stress-free financial life.
Tip #3. Allocate Funds for Savings
After covering your essential expenses, it’s important to allocate funds for savings.
Establishing a savings plan can help you build an emergency fund, save for future goals, and provide financial security (especially if interest rates increase).
When you first take out a mortgage your payments are going to take a fair chunk of your income so your limit for savings might be low.
Try and aim to set aside at least 10% of your combined income for savings if possible.
Start by creating an emergency fund to cover unexpected expenses such as medical bills or car repairs. A good rule of thumb is to save three to six months’ worth of your living expenses.
Once your emergency fund is in place, consider other savings goals like debt reduction (mortgage included), funding education for children/future children or home improvement projects.
Pro Tip: Automate your savings to a high interest savings account each payday, so you don’t get a chance to touch it.
Tip #4. Schedule Regular Money Meetings
A mortgage is a long term commitment so it can be very easy to just plod along making the minimum repayments.
Your mortgage will probably be the biggest debt you’ll ever have, so you will need to take proactive steps to get rid of it quickly.
To maintain a healthy financial relationship, it’s essential to schedule regular money meetings with each other. These meetings provide a dedicated time to discuss your budget, review expenses, and plan for upcoming financial goals.
Aim to hold these meetings at least once a month to stay on track.
During these sessions, go over your income, expenses, and savings. Address any financial concerns or changes that may have occurred since your last meeting. This can include unexpected expenses, changes in utility bills or changes in income.
Reviewing your finances together helps you both stay informed and engaged. By regularly discussing your finances, you can prevent misunderstandings, make informed decisions and strengthen your financial partnership.
Tip#5. Get a Home Loan Health Check Every Year.
A lot can change in a year. If major life events like getting a new job (or losing one), having children, or renovating your home have occurred, your mortgage needs may have changed as well.
An annual home loan review with a Mortgage Adviser allows you to assess whether your current mortgage still fits your lifestyle and financial situation. This way, you can look at making adjustments to ensure your home loan continues to support your goals, whether that’s getting a better interest rate, accessing new features, or finding a loan that better suits your current circumstances.
As you can see, managing your finances as new homeowners can be challenging, but with the right approach, it can lead to a less-stress experience.
By establishing a joint budget, prioritising essential expenses and allocating funds for savings, you can create a stable financial foundation.
Regularly discussing your financial goals ensures both partners are aligned and working towards the same objectives.
If you would like some advice around your particular situation then please don’t hesitate to get in touch with us.
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