If you recently purchased a new home, congratulations! But after leaping into homeownership, you might be feeling the strings tightening on the old wallet.
When we buy a home, we do the necessary diligence, like getting an inspection, to help mitigate some of those uncertainties, but life happens no matter how much you prepare. To avoid becoming what the pros call “house poor,” you should put together a plan to prepare for those unplanned expenses that can come with owning a home.
If you have been making it rain the last couple of years, creating a home budget can feel overwhelming and stifling at the same time. But have no fear, putting expenses to paper can help organize what you are spending all your hard-earned dollars on and help you save for those home expenses you hadn’t accounted for.
Consider taking it one week at a time by creating a cash flow budget to give you insight into your weekly expenses.
Creating a cash flow budget
A cash flow budget is all about tracking the timing of your income and expenses to make sure you have enough from week to week.
Before you can build a cash flow budget, you will need to track your income, resources, and expenses for at least one month.
Enter your beginning balance for the week. Add all of the income and benefits you receive that week, then subtract all your expenses for that week. Include the money you spend on everyday expenses, bills, and savings. What’s left is your ending balance.
If it’s positive, you have enough income and benefits to make it through the week. If it’s negative, you’re falling short.
Copy your ending balance for the week to the beginning balance of the following week. Repeat these steps for the rest of the weeks that month.
If it looks like there are weeks where your expenses are more than your income and benefits, brainstorm some strategies for getting back on track. Here’s an Improving Cash Flow Checklist to give you some ideas for cutting back on spending to create a healthy cash flow budget.
If creating a budget still sounds like a daunting task, you are in luck because there is an app for that!
Below is the list of best budgeting apps for 2022:
- Best Overall: You Need a Budget (YNAB)
- Best Free Budgeting App: Mint
- Best for Cash Flow: Simplifi by Quicken
- Best for Overspenders: PocketGuard
- Best for Building Wealth: Personal Capital
- Best for Couples: Zeta