You have to be prepared not just mentally and psychologically to own your very own home but more so, financially. Before you can buy a house, you have to set aside a certain amount to purchase the one that you intend to buy. You should get your finances in order and set aside the necessary down payment that you must be making to purchase the house of your dreams. Because most people tend to get excited with the idea of owning a house, they sometimes miss the importance of planning and preparing their finances accordingly. A wise home owner must not just think about their current payments such as the monthly payments associated with their utility bills, insurance, taxes, and mortgages but also the payments that they will be making in the future. Being wise means saving up or securing some useful reserves that you can later on utilize when unpredictable situations come into your life. If you want to be a wise home owner, you must have some idea what useful reserves you must be making. When you still do not know what these are, here are some of them.
1. Reserves for income interruption: Despite working as a regular employee and despite having the necessary skills and knowledge to carry out your job, there will be times that your source of income becomes temporarily interrupted. From the moment you have decided to make reserves for possible income interruptions, setting aside some of your income from the 6 months or onwards will be enough or even more enough to cover for your income interruptions.
2. Reserves for maintenance and repairs: Always set aside some money for possible maintenance and repair costs for your assets such as those found in your home as well as the vehicles that you use. Start securing these reserves with more or less equivalent to the income you make in one month and if possible, per week, add at least 2% to 3% of your income.
3. Overall reserves or those for contingencies: This is one reserve that you must be sure to fund well. It deals with taking care of the payments that you might be making for unpredictable needs, contingencies, and more. When you have completed such reserves, you do not have to add to them regularly. However, if you have used a portion of this fund or all of it, be sure to have it replaced as soon as you can. Six to nine months’ worth of your income is recommended for this reserve.
4. Reserves for major maintenance and repair concerns: Are your prepared to deal with the financial implications of something you own and need that must be repaired at the least convenient times? For concerns such as this, it is best that you set aside some funds that will be equivalent to at least six months of your income for any unfortunate circumstances that might come your way.
5. Reserves for upgrades and renovations: Despite owning your own home, there will be times that you need something more from it such as having some renovations and upgrades to make it a more comfortable place to live in for the entire family. Always think about how you will be paying for these upgrades whether they may be caused by a need (e.g., having a new member in the family) or a want (e.g., making your kitchen look more modern). Set aside some money for this purpose, and only start such projects when you have prepared the right amount for them.