Managing Your Living Costs After Buying A Home

The Coronavirus pandemic has virtually disrupted our plans in all facets of life; from having a great Easter holiday to finalizing that transaction on a home acquisition that you had started last year. Indeed, it’s a perilous time for both businesses and individuals all over the world. No one, not even the world best strategists with a good record of crystal ball would have predicted a global pandemic. However, the disruption is now here with us and the best we can do is manage through it till we hopefully all survive at the end.

Just like other sectors that have been hit hard by the pandemic, the real estate industry has not been spared either in the Coronavirus disruption. In Kenya, different real estate players along the value chain have been affected in varied ways. For property developers and contractors, construction has stopped, homebuyers, on the other hand, can no longer make their mortgage payments, tenants on their part are calling for rent waivers, and previously interested buyers are have paused their purchase plans. It’s a hot mess, everywhere.

However, if you are among the lucky few who had bought a home before the Coronavirus outbreak, the next thing would be how to manage your living costs given the huge financial drain that is usually associated with homeownership.

Undoubtedly, there’s never a bad time to save some money, but when you’ve just bought a new home, that’s when you need to knuckle down especially during this Coronavirus pandemic. “You just need to make those adjustments and reprioritize to make sure you’re getting ahead, and preferably building yourself a bit of a buffer for that rainy day.” Bruce Brammall, a financial advisor quips.

There are several ways that you can manage your living costs depending on your lifestyle. When it’s your time to cut back on spending, consider these expert hacks.

1. Make a budget to monitor your spending
It’s often said the best way to solve a problem is to know the root causes. Thus, the first step in managing your living costs is to list down all your expenses. Most people don’t closely monitor their costs except for those obvious ones like rent, water and electricity bill. However, financial advisers contend that one needs to sit down and work out a comprehensive budget, preferably every month. This would help you in tracking where all your money is going every month and critically assess if the said expenditures are of any real value.

This calls for a high level of self-discipline and just like changing a habit, budgeting and expenditure monitoring can be difficult at first but constant practice will make you perfect in addition to the underlying motivation of cutting down costs so that you stay afloat. You can use a spreadsheet, a budgeting app or if you still like old school way of things, you can have a dedicated notebook where you jot down all the income and expenses.

2. Reduce expenditure on household utilities
Household utilities contribute significantly on the overall expenditures and if left unchecked, it can mess up your financial standing. Indeed, you need to check on water and electricity bills. If you have a family, formulate some house rules on water and electricity conservation that every family member needs to abide by e.g. hot showers shouldn’t be more than 10 minutes, lights should be switched off when not in use, and food that takes long to prepare shouldn’t be cooked on gas/electricity cookers etc. To effectively do this, you need to conduct a family lifestyle audit, identify the wastage loopholes and come up with suitable containment measures.

3. Cut back on extra entertainment to save
Having done expenses audit, you will soon realize that cutting back on some expenses could be difficult given their necessity. However, one of the simplest areas to cut back on your budget is on general entertainment. We unknowingly spend so much money on entertainment, sometimes at the expense of things that matter in our lives. Others, deliberately overspend in entertainment to keep up with the Joneses or boost their social perception and standing. However, that said, you don’t have to miss out completely, just need to get creative about having fun. For example, instead of drinking at clubs, you can drink at home.

Tying it All Together
“The two big things to consider when buying something is ‘do I need this or do I want this?'” Bruce says. Say, ‘well I do want to go out, but do I need to go out to an expensive restaurant or if you’re going out a few nights a week, can you cut that back to one or two. It’s about making little sacrifices.” Take this forced ‘coronavirus holiday’ as an opportunity to think through your household living expenses and make necessary adjustments. It will be definitely worth your while in the long run.

AUTHOR’S NOTE:
The views expressed here are of the author and do not necessarily represent the position of Square Foot Real Estate Ventures Limited and as such does not warranty any particulars.

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