Your MOney

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After familiarizing yourself with the entire home-buying process, it's essential to gain perspective by examining your current spending habits. This following segment will assist you in developing a spending plan for a personal financial assessment. By creating a spending plan, you'll be able to evaluate your money management patterns and pinpoint any necessary adjustments to guarantee your success as a homeowner. 

Determining your expenditures 

What do I need to begin? In the expense section of your spending plan, you will record your expenditures on various items. The more detailed and accurate the information you provide, the more beneficial your spending plan will be. To make the process easier, it is advisable to gather paystubs, bill statements, and any other relevant financial information beforehand. Don't worry if you don't have every expense tracked down to the exact amount. Start with what you have and make use of readily available online tool like a Money Management Planner. The objective here is to create a workable spending plan. To be successful, we recommend the following three steps:

1. Gather useful documents
2. Complete your money plan and receive initial assessment
3. Print a copy of your money plan 

What about my partner's expenses? 

Many homebuyers are married or purchasing a home with someone else. You might be wondering whether you should include your partner's information along with your own. The answer is: you can do it either way. If you manage your finances jointly, it may make sense to include both sets of information. Conversely, if you maintain separate finances, it may be best to create an individual budget. Whichever option you choose, ensure consistency throughout the entire budget. For example, if you include your spouse's income, also include their expenses.

How do I account for occasional purchases? 

For expenses that occur periodically or fluctuate throughout the year (such as gifts, clothing, or travel), calculate the annual amount and divide it by twelve to obtain a monthly average. Similarly, for items you purchase weekly, multiply the average by 52 and divide by twelve.

Some deductions are already subtracted from my income – should I include them? If you entered your net income (the income you receive after deducting payroll deductions), be careful not to add those already-subtracted items as expenses. For instance, if your health insurance premium or contributions to an investment plan are automatically deducted from your paycheck, there's no need to list those amounts as expenses.

I use credit cards for many purchases – should I include them? 

If you currently charge expenses like gasoline or other items, include them in your budget regardless. The goal is to reduce reliance on credit and ensure that your plan accommodates all necessary expenses.

 If you normally get a large tax refund, consider reducing your tax withholdings to increase your net income. Visit www.irs.gov for more information.