Saving And Spending Strategies For An Efficient Housing Budget

For the past few decades, finding an affordable housing option has been increasingly difficult. Whether through a distinct house and lot or an apartment, the reality is that housing is slowly becoming a privilege. Today, one of the significant challenges is how to afford rent. As a result, people use different strategies to allocate their financial resources.

Perhaps the most common method that people do is to use a rent calculator. However, they often do not supplement it with other saving and spending strategies. If you want to create a truly effective budgeting plan, here are a few saving and spending strategies below:

Portion Your Income

The most obvious strategy for effective budgeting is to portion your income. For most people, we advise using the 50/30/20 rule. This rule indicates that you should allocate 50% of your income to your necessities (rent, utilities, groceries, etc.), 30% to your wants (shopping, dining, or entertainment), and 20% to your savings and debt payments. This general rule is almost universally applicable as it simplifies the budgeting approach, which helps prevent going over budget. 

Have a Flexible Plan 

It is important to remember that saving or spending rules should not be absolute or rigid. In other words, do not limit yourself to a certain rule, especially during special or emergency cases. To illustrate this, let us use the 50/30/20 rule and apply it to a certain scenario. For example, let us say that you currently follow the 50/30/20 rule, yet you prefer a bit more comfort and luxury in your home. In such a case, you might want to lower your budget for your wants to effectively afford the increased cost of your living space.

Specifically, you may want to increase the budget allocation of your necessities to 60 or even 70 percent while simultaneously decreasing your budget for wants. Also, flexibility is critical when it comes to special cases like getting laid off from your job, bearing your first child, or getting into an accident. In such cases, you may want to adjust your budgeting according to your priorities.

Consider All Costs

In budgeting for rent, consider hidden costs, sunk costs, and minor costs. Hidden costs typically get buried inside paperwork or documents. This is a scheme that companies use to extract more money from tenants or homeowners.

To avoid this, be sure to check any signed housing agreements or contracts. Sunk costs pertain to those costs that cannot be recovered. Insurance, rent, and subscription fees should already be treated as an expense to avoid overspending and underbudgeting. Finally, keep track of all minor costs. Homeowner fees, monthly product subscriptions, and housekeeping expenditures are quite small, but they might add up when left unattended. 

Be Future-oriented 

Future-oriented means looking at things from a broader perspective to see the attached value, expenditure, and utility in each purchase or subscription. In the context of housing, do not get easily baited into discounts or free months, as landlords and companies typically use these to trick you into paying more in the future.

Never Compare

Comparison is the thief of joy. If you start comparing yourself to your peers or others, you may not see the value of your sacrifices and get steered into a life you can’t afford. Always look at the bigger picture and do not feel disadvantaged or discouraged even if you do not have all the luxurious stuff.