Allocating 30% of Your Budget to Housing Costs

December 22, 2015 by  
Filed under Real Estate

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Budget to Housing CostsHousing is one of the most important, and largest, purchases that people make today. You’re always going to need a roof over your head and when it comes time to shop for one, you’ll want the best for you and your family. But, many buyers get a bit too carried away and purchase a house that’s out of their budget.

The importance of limiting your housing cost to about a third of your actual budget will benefit your long-term finances. While this may seem contradictory, by doing this, you’ll be able to live comfortably and still take care of the costs.

Increasing your cash flow is a desire that many people have today. One of the ways that you can increase your cash flow is to increase your total income. But, if you’re not as fortunate, you can cut your expenses instead. By cutting housing costs, you’ll be able to increase your cash flow while on a budget.

If you’re spending only 30% of your budget on housing costs, you’re going to have 70% left to spend on whatever you want. You can pay off previous debts, place some in your savings, or even purchase things that you’ve wanted before but were never able to due to your financial situation. Imagine becoming debt-free and still having cash flow streaming through to your account. One of your goals is to build up a steady savings account, and by allocating 30% of your funds to housing costs, you’ll be able to achieve it a lot faster.

Bio: Kuba Jewgieniew is the head of Realty ONE Group, a real estate brokerage firm that has nearly 6,500 associates.