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Create a New Home Expense Fund

I take home ownership pretty seriously. It’s probably one of the biggest financial move any of us will ever make. Jumping into owning a home before you’re ready is easy to do, but it will most likely just land you in a tight financial situation in the end.

Only you can decide when you’re really ready to buy a home. But, how exactly do you know when you’re really ready?

You’ve probably heard that you should save 20% of your home’s purchase price before you buy, but even that’s not a rule that’s set in stone. If that is something that you can fit into your financial plan, than that’s great, but it’s not necessarily a deal breaker.

But, one thing is for sure: your new home will come with a whole new set of expenses. (In fact, Sarah wrote yesterday about the many costs to buying a new home).

Before we take that big step into a committed relationship with a mortgage, the majority of us probably live in a smaller apartment, a house with a bunch of college friends, or maybe even at home with Mom and Dad. Smaller pads or shared homes are great because they come with smaller utilities bills and less need for furniture. Additionally, your landlord (or Mom and Dad) are probably the ones fixing that leaky faucet or spraying for bugs. That’s another responsibility that comes with owning a home: you can’t depend on others to maintain your home and you’ll probably spend more money on furnishings and utilities.

New Home Fund

We’ve all heard of an emergency fund and a down payment fund, but what we don’t always hear about is the new home expenses fund. Where do you plan to get the cash to buy furnishings for your new house (which is likely bigger than your apartment), pay for higher electricity bills, or fix anything that breaks? Something tells me that you’ll want to fix your air conditioner (or maybe even buy a new one) if it goes out during a 100 degree heat wave in July.

In comes the new home fund. As soon as you purchase a home, you’re bound to shell out some more dough for other necessities for your new abode. If you’re already saving for your down payment on a home, consider setting up a sub-account in your high yield savings account for miscellaneous new home expenses as well.

New Home Expenses

Just how much should you save for these miscellaneous new home expenses? That much is up to you. Of course, you don’t really know if you’re air conditioner is going to break down within the first week of living there, so it’s a little difficult to decide how exactly how much to save for. When it comes to new home expenses, we don’t have the handy twenty percent rule to guide us.

But there are some expenses that you’ll definitely run into when you buy your first home. Here are a few examples:

  • Furnishings: Take note of any new rooms like more bedrooms/bathrooms, an office, a den, an extra living room, sunroom, patio, dining room, etc.
  • Home Maintenance: Think lawn mowers, yard maintenance, hoses, vacuum cleaners, tools, etc.
  • Décor: The best part about home décor is that you can spend as much or as little as your want. If you don’t want to spend much here, you could always ask for hand-me-downs from friends and family.
  • Kitchen/Bath Necessities: Don’t forget about dishes, pots & pans, silverware, cups, towels, washcloths, etc.
  • Appliances: Not all homes come with all the necessary kitchen appliances. It’s common for a house to come with the refrigerator, stove, and dishwasher, but you might need to buy things like a microwave, toaster, or coffee maker.

Some of you might already have many of these things. If not, take some of these ideas and try to come up with your own list of new home items that you might need to save money for. In addition to the things that you know you’ll definitely need to buy for your new home, aim to save for a bit more to cover for those unexpected expenses like a broken air conditioner or a leaky faucet.

Planning for new home expenses today could save you a lot of grief in the future. It could also save you from racking up a high credit card balance! All of these expenses may seem daunting now, but if you start saving early, you won’t have to worry a bit when it finally comes time to buy your first home.

Published or updated on July 7, 2010

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About Amber Gilstrap

Amber is a twenty-something CPA from Kansas City, Missouri who loves writing, working out, and---of course---finding fresh ideas for saving money. Follow her on twitter @amberinks.


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  1. I think that it’s easy to focus on the actual price of the home with that being the biggest cost, but what people often overlook is that once they get a new house, they need to fill it with things to make it a home!

  2. Ace says:

    Great tips. I think that it’s easy to focus on the actual price of the home with that being the biggest cost, but what people often overlook is that once they get a new house, they need to fill it with things to make it a home!

    I love the idea of saving for it ahead of time. Because this will help you put constraints on how much you spend to furnish your new home. It’s hard because some times it means that you need to wait before acquiring large ticket items like furniture, but part of what makes it so fun is the process!

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