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4 Easy-to-Overlook Buyer Budget Woes

Two friends shopping at market
Find the places where you need to adjust either your spending or your budget before buying a home.

Have you done the math online to find out what type of house you can afford? Somewhere during the home-search process, most people pick a maximum home purchase price that sits well in their hearts, minds, and, hopefully, their monthly budgets.

Unfortunately, a few critical line items commonly slip through the cracks of one or more of these calculations. When it comes to DIY budgets, prospective homebuyers often create household spending plans based on ideal versus actual spending patterns.

Be sure to look back at your recent bank statements to see how your actual spending measures up against what you think it should be. Find the places where you need to adjust either your spending or your budget before you buy a home.

To get you started, here are four frequently overlooked expense buckets to consider:

1. “Essential” extras

One way to pinpoint someone’s values is by exploring where they invest their time, energy, love, and money. It’s no surprise that expenses many homebuyers see as essential might not be viewed the same way by loan officers.

Just a few of those items include:

  • Charitable giving and religious tithes, dues, and offerings
  • Expenses related to caring for an aging parent
  • Health care and therapies not typically covered by insurance, like acupuncture, massage, and chiropractic

Make sure you factor them into your budget — or cut back so that you can save more for that down payment.

2. “Cash cushion” stuffing

During the long, dark years of the recession, many people cut back on investing and saving for retirement. If that’s you, and your personal economy has recovered enough to support saving for a down payment or buying a home, congrats!

Just make sure you circle back to those recession-era cutbacks before considering your monthly housing costs as a new homeowner. You might want or need to save more than traditional financial guidelines suggest to reposition your retirement or to fluff up your “cash cushion.”

Bottom line: Make sure you don’t overextend yourself by buying a home without accounting first for stuffing the cushion(s) you’ll need in the future.

3. Enriching experiences

If it’s done correctly and sustainably, purchasing a home can be one of the most life-enriching experiences a person can have. But lots of us also invest in other enriching experiences.

Some of the big-ticket items:

  • Vacations
  • Trainers, coaches, and therapists
  • Yoga and mind-body wellness
  • Retreats and workshops
  • Conferences and continuing education

If you decide you’re willing to cut back or forgo entirely to redirect those funds into your home, that’s fine. Just make sure you go in with eyes wide open — cutting out activities that enrich your life might make homeownership no fun.

4. Kid-related cash outlays

The honest-to-goodness truth about kidlets? They cost. Sure, the rewards of parenthood are well worth it, but the costs are considerable and are often overlooked when considering how much you can afford to spend on housing. The big ones generally get on the list, like child care, private school payments, and college tuition, but others sneak by.

Items that often get underestimated or flat-out omitted in this category include:

  • Extracurriculars, like language or music lessons
  • Gear and equipment
  • College savings

What sneaky expenses have you underestimated when trying to build out a budget or understand what you can really, truly afford to spend on housing? Share your stories in the comments below!