Not only did Eskom recently increase their electricity rates by 9.4% on the 1st of April, but the City of Johannesburg also hiked their prices by almost 7% on the 1st of July. With everything becoming more and more expensive – especially when you’re a new home owner – we know that it’s hard to balance your home expenses budget. That’s why we spoke to the head of product management at Absa Home Loans, Miguel Martins and asked him for some advice as to how one can go about managing your home expenses better.
Firstly, we have to talk about exactly what we mean when we mention home expenses. This is all the costs that relate to the upkeep and improvement of your property – it includes utility bills, monthly upkeep costs as well as repair and maintenance costs.
According to Martins it’s important to differentiate between the home expenses that freestanding home owners are liable for, and those of owners of apartments or units in security complexes.
“The levies in an apartment or complex environment tend to cover a lot of the building upkeep and maintenance costs. It would also include building insurance costs, where as the owner of a freestanding home, would have to pay all of these expenses separately.”
Now let’s take a closer look at these expenses.
- Utility bills: These are compulsory monthly expenses that include water and electricity, rates and taxes, as well as sewage maintenance.
- Repair and maintenance costs: According to Martins, people often forget to budget for maintenance costs, as you can’t always plan for it. It could come down to about R300 – R500 a month depending the age of the building among other factors. This includes fixing broken items in and around your home such as leaking roofs, broken gutters or cracked walls, as well as the services of plumbers and/or electricians.
- Monthly lifestyle costs: These are the monthly services and expenses that aren’t always completely necessary, but play a part in bettering your living situation. This include expenses such as garden services, security, housekeeping, DStv and Wi-Fi.
“There are also long-term costs that need to be taken into consideration, such as repainting your house every few years, replacing carpets or tiles and other general improvements in and around your house to keep the value up.”
Martins also shared a few handy tips to help you change the way you look at your budget, and ultimately help you to better manage your home expenses:
- Put together a monthly budget. Before you can manage your finances properly, you need to have a view of your incoming and outgoing cashflow, and knowledge of what you have left to save. Start off by taking time to review your bank statements.
- Understand your monthly expenses. You need to differentiate between the costs you have little or no control over, such as rates and taxes, and which expenses you can immediately reduce if need be, like data costs on your Wi-Fi connection.
- Always have a savings fund. Your home is your largest asset but if you don’t invest on its upkeep, it will ultimately decrease in value. Keep a savings fund available to replace and repair items in and around your home, to avoid letting it fall into disrepair.
“Property is an asset that will usually increase in value – don’t be afraid of the risks and expenses that come along with being a home owner, because as long as you do proper planning and stay on top of things, the rewards far outweigh the expenses.”
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.