Looking at purchasing a new home can be a daunting financial task. You can better focus on mortgage payment goals and how the new house will affect your total expenses by putting together a household budget. Maintaining a budget during the time you own your home can also help to prevent potential financial disasters, as well as point you the direction of good financial habits of saving and responsible financial management.

Taking the Time

You will need a little time to develop your budget--it's not a five minute exercise--but should not take longer than a few hours if you gather the necessary information first. Get everyone who will be involved in spending involved in developing the budget.

Some of the items and information you will need to develop your budget are:

• All current monthly loan payments.
• All other monthly expenses (such as child care, dues, etc.).
• Records of variable expenses (for example, utilities, food and car repair) from the last 12 months. This will give you an estimate of your monthly expenditures.
• Records of annual or semi-annual expenses (such as insurance and taxes).
• An estimate of what your new mortgage payment will be. You can estimate that using our mortgage calculator.
• Records of other non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type.
• Records or an estimate of personal expenses (entertainment, travel, etc.)
• Having a current copy of your credit report can be very helpful. Not only will it reveal any inaccuracies in your credit history, it will also give you a clear picture of not only your total debt but your monthly obligations. You can get a copy of your credit report here.

Be realistic in your budget assessment. Make provisions for possible increases in some items (for example, school tuitions, insurance and taxes). Then, look for ways to get (and maintain) control over your budget. You can fine a handy budget worksheet here: Budget Worksheet.

Most People Spend 10% More Than They Make!

You probably know how much money you made last month, but do you know how much money you spent? Or do you know how much money you have left to spend this month? If you don't you're not alone, most people have no idea. The fact is most of us spend 10% more per month than we make. That comes out to $431 per month based on the average American income. No wonder the average credit card debt is growing.

So why is it so difficult to track spending? Today we live in a near "cashless" society. Using debit cards, credit cards, automatic deposits, and wire transfers we rarely even see our money. It's easier than ever to spend, spend, spend! Taking the time to make a household budget can help you meet your short and long-term goals as a homeowner and a responsible consumer. Good luck!