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Jun 24, 2023

Five Key Financial Aspects to Managing Your Home

Track these five expense categories to manage your home's finances. For most

Track these five expense categories to manage your home's finances.

For most consumers, a home is their largest financial asset and largest ongoing expense. The biggest difference between your home and all your other financial assets is that your home is a physical asset. It is a collection of building materials, equipment, appliances, fixtures, finishes and landscaping. Therefore, you must manage not only the financial aspects but also the physical ones, which include insurance, maintenance and improvement aspects of your home.

Yet in my experience, most consumers focus on the lifestyle and family aspects of being a homeowner. They ignore the financial tracking of this asset and expense, which leads to spending more money than necessary, decreasing the value and not having complete financial visibility to plan their overall personal finance strategy.

Here are five home finance categories to manage and track on a consistent basis:

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Your home has different asset values, so it is important to understand and manage these metrics.

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These are all the annual recurring expenses that most homeowners spend every year on their homes to various companies that service the home.

Your home's collection of physical assets needs maintenance to keep things running efficiently.

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Major home renovations are expenses but also additional investments into your home with tax implications. It is important to set budgets and track costs for these.

As an option, many people are looking to generate income from their home. Here are two approaches.

You can track these financial categories yourself or use a home management platform to help you do it. Whichever method you use, since your home is a financial asset and likely your biggest expense, it is vital to find a system to manage all these financial and physical aspects of your home. It is time to dedicate effort to financially manage your home just like the other financial aspects of your life.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

John Bodrozic is a Co-Founder of HomeZada, a personal finance platform for homeowners to save money and improve value on their properties.

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