After buying a home, many people find themselves with more money than they know what to do with. But how does this new amount of disposable income affect your finances? Is it even worth it to buy that new car you’ve been eyeing? You may be surprised by the answers. In this blog post, we’ll discuss the financial implications of purchasing a home on your finances.
You’re likely to spend less money
What do most people with a lot of disposable income do? They go shopping. This is not necessarily the case for those who have just bought a house and are starting their family. Many couples buy all new furniture, appliances, and clothing after purchasing a home because they need items that fit the new space they’ve moved into. This leaves them with little leftover money to spend on frivolous purchases like entertainment or eating out at restaurants.
Your job will soon become more important than ever before
When you are just out of college or have been living on your own for a few years, being able to pay rent every month without too much difficulty is enough proof that your career (or lack thereof) is headed in the right direction. Once you purchase a home and make mortgage payments every month, however, this becomes evidence of how stable and long-term your professional position is. Before telling yourself, “I can still move up if I want to,” once again, consider the fact that changing employers (or even careers) can be much more difficult after buying a home.
The institution of marriage will become dramatically more expensive
Many people assume that marriage means you’ll no longer have to pay for dates or shopping sprees as a couple, but this is not the case at all. Once you marry and purchase a home together, you open yourselves up to unique financial challenges and responsibilities that married couples face each year. For example: · Income Tax: You must now file separate taxes if your combined incomes make it impossible to qualify for the “married filing jointly” tax bracket (this would be taxed as though you’re still single). The alternative is declaring your respective salaries separately on two different tax forms and lowering your adjusted gross income by $6,300.