How to Buy a Second Home that Pays for Itself

Recent data from the U.S. Census Bureau shows that home sales were up more than 17% in June 2020 from the month before, and up more than 13% compared to the year prior. Those who have the means to buy a second home are wise to take on mortgage debt (or reorganize their current debt) in today’s low interest environment.

With low 30-year mortgage rates, owning a rental property that “pays for itself” through monthly rental income is especially lucrative with a significantly lower mortgage payment. If you’re curious about buying a second home and renting it out, keep reading to find out about the major issues you should be aware of, the hidden costs of becoming a landlord, and more. 

Important Factors When Buying a Short-Term Rental

The issues involved in buying a rental home varies dramatically depending on where you plan to purchase. After all, buying a ski lodge in an area with seasonal tourism and attractions might require different considerations than buying a home in a major metropolitan area where tourists visit all year long.

But there are some factors every potential landlord should consider regardless of location. Here are a few of the most important considerations:

  • Location. Consumers rent vacation homes almost anywhere, but you’ll want to make sure you’re looking at homes in an area where short-term rentals are popular and viable. You can do some basic research on AirDNA.co, a short-term rental data and analytics service, or check competing rentals in the area you’re considering.
  • Property Management Fees. If you plan to use a property management company to manage your short-term rental instead of managing it yourself, you should find out how much other owners pay for management. Also, compare listing fees for your second home with a platform like Airbnb or VRBO.
  • Taxes. Property taxes can be higher on second homes since you don’t qualify for a homestead exemption. This means higher fixed costs each month, which could make it more difficult to cover your mortgage with rental income.
  • Competition. Check whether a rental area you’re considering is full of competing rentals that are never full. You can find this information on VRBO or Airbnb by looking at various rentals and checking their booking calendars.
  • Potential Rental Fees. Check rental sites to see how much you might be able to charge for your second home on a nightly, weekly, or monthly basis. 

5 Steps to Rent Your Second Home

Before purchasing a second home, take time to run different scenarios using realistic numbers based on the rental market you’re targeting. From there, the following steps can guide you through preparing your property for the short-term rental market.

1. Research the Market

First, you’ll want to have a general understanding of the rental market you’re entering. How much does the average short-term rental go for each night or each week? What is the average vacancy rate for rentals on an annual basis? 

Research your local rental market, the average price of rentals in your area, various features offered by competing rentals, and more.

Action Item: Dig into these figures by using AirDNA.co. Just enter a zip code or town, and you’ll find out the average nightly rate, occupancy rate, revenue, and more. Although some of the site’s features require a monthly subscription, you can find out basic information about your rental market for free.

2. Know Your Numbers

You need to know an array of real numbers before renting your second home, including the following:

  • Average nightly rate
  • Average occupancy rate
  • Fixed costs, such as your mortgage payment, taxes, and insurance for the rental
  • Property management fees and costs for cleaning between tenants
  • Additional fixed costs for things like trash pickup, internet access, and cable television
  • Costs for marketing your space on a platform like VRBO or Airbnb, which could be a flat fee or 3% of your rental fee depending on the platform

You’ll use these numbers to figure out the average monthly operating cost for your second home, and the potential income you might be able to bring in. Without running these numbers first, you wind up in a situation where your short-term rental doesn’t pay for itself, and where you’re having to supplement operating expenses every month. 

Action Item: Gather every cost involved in operating your specific short-term rental, and then tally everything up with monthly and annual figures that you can plan for.

3. Buy the Right Insurance

If you plan on using your second home as a short-term rental, you’ll need to buy vacation rental insurance. This type of homeowners insurance is different from the type you’d buy for your primary residence. It’s even unique from landlord insurance coverage since you need to have insurance in place for your second home and its contents.

Some vacation rental policies let you pay per use, and they provide the benefits of homeowners insurance (like property coverage, liability, and more) plus special protection when your property is rented to a third party. 

Action Item: Shop around for a homeowners insurance plan that’s geared specifically to vacation rentals. See our top picks for the best homeowners insurance companies out there.

4. Create a Property Management Plan

If you live near your second home, you might want to manage it yourself. There’s nothing wrong with this option, but you should plan on receiving calls and dealing with problems at all hours of the day. 

Many short-term rental owners pay a property management company to communicate with their tenants, manage each rental period, and handle any issues that pop up. Property managers can also set up cleanings between each rental and help with marketing your property. 

Action Item: Create a property management plan and account for any costs. Most property managers charge 25% to 30% of the rental cost on an ongoing basis, so you can’t ignore this component of owning a short-term rental. 

5. Market Your Space

Make sure you appropriately market your space, which typically means paying for professional photos and creating an accurate, inviting listing on your chosen platforms. Your property manager might help you create a marketing plan for your vacation rental, but you can DIY this component of your side business if you’re tech- and media-savvy. 

Action Item: Hire a photographer to take professional photos of your rental, and craft your rental description and listing. 

Risks of Purchasing a Short-Term Rental

Becoming a landlord isn’t for the faint of heart. There’s plenty that can go wrong, but here are the main risks to plan for:

  • Government roadblocks. In destinations from New York City to Barcelona, government officials have been cracking down on short-term rentals and trying to limit their ability to operate. New rules could make running your business more costly, difficult, or even impossible. 
  • Your home could be damaged beyond repair. If you read the Airbnb message boards and other landlord forums, you’ll find an endless supply of nightmare rental stories of houses getting trashed and rentals enduring thousands of dollars in damage. 
  • Housing market crash. If the housing market crashes again like it did in 2008, you might find you owe more than your second home is worth at a time when it’s increasingly difficult to find renters. 
  • Reliance on tourism. As we’ve seen during the pandemic, circumstances beyond our control can bring travel and tourism to a screeching halt. Since short-term rentals typically rely on tourism to stay afloat, decreases in travel can affect the viability of your business, quickly.
  • High ongoing costs and fees. Higher property taxes, property management fees, cleaning fees and maintenance costs can make operating a short-term rental costly in the long-term. If you don’t account for all costs and fees involved, you might wind up losing money on your vacation home instead of having the property “pay for itself”.

The Bottom Line

A short-term rental can be a viable business opportunity, depending on where you want to buy and the specifics of the local rental market. But there are a lot of factors to consider before taking the leap. 

Before investing hundreds of thousands of dollars, think over all of the potential costs and risks involved. You’ll want to ensure that you’ve done comprehensive research and have run the numbers for every possible scenario to make an informed decision.

The post How to Buy a Second Home that Pays for Itself appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

How Much Your Monthly Food Budget Should Be + Grocery Calculator

.food-budget-calculator{margin:30px auto;border:2px solid #ebebeb;border-radius:8px;border-top:0;border-top-left-radius:8px;border-top-right-radius:8px;padding:30px 30px 0;padding-top:0;position:relative}@media(max-width:610px){.food-budget-calculator{padding:0 20px 0}}.calc-header{font-family:Avenir,sans-serif;font-size:35px;color:#fff;font-weight:700;width:calc(100% + 62px);border-top-left-radius:8px;border-top-right-radius:8px;background-color:#33a6a5;padding:40px 0 40px 0;text-align:center;-webkit-box-sizing:border-box;box-sizing:border-box;margin:0 -31px}.calc-subheader{display:block;text-align:center;font-size:18px;margin:20px -31px 0;border-bottom:1px solid #75767b;padding:10px 10px 25px;position:relative}.calc-subheader.arrow:after,.calc-subheader.arrow:before{top:100%;left:40%;content:”;display:block;position:absolute;width:0;height:0;border-left:30px solid transparent;border-right:30px solid transparent;border-top:20px solid #bcbcbc;margin-top:1px;z-index:10}.calc-subheader.arrow:after{z-index:20;border-top:20px solid #fff;margin-top:0}@media(max-width:609px){.calc-header{width:calc(100% + 42px);margin:0 -21px}.calc-subheader{margin:10px -21px 25px}}.calc-household-wrap{display:-webkit-box;display:-ms-flexbox;display:flex;margin:0 -31px;-webkit-box-shadow:0 1px 0 0 #75767b6b;box-shadow:0 1px 0 0 #75767b6b;overflow-x:auto;-ms-scroll-snap-type:x mandatory;scroll-snap-type:x mandatory;scroll-padding:60px;scroll-behavior:smooth;-webkit-overflow-scrolling:touch;position:relative;scrollbar-width:thin;scrollbar-color:#33a6a5 #beecf1}@media(max-width:608px){.calc-household-wrap{margin:-25px -20px 0}}.household-wrap-arrow,.household-wrap-arrow-prev{display:none;position:absolute;top:318px;bottom:auto;width:28px;right:0;height:405px;background:linear-gradient(to right,transparent 0,rgba(255,255,255,.99) 100%);z-index:12}.household-wrap-arrow-prev{left:0;background:linear-gradient(to left,transparent 0,rgba(255,255,255,.99) 100%)}.household-wrap-arrow span,.household-wrap-arrow-prev span{position:absolute;top:40%;left:48%;font-size:60px;line-height:1;cursor:pointer;color:#2c77bf;opacity:.5;transition:opacity .25s ease-in-out}.household-wrap-arrow-prev span{left:auto}.household-wrap-arrow span:hover,.household-wrap-arrow-prev span:hover,.household-wrap-arrow-prev:focus-within span,.household-wrap-arrow:focus-within span{opacity:1}.calc-household-wrap::-webkit-scrollbar{width:12px;height:12px}.calc-household-wrap::-webkit-scrollbar-thumb{background:#33a6a5;border-radius:10px}.calc-household-wrap::-webkit-scrollbar-track{background:0 0}.calc-person{display:none;padding:30px;scroll-snap-align:start;-webkit-transform-origin:center center;-ms-transform-origin:center center;transform-origin:center center;-webkit-transform:scale(1);-ms-transform:scale(1);transform:scale(1);-webkit-transition:-webkit-transform .5s;transition:-webkit-transform .5s;-o-transition:transform .5s;transition:transform .5s;transition:transform .5s,-webkit-transform .5s;position:relative}@media(max-width:480px){.calc-person{min-width:330px}}.calc-person.active{display:block}.calc-person:nth-child(even){background-color:#f8f8f8}.calc-group{margin-bottom:15px}.calc-group:last-of-type{margin-bottom:0}.calc-group label{font-weight:400;color:#2e2f30;font-size:18px}.calc-group:not(.dietary){display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-align:center;-ms-flex-align:center;align-items:center}@media(max-width:480px){.calc-group:not(.dietary){flex-wrap:wrap}}.calc-group:not(.dietary) label{width:260px}.calc-person input[type=checkbox]{border-radius:0;height:18px;width:18px;-moz-appearance:none;-webkit-appearance:none;-o-appearance:none;border:1px solid #75767b;outline-offset:-1px;-webkit-transition:all .2s;-o-transition:all .2s;transition:all .2s}.calc-person input[type=checkbox]+label{margin-left:12.5px;margin-right:20px;position:relative;top:-2.5px}.calc-person input[type=checkbox]:checked+label:after,.calc-person input[type=checkbox]:not(:checked)+label:after{content:”;background-image:url(https://blog.mint.com/wp-content/uploads/2020/09/check@2x.png);position:absolute;top:6.5px;left:-29.5px;font-size:1em;line-height:.8;color:#09ad7e;-webkit-transition:all .2s;-o-transition:all .2s;width:16px;transition:all .2s;background-repeat:no-repeat;height:17px;background-size:100% auto}.calc-person input[type=checkbox]:not(:checked)+label:after{opacity:0;-webkit-transform:scale(0);-ms-transform:scale(0);transform:scale(0)}.calc-person input[type=checkbox]:checked+label:after{opacity:1;-webkit-transform:scale(1);-ms-transform:scale(1);transform:scale(1)}.calc-person input[type=checkbox]:checked{background-color:#2c77bf}.calc-person input[type=checkbox]:checked+label:after{color:#fff}.calc-person h3{margin-top:0;margin-bottom:20px;color:#00a6a4;font-weight:700;font-size:18px}.dietary-label{display:block;margin-bottom:8px}.food-budget-calculator select{font-size:16px;padding:9px 8px;margin-left:20px;width:87px;-ms-flex-item-align:center;-ms-grid-row-align:center;align-self:center}@media(max-width:480px){.food-budget-calculator select{margin-left:0;margin:10px 0}}.food-budget-calculator select#household{width:57px}.placeholder{margin-left:auto;margin-right:auto}.calc-container{width:100%;font-family:Avenir,sans-serif;border:2px solid #ebebeb;border-radius:8px;border-top:0;border-top-left-radius:0;border-top-right-radius:0;padding:30px;-webkit-box-sizing:border-box;box-sizing:border-box}.calculation-section{display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-orient:horizontal;-webkit-box-direction:normal;-ms-flex-direction:row;flex-direction:row;-webkit-box-pack:justify;-ms-flex-pack:justify;justify-content:space-between;-webkit-box-align:center;-ms-flex-align:center;align-items:center}.calculation-section p{font-size:18px;color:#333;font-weight:700}.user-input{-ms-flex-item-align:start;align-self:flex-start;padding-top:0;padding-left:0;padding-right:10px}.user-input p{margin-top:0}.user-input label{font-size:14px;color:#75767b;font-weight:500;position:relative}.user-input input{border:1px solid #bababd;padding:10px;-webkit-box-sizing:border-box;box-sizing:border-box;margin-top:10px}.result-display p{font-weight:700;color:#33a6a5;font-size:14px;text-transform:uppercase;text-align:center;margin:0}.result-display{background-color:#f8f8f8;padding:25px 15px 25px 15px;-webkit-box-sizing:border-box;box-sizing:border-box}.rent-text{color:#333!important;font-weight:700;font-size:48px!important;padding:20px 0 20px 0;-webkit-box-sizing:border-box;box-sizing:border-box}.calc-gen-p{font-size:18px;color:#333;margin-top:30px;margin-bottom:30px;text-align:center}.bold-p{font-weight:700}.slider-section{border:1px solid #75767b;padding:30px;padding-left:26px;padding-right:26px}.slider-directions{font-weight:700;text-align:center;width:73%;margin-left:auto;margin-right:auto;margin-top:0;margin-bottom:30px}.slider-div{width:100%;-webkit-box-sizing:border-box;box-sizing:border-box}.slider{-webkit-appearance:none;-moz-appearance:none;appearance:none;height:12px;width:calc(100% + 35px);border-radius:8px;background:-webkit-gradient(linear,left top,right top,from(#5da3a3),color-stop(25%,#5da3a3),color-stop(25%,#6ebf7d),color-stop(50%,#6ebf7d),color-stop(50%,#edbd46),color-stop(75%,#edbd46),color-stop(75%,#e7984c),to(#e7984c));background:-o-linear-gradient(left,#5da3a3 0,#5da3a3 25%,#6ebf7d 25%,#6ebf7d 50%,#edbd46 50%,#edbd46 75%,#e7984c 75%,#e7984c 100%);background:linear-gradient(to right,#5da3a3 0,#5da3a3 25%,#6ebf7d 25%,#6ebf7d 50%,#edbd46 50%,#edbd46 75%,#e7984c 75%,#e7984c 100%);margin-bottom:30px}.slider:focus{outline:0!important}.slider-spender>div.active::before,.slider::-webkit-slider-thumb{-webkit-appearance:none;appearance:none;width:35px;height:35px;border-radius:50%;background:#f8f8f8;-webkit-box-shadow:0 2px 4px 0 rgba(0,0,0,.2),0 3px 6px 0 rgba(0,0,0,.19);box-shadow:0 2px 4px 0 rgba(0,0,0,.2),0 3px 6px 0 rgba(0,0,0,.19);cursor:pointer}.slider-spender>div.active::before,.slider:focus::-webkit-slider-thumb{border:1.5px solid #33a6a5}.slider-spender>div.active::before,input[type=range]::-moz-range-thumb{-webkit-appearance:none;-moz-appearance:none;appearance:none;width:35px;height:35px;border-radius:50%;background:#f8f8f8;box-shadow:0 2px 4px 0 rgba(0,0,0,.2),0 3px 6px 0 rgba(0,0,0,.19);cursor:pointer;margin-left:-17.5px}.slider-spender{display:block;margin-bottom:30px;height:12px;width:100%;border-radius:10px}.slider-spender-wrap{margin-bottom:50px}.slider-spender>div{display:inline-block;width:25%;height:100%;position:relative;cursor:pointer;transition:all .25s ease-in-out;z-index:1;margin:0 -2.5px;}.slider-spender>div.active{transform:scale3d(1.125,1.55,1);z-index:2}.slider-spender .thrifty{background-color:#00a6a4;border-radius:10px 0 0 10px}.slider-spender .cost-conscious{background-color:#21c374}.slider-spender .moderate{background-color:#ffdc00}.slider-spender .generous{background-color:#ff9331;border-radius:0 10px 10px 0}.spender-wrap{padding:30px 0;margin-top:45px}.moderate-budget{font-size:18px;text-align:center;margin-bottom:30px}.slider-results{display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-orient:horizontal;-webkit-box-direction:normal;-ms-flex-direction:row;flex-direction:row;-ms-flex-wrap:wrap;flex-wrap:wrap;-webkit-box-pack:center;-ms-flex-pack:center;justify-content:center}.slider-text{display:-webkit-box;display:-ms-flexbox;display:flex;-ms-flex-pack:distribute;justify-content:space-around}.slider-text p{font-size:18px;font-weight:800;width:25%;text-align:center;white-space:nowrap;position:relative}@media(max-width:644px){.slider-text p{display:none}.slider-text p.active{display:block;width:auto}}@media(min-width:768px){.slider-text p{font-size:13px;font-weight:600}}@media(min-width:900px){.slider-text p{font-size:15px;font-weight:800}}@media(min-width:1100px){.slider-text p{font-size:18px}}.kind-spender{margin:70px 0 0;text-align:center;font-size:24px}.result-box{width:258px;margin:4px;padding:10px;height:100px;-webkit-box-sizing:border-box;box-sizing:border-box;background-color:#f8f8f8;position:relative}.result-2-header{font-size:14px;text-transform:uppercase;text-align:center;font-weight:700;margin:0;margin-bottom:10px;width:-webkit-max-content;width:-moz-max-content;width:max-content;display:block;margin-left:auto;margin-right:auto;position:relative;-webkit-box-sizing:border-box;box-sizing:border-box}.tooltip-icon{position:absolute;right:-25px;bottom:17%;width:13px;height:13px}.tooltip-text{background-color:#75767b;color:#fff;font-family:Avenir,sans-serif;font-size:14px;padding:8px;position:absolute;border-radius:12px;width:150px;display:none;position:absolute;left:85px;top:52px;z-index:1;text-transform:none;font-weight:400;text-align:left;white-space:normal}.tooltip-icon:focus+.tooltip-text,.tooltip-icon:hover+.tooltip-text{display:block}.slider-text p .tooltip-icon{left:0;right:0;top:50px;margin:auto}.slider-text p .tooltip-text{left:0}.result-box p .tooltip-text{left:110px;top:30px}@media(max-width:600px){.result-box p .tooltip-text,.slider-text p .tooltip-text{left:auto;right:0}}.tooltip-wrapper{position:relative;width:-webkit-max-content;width:-moz-max-content;width:max-content}.rent-tip{left:55px}.rent-header{color:#33a6a5}.other-header{color:#2683e6}.discretionary-header{color:#ff9331}.savings-header{color:#00cadc}.silder-result-number{font-size:36px;color:#333;text-align:center;font-weight:700;margin:0}.printables-button,.signup-2{width:60%!important;margin-right:auto}.printables-button,.signup-calc{font-family:Avenir,sans-serif;font-size:16px;color:#fff;background-color:#ff9331;text-align:center;height:48px;width:158px;border:none;border-radius:5px;cursor:pointer;width:100%!important;display:block;margin-right:auto}.printables-button{background-color:#1a7de5;height:60px;width:300px!important;margin-top:10px;margin-bottom:10px}.printables-button:focus,.printables-button:hover{color:#1a7de5;background-color:#fff;border:2px solid #1a7de5}.cta-p{display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-ms-flex-pack:justify;justify-content:space-between;-webkit-box-align:center;-ms-flex-align:center;align-items:center;margin-top:80px}.signup-calc:focus,.signup-calc:hover{color:#ff9331;background-color:#fff;border:2px solid #ff9331}.signup-2{height:60px;width:300px!important;margin-top:10px;margin-bottom:10px}@media screen and (max-width:645px){.calc-gen-p a{margin-left:10px}}@media screen and (max-width:500px){.printables-button,.signup-2{margin-left:auto;margin-right:auto}.calc-container{display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-orient:vertical;-webkit-box-direction:normal;-ms-flex-direction:column;flex-direction:column;width:90%;border:2px solid #babbbe;border-top:none;margin-left:auto;margin-right:auto;border-radius:0}.calculation-section,.slider-results{display:-webkit-box;display:-ms-flexbox;display:flex;-webkit-box-orient:vertical;-webkit-box-direction:normal;-ms-flex-direction:column;flex-direction:column;width:90%;margin-left:auto;margin-right:auto}.user-input{margin-left:auto;margin-right:auto}.user-input p{font-size:25px;padding-bottom:20px;margin-bottom:20px;border-bottom:1px solid #75767b}#income{width:100%}.slider-section{border:none;border-top:1px solid #75767b;padding-left:0;padding-right:0;padding-bottom:0}.result-display{margin-top:30px;width:100%;margin-left:auto;margin-right:auto}.result-box{width:100%}.calc-gen-p{width:80%;margin-left:auto;margin-right:auto;font-size:15px}.calc-gen-p a{margin:auto}.cta-p{text-align:center;margin-top:0;margin-left:auto;line-height:1.2222;margin-right:auto;width:100%;font-size:20px;-webkit-box-orient:vertical;-webkit-box-direction:normal;-ms-flex-direction:column;flex-direction:column}.signup-calc{margin-top:30px;margin-left:0;width:80%}.signup-2{height:60px;width:300px;margin-left:30px}.slider{height:22px}.slider::-webkit-slider-thumb{height:45px;width:45px}input[type=range]::-moz-range-thumb{height:45px;width:45px}.user-input label{font-size:18px}.user-input input{font-size:14px}.slider-directions{font-size:18px}.silder-result-number{font-size:27px}.result-2-header{font-size:12px}.rent-text{font-size:40px!important}}

Your grocery bill can add up fast. From dinner entrées to snacks, the amount you spend directly affects your other financial goals. Luckily, there are some guidelines to ensure you’re not overspending. 

Use the grocery calculator below to estimate your monthly and weekly food budget based on guidelines from the USDA’s monthly food plan. Input your family size and details below to calculate how much a nutritious grocery budget should cost you. Of course, every family is different. Some love coupons and leftovers, while others prefer fresh fish and aged cheese. Once you’ve established your budget, use the slider to adjust your estimate to your spending habits. 

Getting your food budget on point takes practice. With this grocery calculator and the right spending habits, you’ll have enough for your living expenses and exciting financial goals like paying off loans or buying a house.

Grocery Budget Calculator

012345678910

Person 1

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 2

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 3

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 4

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 5

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 6

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 7

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 8

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 9

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

Person 10

0-34-812-1819-5051-7071+
0123456789101112131415161718192021

A moderate grocery budget will run you:

Weekly Grocery Cost Food costs per individual are based on USDA research regarding Dietary Reference Intakes and Dietary Guidelines for Americans, and follow MyPyramid nutrition guidelines.

$0.00

Monthly Grocery Cost Food costs per individual are based on USDA research regarding Dietary Reference Intakes and Dietary Guidelines for Americans, and follow MyPyramid nutrition guidelines.

$0.00

What kind of spender are you?

Does your estimate look right? If your spending habits don’t add up, explore these other budget options and choose what’s best for your lifestyle.

Thrifty This is the USDA’s estimated food budget for families that receive food assistance like WIC or SNAP.

Cost-Conscious This is an ideal budget for nutritious meals if you’re looking to save a little extra cash with leftovers and coupons.

Moderate This is the standard for affordable, nutritious, and balanced portions for most families.

Generous This budget gives you some spending wiggle room for finer foods or extra portions.

See where the rest of your budget is going Sign up for Mint

Monthly Grocery Budget

Ever wonder how much you should spend on groceries? The average cost of food per month for one person ranges from $150 to $300, depending on age. However, these national averages vary based on where you live and the quality of your food purchases.

Here’s a monthly grocery budget for the average family. This is based on the national average and likely varies by location and shop. For instance, New York City grocers are going to be far more expensive than Kansas City shops. Additionally, organic grocery stores like Whole Foods are pricier than places like Walmart or Aldi.

You’ll also want to consider dietary choices, like gluten-free or vegan diets. These can significantly affect your budget, so consider planning your grocery list online to compare prices and find your preferred alternatives.

FAMILY SIZE SUGGESTED
MONTHLY BUDGET
1 person $251
2 people $553
3 people $722
4 people $892
5 people $1,060
6 people $1,230

Finding a reasonable monthly grocery budget ensures you and your family have what you need, while not overspending. Look back at previous months using a budgeting app or credit card statements to see what you’ve spent at the grocery store. Decide if you want to maintain your current budget or cut back.

Purchasing Groceries vs. Dining Out

Mockup of grocery list and food inventory printables with fresh produce

 

Download grocery list and inventory printables button.

Don’t forget what you spend at restaurants when you consider your food budget. According to the U.S. Department of Agriculture, Americans spend 11 percent of their take-home income on food. It doesn’t all go towards groceries, though. Approximately six percent is spent on groceries, while five percent is spent dining out — including dates, lunches with coworkers, and Sunday brunch.

With this framework in mind, you can calculate your total food budget based on your take-home income. For example, Rita makes $3,500 per month after taxes. She would budget six percent for groceries ($210) and five percent for restaurants ($175). So she’ll need a total of $385 for food each month. With a little practice, she’ll better learn her habits and be able to accurately adjust her budget.

Tips for Reducing Your Budget

Illustration of grocery coupons and meal planner.

There are several ways to cut back on what you spend without sacrificing the quality and taste of your food. Trimming your food budget can help you stow away more for your financial goals, such as building an emergency fund or saving for a dream vacation.

Cut Coupons

Coupons are easy to find in the mail, in store, in your inbox, and even in a Google search. Many popular grocery stores are rolling out apps that track your coupons and savings. Be sure to download and register your email for new updates and sales. These usually work in person or online, so you can shop when and how you like. 

While a single coupon might not give you a large discount, you can save a lot with multiple coupons. It’s also important you make sure you actually need the item you’re purchasing instead of buying it for the sale. This can quickly get out of hand and push you over budget. 

Freeze Your Food

Freezing your fresh food before it goes bad helps your wallet and the environment. You can plan ahead and freeze prepared produce to save time on weekday cooking, or chop and freeze last week’s produce before shopping for more. Frozen vegetables are great in soups and stews, and you can use frozen fruits for healthy breakfast smoothies. 

Plan a Weekly Menu Ahead of Time

Plan your meals ahead of time to determine the food items and quantities you need before you head to the grocery store. This way you’re more likely to buy the exact items you need and can plan for breakfast, lunch, and dinner. Try to plan for recipes that use the same ingredients so there’s less to purchase. You can also make larger meals and plan leftovers for lunch so you have less to plan and purchase.

Download meal planning printable button.

Bring Lunches to Work 

A $13 lunch out might not seem like much, but it can blow your food budget fast if it becomes a habit. Push your monthly food budget further with delicious lunches from home. Salads, sandwiches, and leftovers are all easy, inexpensive, and nutritious. 

Buy Store Brands 

Many packaged products have a huge price disparity between brand name and generic items, and store brand items tend to be cheaper without sacrificing much quality. You can easily save 10 cents to a dollar per item, which adds up quickly over many trips. 

Shop at a More Affordable Store

Your local farmers market, chain grocery, and organic store will all offer different specialties and sales. Check out the different shops in your area to find the best combination of quality and price. Some stores might even offer bulk items — great for your favorite products and those with a long shelf-life. Choosing cheaper staple items like milk and yogurt can also make a huge difference over time. 

An accurate food budget that works for you helps you feel more confident and in control of your finances. Build a budget, learn your spending habits, and keep a grocery list to keep you on track and responsible so you can reach bigger goals, like a new vehicle or a down payment on a house. 

Sources: USA Today | EurekAlert | Persistent Economic Burden of the Gluten-Free Diet

The post How Much Your Monthly Food Budget Should Be + Grocery Calculator appeared first on MintLife Blog.

Source: mint.intuit.com

Popular Housing Markets During the Pandemic

There’s something weird happening with the real estate markets today. Normally in a recession, demand for rentals goes up while demand for houses goes down. But if there’s anything 2020 has taught us, it’s that everything is turned on its head right now. 

Instead, we’re seeing an interesting trend: despite the ongoing pandemic, home-buying is experiencing higher demand now than they have been since 1999, according to the National Association of RealtorsⓇ (NAR). If you’ve been hoping to buy a home soon, you’re probably already aware of this weird trend, and excited. But is it the same story everywhere? And is a pandemic really the right time to buy? 

How the Pandemic is Changing Homeownership

This pandemic is different from any other in history in that many people — especially some of the highest-paid workers — aren’t being hit as hard as people who rely on their manual labor for income. This, coupled with an ultra-low mortgage rate environment and a new lifestyle that’s not fit for a cramped apartment, is creating the perfect storm of high-dollar homebuyers. 

“I didn’t want to pay someone else’s mortgage to have three roommates,” says Amy Klegarth, a genomics specialist who recently purchased a home in White Center, a suburb of Seattle where she was formerly renting. “I moved because I could afford to get a house with a large yard here for my goats, Taco and Piper.” 

Whether you have goat kids or human kids (or even no kids), you’re not the only one looking for a new home in a roomier locale. According to the NAR report, home sales in suburban areas went up 7% compared to just before the pandemic started. In some markets, it’s not hard to understand why people are moving out. 

Where Are People Going?

Apartments are small everywhere, but they’re not all the same price. For example, homes in cities tend to be 300 square feet smaller than their suburban counterparts. Some of the hottest home-buying markets right now are in areas where nearby rents are already too high, often clustered around tech and finance hubs that attract high-paid workers. After all, if you can’t go into the office and all of the normal city attractions are shut down, what’s the point of paying those high rental costs?

According to a December 2020 Zumper report, the top five most expensive rental markets in the U.S. are San Francisco, New York City, Boston, San Jose, and Oakland. But if you’re ready to buy a home during the pandemic, there are nearby cheaper markets to consider.

If You Rent in San Francisco,  San Jose, and Oakland, CA

Alternative home-buying market: San Diego, Sacramento 

  • Average rent: San Francisco, $2,700, San Jose, $2,090; Oakland; $2,000
  • Average home value (as of writing): San Diego ($675,496) and Sacramento ($370,271)
  • Estimated mortgage payment with 20% down: San Diego ($2,255) and Sacramento ($1,236)

Big California cities are the quintessential meccas for tech workers, and that’s often exactly who’s booking it out of these high-priced areas right now. Gay Cororaton, Director of Housing and Commercial Research for the National Association of Realtors (NAR), offers two suggestions for San Francisco and other similar cities in California. 

San Diego

First, is the San Diego-metro area, which has a lot to offer people who are used to big-city living but don’t want the big-city prices. An added bonus: your odds of staying employed as a tech worker might be even higher in this city. 

“Professional tech services jobs make up 18% of the total payroll employment, which is actually a higher fraction than San Jose (15.5%) and San Francisco (9.3%),” says Cororaton.

Sacramento

If you’re willing to go inland, you can find even cheaper prices yet in Sacramento. “Tech jobs have been growing, and account for 7% of the workforce,” says Cororaton. “Still not as techie as San Jose, San Francisco, or San Diego, but tech jobs are moving there where housing is more affordable. It’s also just 2 hours away from Lake Tahoe.”

If You Rent in New York, NY

Alternative home-buying market: New Rochelle, Yonkers, Nassau, Newark, Jersey City

  • Average rent: $2,470
  • Average home value (as of writing): New Rochelle ($652,995), Yonkers ($549,387), Nassau ($585,741), Newark ($320,303), or Jersey City ($541,271)
  • Estimated mortgage payment with 20% down: New Rochelle ($2,180), Yonkers ($1,834), Nassau ($1,955), Newark ($1,069), or Jersey City ($1,807)

Living in New York City, it might seem like you don’t have any good options. But the good news is you do — lots of them, in fact. They still might be more expensive than the average home price across the U.S., but these alternative markets are still a lot more affordable than within, say, Manhattan. 

New Rochelle and Yonkers

Both New Rochelle and Yonkers are about an hour’s drive from the heart of New York City, says Corcoran. If you ride by train, it’s a half hour. Both New Rochelle and Yonkers have been stepping up their appeal in recent years to attract millennials who can’t afford city-living anymore (or don’t want to be “house poor”), so you’ll be in good company. 

Nassau

“NAR ranked Nassau as one of the top places to work from home in the state of New York because it has already a large population of workers in professional and business services and has good broadband access,” says Cororaton. If you have ideas about moving to Nassau you’ll need to move quickly. Home sales are up by 60% this year compared to pre-pandemic times. 

Newark or Jersey City

If you don’t mind moving to a different state (even if it is a neighbor), you can find even lower real estate prices in New Jersey. This might be a good option if you only need to ride back into the city on occasion because while the PATH train is well-developed, it’s a bit longer of a ride, especially if you live further out in New Jersey. 

If You Rent in Boston, MA

Alternative home-buying market: Quincy, Framingham, Worcester

  • Average rent: $2,150
  • Average home value (as of writing): Quincy ($517,135), Framingham ($460,584), or Worcester ($284,936)
  • Estimated mortgage payment with 20% down: Quincy ($1,726), Framingham ($1,538), or Worcester ($951)

Boston is another elite coastal market, but unlike New York, there’s still plenty of space if you head south or even inland. In particular, Quincy and Framingam still offer plenty of deals for new buyers.

Quincy

If you like your suburbs a bit more on the urban side, consider Quincy. Although it’s technically outside of the city, it’s also not so isolated that you’ll feel like you’re missing out on the best parts of Boston-living. You’ll be in good company too, as there are plenty of other folks living here who want to avoid the high real estate prices within Boston itself.

Framingham

Framingham is undergoing an active revitalization right now in an effort to attract more people to its community. As such, you’ll be welcome in this town that’s only a 30-minute drive from Boston.

Worcester

“Now, if you can work from home, consider Worcester,” says Cororaton. “It’s an hour away from Boston which is not too bad if you only have to go to the Boston office, say, twice a week.” Worcester (pronounced “wuh-ster”) is also a great place for a midday break if you work from home, with over 60 city parks to choose from for a stroll.

Renting Market(s) Average Rent for 1-Bedroom Apartment Housing Market Options & Avg. Monthly Mortgage*
San Francisco, CASan Jose, CAOakland, CA $2,700 San Diego ($2,255) Sacramento ($1,236)
New York, NY $2,470 New Rochelle ($2,180) Yonkers ($1,834)Nassau ($1,955)Newark ($1,069)Jersey City ($1,807)
Boston, MA $2,150 Quincy ($1,726)Framingham ($1,538)Worcester ($951)

*Average home mortgage estimates based on a 20% down payment.

Should You Buy a House During a Pandemic?

There’s no right or wrong answer here, but it’s a good idea to consider your long-term housing needs versus just what’ll get you through the next few months. 

For example, just about everyone would enjoy some more room in their homes to stretch right now. But if you’re the type of person who prefers a night on the town, you might be miserable in a rural area by the time things get back to normal. But if you’ve always dreamed of a big vegetable garden or yard for the family dog, now could be the right time to launch those plans. 

Another factor to consider is job security. And remember that even if you’re permanently working from home today — and not everyone has this ability — living further from the city could limit your future opportunities if a job requires you to be on-site in the city.

Finally, consider this: most homes in outlying areas weren’t built with the pandemic in mind. For example, “… open floor plans were popular, pre-pandemic,” says Cororaton. “If the home for sale has an open floor plan, you’d have to imagine how to reconfigure the space and do some remodeling to create that work or school area.” 

Here are some other things to look for:

  • Outdoor space
  • Area for homeschooling
  • Broadband internet access
  • Proximity to transport routes
  • Office for working from home

Is It More Affordable to Buy or Rent?

There aren’t any hard-and-fast rules when it comes to whether it’s cheaper to rent or buy. Each of these choices has associated costs. To rent, you’ll need to pay for your base rent, pet fees and rent, parking permits, deposits, renters insurance, and more. To buy, you’ll have an even bigger list, including property taxes, maintenance and upgrades, HOA fees, homeowners insurance, closing costs, higher utility bills, and on.

Each of these factors has the potential to tip the balance in favor of buying or renting. That’s why it makes sense to use a buy vs. rent calculator that can track all of these moving targets and estimate which one is better based on your financial situation and the choices available to you. 

In general, though, most experts advise keeping your housing costs to below 30 percent of your take-home pay when setting up your budget. The lower, the better — then, you’ll have even more money left over to save for retirement, your kid’s college education, and even to pay your mortgage off early. 

The post Popular Housing Markets During the Pandemic appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

How To Create A Budget Friendly Spread For Fourth Of July

Nothing says summertime like a BBQ, and getting friends and family together for some food and friends for the Fourth of July is the perfect way to celebrate. I’m usually the host for these get-togethers, and even though I absolutely love having people over, feeding everyone can take a toll on your budget, especially with a big family like mine.

Now that I’ve been using Mint to keep track of expenses, here are some tips on how to have a cost-conscious Fourth of July spread:

1) Declare the BBQ a Potluck.

There’s no secret here: potlucks save money AND time. When you invite your guests to bring dishes to the party, that basically means they’re not only helping out with the food budget, they’re also taking the time to shop for the ingredients and deliver it to your house ready to eat! I would suggest setting some guidelines for your guests so that there is a variety of food in your spread and not just 5 versions of chips and salsa….and that’s it. To divide up the dishes, you could try a few different methods:

  • Assign your guests by categories. If there’s an easy way to divide up your guests, like by their last name, or their birthday month, then you could assign one set of guests appetizers, and another set of guests foods for the grill, for example. For this option, I would suggest asking your guests to confirm their choice with you and even post it on a message board if you are using a website to plan your party, so that you know and your other guests what’s coming and to avoid too much of one type of food.
  • Ask guests to bring specific foods. If your best friend makes the most amazing potato salad, and you need potato salad, ask your best friend to bring potato salad. There’s no need to do all the work when you can tap into the strengths of your guests. For those who are known to shy away from cooking, ask them to bring something simple like a salad or lemonade.

2) Set a food budget….and stick to it!

This tip comes directly from my previous post on Healthy Food on a Budget because it’s also important to serve your guests healthy food and stick to your budget. Just because it’s a party doesn’t mean you should let your health and your money slip up! It’s easy to set up budgets in Mint, like saving for a vacation, but you can also set up smaller budgets like for a summer BBQ celebration. Ideally, since you’re having everyone over for a potluck, this get-together won’t take a huge toll on your wallet, but it’s still important to set limits for what you can spend. I like to make it a fun challenge to see how much money I can save and get the most bang for my buck, while not cutting corners on the quality of food served for my guests.

3) Check out the weekly sales ads.

Don’t throw away those ads because right before Fourth of July, the mail will be filled with sales on foods for entertaining. Gather those ads up to look through what’s on sale for the week and map out your menu from those hot buys. If you have apps for your favorite stores, check those out too because I’ve seen in-app coupons that weren’t in the print ads that have saved me some money. Once you cross-reference the sales and build your shopping list, also plan out where you will shop from. If you have to travel from 2 different stores to save $15 dollars, I think it’s worth it to take the time to shop smart. Sure, it may take an extra 15 minutes, but I can bet that you’ll feel a lot better to have that extra money in your wallet.

4) Pick a dish that saves you money and time.

As the host of the party, you’ll be pretty busy with all the details of the day so your time on the day of the party will be limited. From cleaning up the house to setting up the grill, there’s plenty to do before guests show up. The last thing you want to do is prep a labor-intensive dish when there is so much more on that to-do list. To save money and time, I like to serve up a dessert dish that brings a wow-factor to the party, my Banana Boat S’mores. These delicious treats light up the eyes of all my guests, and if they knew how cost-effective they are, they’d light up even more!

To save money, I like to use fruit for dessert, especially in the summer season, because they’re more affordable, easier to prepare, and most importantly, they’re healthier! Bananas are only 19 cents each, so just make sure to have at least one banana per guest. I also know that marshmallows and Graham crackers are always on sale for $1 around this time of year, so already, this is a dish that costs less than 50 cents per serving.

To save time, I like this dish because you can have your guest prep their own Banana Boat. All you have to do is set up a station of the ingredients and let them make their creation as they please. When you get your guests involved in the food preparation, you’re saving some valuable time on your end, but also your guests are having fun! They’ll leave your party with another recipe under their belt as well, so it’s a win-win for everyone.

5) Buy your food in bulk bins.

Don’t pass up those bulk bins on your shopping trip, because buying from these can be 30-40% cheaper than packaged branded items. For the chocolate, I paid per ounce from the bin instead of buying packages. Since I’m setting up a station for my guests at my own home, I don’t need the packaging or extra chocolate so why should I pay extra for it? Half a pound only costs $2, whereas if I were to buy a bag or a bar it would cost me close to $5.

With these tips on how to have a cost-conscious Fourth of July spread, I hope you can spread out your budget and use some of that money you save on other fun activities this summer!

The post How To Create A Budget Friendly Spread For Fourth Of July appeared first on MintLife Blog.

Source: mint.intuit.com