- Real Estate
ACCOUNTING AND INSURANCE
Accounting And Insurance
Root of all evil or not, money is the basis on which you must run a home. Learn to manage it early on.
In order to finance your home-making projects you will need to manage your money carefully. Not overspending in these terms means that you have enough cash to cope with day-to-day living and any emergencies which may arise, as well as putting a bit aside for home improvements.' You must also insure your possessions to their proper value so that if there is a flood at your home, for example or a burglar makes off with things you will a least be able to claim on your policies.
Most people don't keep accounts because they think it is time consuming and difficult. It need be neither if you take a short time over it each day; it is undoubtedly the best way of keeping track of your expenditure. Everyone can tell you to the penny what the sofa cost but is unlikely to have a very good idea of how much was spent on oddments yesterday. There is no need to wait until January 1 or the beginning of the tax year to start keeping accounts. Tomorrow will do just as well.
Buy a suitable book from a stationer's shop. Most account books come with side headings against which to log your daily expenditure-look at several books to see which one suits you best or buy a blank cash book and write your own. The following headings should cover most people's likely outgoings, although probably everyone will to strike out some and add others:
Repairs and replacements
Although accounting will show you where your money has gone it doesn't help you plan your expenditure in advance. This is particularly important when you are starting to build up a home and have to buy things which cost a lot of money. It's sensible to make a budget plan for the year and decide what you are going to buy and what improvements you plan to make to your property and work out when you can afford them.
To budget properly you must first work out just how much money you will get over the period of a year; i. e. after things like income tax and National Insurance have been deducted. Then write down the amounts of all the fixed payments that you know will occur such as mortgage or rent, rates,, insurances etc. Draw up a chart listing the twelve months of the year and write these sums down in the months in which you pay them. Deduct them from the total sum of your income.
In a new home it is difficult to work out how much your fuel bills will be, but if you can find out roughly how much they are from the previous occupant or from a neighbor in a similar type of place you will be able to allow for this in your budget plan.
You should have a fairly good idea of home much you spend on transport-which should be taken to include the full cost of running the car (petrol, insurance, servicing and so on), fares to and from work and, where appropriate, the maintenance cost of any bicycles.
Food costs vary so much from person to person that it is difficult to suggest what percentage of income should be spent on them. Try to work out how much you spend each week, taking into account the cost of any meals eaten at work or out. Writing down your expenditure over even so short a period as a week should give you a fairly good idea of this.
Once you have allowed for all the inevitable expenditure that goes with running a home, you will know how much is left over for buying new items, decorating and so let borrowing money get out of hand. Decide how much you can comfortably afford to repay each month and don't commit yourself beyond this. Obviously, when you are on a tight budget, the only way to buy expensive items is by spreading their cost over a period of time, but it is sensible to make it a rule that you will pay off on item before purchasing the next.
If you have difficulty meeting large bills, it is worth noting that you can buy stamps which can be credited against your fuel bills and television license. Buy up to the value you can afford each week and stick them on the special card provided.
Don't forget to allow a contingency fund when planning your budget-give yourself some fun and scope for impulse buying. Working to a very rigid plan which allows only for essentials will throw your finances awry if you break out-as you are bound to at some point.
Insuring Your Home
There are two types of insurance you need to have for your home. One is a home building policy which covers the actual fabric of the house and the other is a household contents policy which covers what is in it.
A home building insurance policy will cover not just the structure of the building cover not just the structure of the building but also the permanent fixtures and fittings in it. These include kitchen units and built-in cupboards. In addition it covers outbuildings like sheds and greenhouses and provides limited cover for walls. fences, drives, etc. Most policies cover your home against damage by fire, lightning explosion, earthquake, thieves, riot and malicious persons, storm and flood, aircraft- things falling from them-subsidence, landslip and heave, falling trees, impact by vehicle or animal,
breakage or collapse of radio and TV aerials escape of water from tanks or pipes and oil escaping from fixed heating installations. The policy should also provide for you to stay in alternative accommodation if stay in alternative accommodation if your home is so badly damaged that you cannot live in it for a time. It should also cover you against a person being injured while on your property.
Not all home buildings policies are identical-it is important that you are quite sure what you are covered for. If you feel it is inadequate in some respect, increase your cover or change to another insurance company. Most people only read insurance policies when they come to claim. The correct time to read them is before you sign on with a company. It is your home that is being insured and you must be assured that it is properly covered. The sum insured' is the amount of money for which your policy covers your home and is the maximum that you will be paid in the event of a disaster such as it being burned to the ground. It is therefore vital that this sum is sufficient to replace your home or to buy an equivalent should you need to do so. The current market value of your home is not a reliable indication of what cost to rebuild it and replace all the permanent fixtures. To find this out you should really consult an architect or surveyor who will measure up for you and tell you the true amount for which you should be insured. Bear in mind that building costs tend to rise year insured with this in mind. Some insurance companies will index-link your cover so that any increase in building costs is automatically taken care of. With others you will have to review the cost for yourself and adjust the sum insured as appropriate. Note that you should, in addition, inform your insurers if you improve your property by adding permanent features like central heating or double glazing.
A home contents insurance policy covers the things in your home that you would take with you if you moved. These include furniture, furnishings, household goods, kitchen equipment and other appliances, food and drink, televisions, radios and similar equipment, clothing, personal effects and valuables such as jeweler and personal money up to stated limits.
Your possessions are usually covered against loss or damage-this includes accidental breakage-this includes accidental breakage of mirrors or of glass-fronted book cases. Things which you take out of your home-like clothes, cameras, jewellery and so on-will need all risks cover to take care of loss or damage while they are outside the home. You will are worth more than a certain amount of money-valuable ornaments, jewellery and pictures are the kind of thing which will fall into this category. The insurance company will probably insist that you have them valued, possibly by someone of their choice and that you have a certificate sating what their value is.
There are two types of household contents policy and it is important to think carefully about which one you want. If you insure on an indemnity basis you will be paid for the objects you lose less an amount for wear, tear and depreciation. If you take cover on a replacement as new basis you will be paid the cost of replacing any lost or damaged articles whether you had bought them one or ten years ago. This is obviously a better choice, since with the indemnity type of policy you can end up having to dip into your own pocket in order to replace quite expensive household or personal times. However as with most favorable options, the premiums cost more.
As with the structure of your home, inflation will affect the value of your possessions and you need to make sure that you keep the sum insured at the properly in the event of loss. Failing to be properly insured can cause problems that are both financial and emotional. It's a subject you should review each year to make sure your policies are keeping up with what you own.
Insuring Your House Contents
Furniture, beds &bedding, carpets, jewellery, clothes curtains, children's toys & computer.
Furniture & carpets, umbrellas, cameras.
3. SITTING ROOM
Carpets & curtains, furniture, decorative objects & pictures, books, hi-fi, video & TV.
4. CELLAR (OR GARAGE SPACE)
Wine, lawnmowers, freezer & contents, bicycles.
5. DINING ROOM
Fine glassware, furniture, silver, lighting fixtures.
Cooking utensils, cutlery, china, mixers, washing machine, fridge, cooker.
7. BATHROOM & AIRING CUPBOARD
Linens, hairdryers, irons.
Stored items camping gear & sporting equipment, excess furniture, prams.