Home maintenance expenses are an inevitable part of homeownership. But many new homeowners are unaware of the importance of effectively budgeting for these expenses.
Some experts recommend putting aside 1% to 4% of the purchase price of your home annually for maintenance costs. This article will explore several ways to do this efficiently.
1. Estimate Repair Costs
Many homeowners use rules of thumb to help estimate the amount they should set aside for home maintenance. One popular rule states that you should save 1% of your home’s value each year for ongoing repairs. Another common method is to use a square-footage rule: you should save $1 per square foot of your house each year.
Both of these methods can give you a general idea of how much to set aside, but they don’t account for many factors that can affect your maintenance costs. For example, the life expectancy of your home’s appliances and systems may vary significantly based on how well you or a previous owner took care of them.
It’s also important to consider your location and weather patterns. For instance, a coastal home will face more wear and tear than an inland home in a more temperate climate. In addition, older homes will require more maintenance than newer ones — especially if they were previously owned by an older homeowner.
2. Set Aside Money
Home maintenance costs can be unexpected, which makes it essential to set aside money for them. Many financial experts recommend a number of different methods for budgeting for these expenses, but one common rule is to save 1%-4% of your home’s value each year. What homeowners do is invest in a home warranty to save themselves money and provide a peace of mind for them. A home warranty for real estate agents helps agents assist homeowners selling their home.
This can be tricky to estimate, but learning how old the home’s systems and appliances are can help. Then, you can figure out when each may need to be replaced based on their average lifespan and how often they are used.
It is also helpful to keep a separate savings account for these expenses so that you don’t accidentally spend it on something else. This will ensure you have the money when a repair or replacement comes up, rather than having to take out a loan. A good way to do this is by tracking your expenses throughout the year. You can then use these numbers to determine how much you should be saving each month.
3. Track Your Expenses
Home repairs and maintenance expenses may be unpredictable, but there are ways
to budget effectively for them. Getting to know the lifespan of your appliances and systems is an important part of that process.
The euphoria of owning your new house can quickly disappear if you’re hit with a big repair bill or unexpected expense. Budgeting for maintenance costs and ensuring you have enough money to pay for repairs and replacements is key to homeownership success.
One rule of thumb is to set aside 1-4 percent of your home’s value per year for upkeep. You can also use a percentage of your total household income as a guideline. Whatever method you choose, it’s essential that you stick to it to ensure your home is well-maintained and in good working condition for years to come. Creating a routine checklist and saving on a regular basis will help you avoid costly surprises. Learn more about budgeting for your home maintenance needs today.
4. Keep an Eye on the Future
Owning a home comes with many responsibilities, and it’s easy for unexpected expenses to add up quickly. Without a budget in place, unforeseen costs may force you to turn to credit cards or loans—which can lead to high-interest debt and financial stress. By monitoring and adjusting your budget as needed, you can prepare for annual expenses more effectively.
For example, you may want to keep track of how long your appliances typically last so that you can anticipate when they’ll need replacing. Alternatively, you can hire a professional for a maintenance inspection to estimate when various components are likely to need replacement or repair, Klosterman says.
It’s also a good idea to prioritize projects based on their impact on your home’s safety, comfort, and performance. For example, a leaky roof should take priority over painting your house. This way, you can avoid costly repairs in the future. For more information on how to budget more efficiently for home maintenance, check out this comprehensive guide.