Unexpected home repairs can drain a homeowner’s finances. These expenses can lead to credit card debt and other financial stress.
However, there are ways to budget for these costs. In this article, we’ll look at the 1% rule of thumb and other tips to help you prepare for your home maintenance needs.
Know Your Home’s Condition
Home maintenance is essential to ensuring your new home is structurally sound, runs efficiently, and maintains its value. It can be done on a monthly or seasonal basis and includes tasks like changing HVAC filters, waterproofing a deck, and testing smoke alarms.
When buying a property, it’s important to understand that home inspectors look at everything (even the inside of toilets). A musty smell could be a sign of mold or mildew and chipped paint is an easy fix now versus waiting until it leads to wood rot or water damage.
Make a list of any areas that need to be repaired, and set aside money for those repairs before moving in. This will help prevent expensive surprises down the road. A good rule of thumb is to budget 2% of your purchase price for routine home maintenance.
Set Aside Money for Home Repairs
Home repairs can be expensive, and it’s important to set aside money for them. It’s recommended that homeowners set aside 1% of their home purchase price each year for repair and maintenance costs.
Some repairs are inevitable and unavoidable, but other expenses can be reduced with preventative maintenance. Things like cleaning gutters, changing air filters, and touching up paint can reduce the need for costly repairs in the future.
Some homeowners may also pay fees for homeowner’s association, which helps with the upkeep of common areas. If this is the case, it’s also recommended that homeowners add these costs to their budget. Sites like https://www.cinchhomeservices.com/faq-library/-/faq/does-my-home-warranty-cover-my-furnace can benefit you and save thousands of dollars on repair costs.
Set Aside Money for Homeowners Association Fees
Homeowners associations typically require owners to pay fees each year that go toward the upkeep of common spaces. These costs can add up, and it’s a good idea to have savings earmarked for them in case something breaks.
Set Aside Money for Expenses That Are Unexpected
Unexpected expenses, or lump sum payments, can take a major chunk out of your budget. They can be a result of any number of reasons, including natural disasters, medical expenses, and home repairs.
For example, this year’s winter was particularly harsh and wreaked havoc on many homeowners’ homes and wallets. Expenses included the cost of extra heat and power, emergency home repairs, snow removal costs, and the repair or replacement of damaged windows, gutters, roofs, and siding.
It is also important to consider the lifespan of appliances and systems in your home and set aside money for those that will need to be replaced in the future. You may find it cheaper to replace them earlier rather than replacing them later. This can help lower your overall maintenance costs.
Set Aside Money for Extras
There are some home maintenance expenses that you can plan for, such as yearly gutter cleaning or HVAC tune-ups. These costs can help you save money in the long run by keeping your home in good condition.
However, there are other expenses that may arise unexpectedly. For example, a roof repair could cost thousands of dollars. It is important to have money set aside for these kinds of expenses so you don’t find yourself in financial trouble.
Some financial experts suggest saving 1 percent of your home’s purchase price each year for maintenance costs. This number can vary depending on the age and condition of your home, so it’s a good idea to do your research to get a better idea of how much to save.