Whether your family is a superhero budgeteer or just starting out, you probably know that home repairs and maintenance can be costly.
A good rule of thumb is to set aside 1% of your home’s purchase price for upkeep costs. However, local labor and material prices can vary significantly, so research your area’s rates.
1. Set a Budget
The amount you need to save for home repairs will vary, depending on your home’s age and condition. A common rule of thumb is that you should save 1% of your home’s value each year. However, this rule of thumb may not be accurate for everyone.
It’s important to set aside money each month for home repairs, and it’s best to do this in a separate savings account or an emergency fund. By keeping these funds separate from other savings, it’s less likely that you’ll use them for something else.
To make saving easier, consider transferring some of your other monthly expenses into this account. For example, if you usually buy coffee each day or dine out often, consider cutting these expenses and moving that money into your home repair budget. This will help you grow your home maintenance savings quickly. This is especially helpful when unexpected expenses arise.
2. Prioritize Your Repairs
Managing a home can be overwhelming and figuring out how to manage the costs of maintenance can be challenging. While planning ahead and protecting yourself with homeowner’s insurance is a good idea, it’s also crucial to create a budget for repairs and stick to it.
There are some things that shouldn’t be put off indefinitely, like a leaky roof or electrical problems. Fixing these issues immediately will save you a lot of money in the long run and can be less stressful for your family.
Some projects will require professional help, and others can be completed on your own. Replacing the air filter in your HVAC system or clearing a minor sink clog is an example of a project that can be easily handled by an average person without the need for hiring a contractor. It may not be as exciting, but tackling these projects on a regular basis will ensure you’re always prepared for unexpected expenses.
3. Create a Savings Account
In order to avoid pulling from your emergency fund to pay for home repairs, it’s a good idea to create a separate savings account. Some specialists recommend setting aside 2% of your home’s value each year for maintenance, which includes things like new appliances and sewer updates, that can cost thousands of dollars.
You can open a savings account for kids at any age, but it’s often better to wait until they have basic money management skills to help them understand the concept of needs vs. wants. You’ll also want to evaluate the type of savings account you need and what will happen with the account when they reach legal adulthood.
When you’re ready to open an account, make sure you have the necessary documentation, including photo IDs, birth certificates and social security cards. Check out the varying interest rates, monthly fees and other account perks to find the best option for your family.
4. Hire a Professional
While many projects can be completed by yourself, there are times when it’s best to hire a professional. Not only can professionals save you time, but they can also help protect you from unforeseen costs.
For example, if the repair could cost you an exponential amount more if it’s done incorrectly, or if it puts your family’s safety in jeopardy, it is typically better to hire a professional. Professionals have the skills and experience to complete home repairs with a level of accuracy that comes from years of practice.
When hiring a professional, be sure to interview them and compare quotes. Also, be sure they have insurance and a warranty for their work. After all, you’re trusting them with your family’s well-being!
5. Don’t Forget About Coverage
It is a good idea to save at least 1 percent of your home’s value for maintenance and emergency repairs. For example when your hvac maintenance needs to be tended to or any home maintenance in this case.
You may also want to consider a budgeting rule like saving $1 per square foot of livable space each year. This can help account for the fact that larger homes cost more to maintain. You should also be sure to factor in your home’s location and climate when setting up a budget because these can affect how much maintenance or repairs will actually cost.
If you’re not able to save enough money, it is important to keep in mind that there are options available for financing your home repair and renovation projects. These include personal loans, home equity lines of credit, and credit cards. To prevent this much calculation, consider a coverage from home warranty to save you from unexpected repairs.
6. Be Flexible
While unexpected home repairs are an unavoidable part of homeownership, they can cause significant financial stress if you’re not prepared. Fortunately, there are several ways to budget for home repair expenses to reduce your risk of falling into debt and to avoid overspending.
One of the most effective ways to plan for unexpected home repairs is to prioritize your projects based on their urgency and importance. This will ensure that you’re addressing the most critical issues first and that your home is safe and functional.
Another great way to prepare for unexpected home repairs is to set aside money each month in a dedicated account. You can call this your home repair and
maintenance fund or even your “rainy day” fund, but it’s important to have a designated account that’s reserved for this purpose. Ideally, you should aim to save between 1% and 3% of your home’s value each year.