Homeownership indeed brings immense satisfaction, but it also comes with inevitable maintenance responsibilities. Buying a house is not where the spending stops; in fact, it is just the beginning. No matter how well a home is maintained, things will eventually wear out and may need repair.
This is where saving up for house maintenance becomes crucial. This blog outlines strategies necessary for homeowners to budget effectively for house maintenance.
What Are Some Savings Rules?
It is often advised to set aside a portion of one’s monthly salary for annual house maintenance, rather than struggling during emergencies. Here are three important rules to consider when estimating the annual cost of maintaining your home.
The 1-4% Rule
A common rule of thumb in house maintenance budgeting would be to keep aside 1% to 4% of your home’s value. For example, if the house is valued at $200,000, then the ideal budget should be $2,000 to $8,000 annually for maintenance and house repairs.
The Square Foot Rule
This rule suggests saving $1 for every square foot of the home. This means setting aside $2,000 for a 2,000 square foot home, which would mean saving $166 from your monthly budget.
The 10% Rule
This rule recommends setting aside 10% of all the major monthly expenses, like mortgage, taxes, and insurance, for the monthly home maintenance budget. For example, if the mortgage costs $1500 per month, taxes $300 per month, and insurance $150 per month, then 10% of the total budget ($1950) would be $195 per month for house maintenance.
Customise Your Savings Plan
These three savings plans are a good starting point to begin saving for maintenance and repairs. However, if there is a big expense coming up, it is rather safe to tweak the savings plan accordingly.
For example, if a homeowner is about 10 years away from replacing their roof, which can cost at least $10,000, it would be wise to start planning now. By dividing the total cost by the number of months until the expense, which is 120 months in this case, they would need to set aside around $83 per month. This sort of customisation will make sure that when the time comes, there is enough money and it does not feel like a financial shock for homeowners.
Taking this approach for every small thing in a household might feel overwhelming, so keep it limited to items with big expenses. This, along with the above-mentioned three rules, can help you stay prepared for any unexpected events in house maintenance.
Automate Your Savings for House Maintenance
Creating a separate account for house maintenance can make the saving process much smoother. Once you have calculated how much to set aside each month, set up an automatic transfer. Instead of using a single savings account, having a separate one specifically for house maintenance helps earmark those funds.
Savings for Home Improvements
While budgeting for house maintenance, it is equally important to consider potential expenses on home improvements. It is natural to enhance your living space with new essential items like carpets, kitchen counters, or windows. The improvements that can make a home more attractive may also fall under the purview of house maintenance, thereby highlighting the necessity of including them in your savings.
Regular House Maintenance Practices
Financial burden arising from house maintenance can be reduced with regular upkeep. A routine inspection of the house every summer may help solve minor issues at a minimum cost.
In many cases, hiring a professional for repair work costs less than ignoring the repair work, which may lead to complete replacement Automate Your Savings for House Maintenance. Therefore, it is suggested to do regular checks, which include replacing furnace filters, cleaning air vents, and testing smoke alarms and carbon monoxide detectors.
Homeowners often fail to notice things like window caulking that dries out and cracks. But even a small gap can let water seep in, resulting in significant damage. To avoid such escalations, it is always recommended to conduct a routine inspection of the house.
Factors Influencing House Maintenance Costs
Several external factors impact the house maintenance expenses. Hence, it is important to consider them while planning the budget for maintenance and repair.
Geographic Location
Geographic location plays a crucial role in determining the costs. Whether your home is near water channels or mountains, it affects the sustainability of homes. The average maintenance cost of homes in New England is approximately $13,130, whereas those in the East South Central Division of the US cost around $6,270.
Age of the Home
This is another key factor that decides the house maintenance cost. For instance, homes that are built before the 1960s tend to have the highest average annual maintenance costs, often around 8% of the home’s value. On the other hand, homes built in the 2010s cost less to maintain, closer to 2% of the home’s value. However, newer home prices are a bit expensive.
Climate Condition
Factors like region and season directly affect the maintenance needs. Homes situated in a location with harsh winters are more prone to damage because of ice and snow. Even high humidity and exposure to tropical storm rains may require more frequent repairs or replacements.
Conclusion
The key to effective savings strategies for house maintenance often lies in understanding that these expenses are more inevitable than optional. Mindful saving or knowing how much to save for house maintenance can not only prevent sudden financial shock, but also turn it into manageable and planned expenses.
