Anyone who owns a home knows for certain one fact: THINGS WILL BREAK. And unlike renters, homeowners need to be able to pay for the repairs out of their own pockets. Because of this, it is wise to have a home maintenance budget in place.

Issues may be a minor patch jobs that can be done over a weekend. Or there may be extensive damage that requires the expertise of a seasoned professional. The tricky thing is, you never know which kind will pop up, and/or how much these fixes may cost.

It is very wise to be prepared upfront, but starting a home maintenance budget. The following tips can help you determine how much to save, and where to keep the funds for the inevitable ‘rainy day’ when they will be needed.

 

 

TIP #1: THE ONE PERCENT RULE

If you have just moved into your home, and have yet to repair anything, you may want to start with this rule. Use the purchase price of your home as a guide, and save 1% of that figure for repairs. If you purchased your home for $250,000, for example, expect to save $2,500 per year for maintenance.

 

TIP #2: THE SQUARE FOOTAGE RULE

Another easy calculation is to save $1 per square foot per year. If your home is 1,500 square feet – that would equate to $1,500 available for repairs each year.

 

TIP #3: CONSIDER THE AGE OF THE HOUSE

Obviously, a newer home should need less maintenance than one that is older. In the first 5-10 years after a home is built, there should be only minor repair needs. Between 10 and 20 years, common maintenance includes re-painting, window replacement, and flooring removal/replacement. Homes that are over 30 years are more of a challenge. Major systems such as the roofing, electrical, and plumbing-  may begin to fail.

A graduated savings plan might be a good idea. Save a smaller amount of money each year for the first 10 years and increasing the amount put into the account as the house ages. Any money that isn’t used in the early years can be applied to the more costly repair items that inflict a home in it’s later years.

 

 

TIP #4: CONSIDER THE CLIMATE THE HOUSE RESIDES IN

Houses located in areas of the country that receive freezing temperatures, large amounts of snowfall, and ice storms are more susceptible to exterior damage.

Houses located in areas that receive heavy annual rainfall and humid summer months can be subject to termite damage, which can weaken the wooden structure.

If you live in one of these areas, it is a good idea to pad your savings a bit.

 

TIP #5: CONSIDER PRIOR  + FUTURE MAINTENANCE

Small problems will become larger ones if left unattended. It is important to keep on top of the small issues as soon as they are discovered.  If you aren’t the first owner of your house, you may have inherited unresolved issues that are beginning to turn into big problems. A house that has had poor past maintenance is going to require a heftier savings for repairs.

On the flip side, the previous owners may have done a great job keeping the house maintained. If this is the case, you will be able to primarily focus on future repairs.

Not all repair and maintenance items are surprises. Be sure to consider what ELECTIVE projects you plan to tackle in the future. Do you dream of a brand new kitchen or hardwood floors throughout? Go ahead and beef up your fund to reflect these improvements.

 

TIP #6: KEEP THE MONEY LIQUID

Once you determine the amount you will be saving for your home maintenance and repair, you need to decide where to put the funds.

The primary thought is that this money should be available, yet forgotten about. For example, keeping the funds in the standard checking account might not be the best idea. They will be more susceptible to being used for not house-related items.  Converting the cash into savings bonds is also not ideal, as they can be more difficult to access when the need arises.

A money market account may be able to get you a bit of interest over time, but also has the disadvantage of losing value if the money needs to be pulled out at a low point in the market.

The best approach is to set up a separate savings or checking account that can be linked to your primary checking. When maintenance costs are incurred, you can easily move funds from savings to checking in order to pay the bills.

 

 

Use these tips to determine how much money to save, then be diligent to do just that! Having a home maintenance + repair budget isn’t the most glamorous thing you can imagine doing with your money, but it will give your family a sense of peace knowing that if a problem arises it can be easily taken care of, without a financial burden.

 

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