There’s a smart and strategic way of doing things when it comes to home improvements and repairs. For instance, you need to first focus on home improvements that have a high ROI or which greatly enhance your home’s functionality. Similarly, you need a way to keep the cost of home repairs in check. Therefore, you should start by asking, ‘How much should I budget for home repairs?’ This is a great question to ask because the cost of home repairs can add up quickly, and before you know it, you have dug yourself into a financial hole. To help you prepare your budget fully, this article helps you answer the question, ‘How much should I budget for home repairs?’
What Home Repairs Are We Talking About?
There are many repairs that the typical homeowner encounters from day to day. Some repairs are minor, such as when there’s a cracked wall tile. Other repairs require more urgent attention, such as when there’s a burst pipe threatening to flood your home. When it comes to the question of, ‘How much should I budget for home repairs?’ you find that the kind of home repairs being talked about here are major repairs. These are the kind of repairs that you have to sit up and notice. Otherwise, you could end up with a disaster on your hands, or it will make your life extremely inconvenient.
Take electrical issues, for instance. Electrical problems can be quite dangerous, so this is not the kind of home repair you want to postpone. Neither would you want to DIY electrical repairs. Electrical installation and repairs are best left to the professionals because mistakes can result in electrocution or fire. So, depending on the nature of the problem you’re facing, you would want to budget money for this. In the same vein, clogged drains can be quite a hassle to deal with. If you don’t hire a drain cleaning service as soon as possible, you could end up with major problems like foul smells, sewage backups, and strange noises in your plumbing. Again, this is another major problem that needs to get fixed.
If your roof becomes leaky, this is a major home repair that requires roofing services as soon as possible. When a roof leak is left unattended, it can create moisture problems and damage your property. Moisture problems encourage the growth of mold, which means you now have to budget for a mold removal service. So, before we answer the question, ‘How much should I budget for home repairs?’ It’s good to have a solid idea of the home repairs you’re supposed to budget for. Other examples of these repairs include foundation repairs, water heater repairs, HVAC repairs, septic system repairs, and termite damage.
Benefits of Budgeting for Home Repairs
If you understand the value of preventive measures, then you’re already on the right track as this helps reduce the cost of your home repairs. Examples of preventive measures include scheduling maintenance of your roof or HVAC and cleaning your gutters. However, it’s still necessary to ask yourself, ‘How much should I budget for home repairs? This is necessary because it’s part and parcel of being a homeowner. Your home may be your largest asset, but it also comes with its own costs that you have to be prepared to meet. Chances are your budget for property taxes, utilities, and home insurance each month or year.
You should also budget for home repairs in the same way. While owning a home comes with many benefits over renting, it also means you have to take on the responsibilities of fixing things around the house. When you don’t budget for home repairs, you’re caught unaware, and this can have a negative impact on your financial health. Even if you pride yourself on staying on top of repairs, allocating room in your budget specifically for repairs means unexpected expenses won’t end up wreaking havoc on your finances. Ideally, budgeting for home repairs is something that you are supposed to do when you first purchase your home.
Unfortunately, most people only focus on the immediate costs of owning a home without thinking about the long-term costs. So, instead of focusing only on the purchase price and the closing costs, it’s also crucial to think about how you would need to keep your home in optimal condition. The good news is that the cost of routine maintenance is often lower when your home is still new. That’s because most items that cost a lot to fix, like the roof or furnace, will still be under warranty. However, keep in mind that your home maintenance budget should also cover things that you don’t have. These home additions can include a new garage door, concrete staining, replacement windows, and energy-efficient light bulbs.
The Rule of Thumb for Budgeting for Home Repairs
There’s no one-size-fits-all answer to, ‘How much should I budget for home repairs?’ However, there are several rules of thumb that can be a good starting point and help you with a more accurate calculation. When you’re deciding how much room to allocate for home repairs, you can use the 1% rule. This is pretty easy to figure out. It says you have to set aside roughly 1% of your home’s value each year for maintenance and home repairs. Let’s say your home has a value of $300,000. In that case, you need to set aside $30,000 per year for home repairs. With 12 months in a year, this comes down to $2,500 per month.
You can also use what is known as the square footage rule, which says that you have to budget $1 for every square foot of your home. So, if you own a 2,000-square-foot-home, this only means that you have to budget $2,000 per year or roughly $167 per month. This rule makes sense from the onset, because large homes tend to cost more to maintain. Therefore, if you enjoy more livable space in your home, you have to budget more money for repairs. Another rule of thumb that might appeal to you is the 10% rule. The premise of this rule is to budget 10% of your monthly expenses related to your home. For instance, if the total cost of your utilities, taxes, insurance, and expenses comes out to $2,000, then you need to budget 10% of this. That means you allocate $200 per month for home repairs.
That said, it should be emphasized again that there are different ways to budget for everyone, so you need to fine-tune your calculations as you’re trying to determine the answer to ‘How much should I budget for home repairs?’ There are other factors, like your home’s age and condition, that can affect the cost of home repairs.
Factors That Affect The Cost of Home Repairs
In this section, we look at the different factors that affect the cost of home repairs, so you can better refine the answer to ‘How much should I budget for home repairs?’ So far, we have looked at several rules of thumb you may use for your budgeting. As stated, these rules are not foolproof and might need some tweaking. If you consider the square footage rule, it’s not perfect because how much square footage your home covers is not the only factor that affects the cost of repairs. You also have to think about the type of home you have. If your home is well-built, well-designed, with expensive finishes and appliances, home repairs will naturally cost more. On the other end, you might have a house of the same size, but with less expensive outfittings, then you should expect the repairs to cost less.
When budgeting for crucial home repairs, like residential heating repair, you also need to think about repair frequency. Generally, you find that different items in your home have different life expectancies. When an item, such as a roof, is on its last legs, it often requires more repairs due to increased wear and tear. For instance, asphalt shingles typically last up to 20 years. If you look at the different items in your home, such as the siding, the water heater, and the HVAC system, these all have a lifespan. The lifespan will have a big impact on the frequency and cost of repairs.
Other factors that might increase the frequency of repairs are how many people live in your home and the local climate. If there are more people in your home, you should expect that with increased usage comes more wear and tear. Hot and humid areas can also shorten the lifespan of items like your painting, siding, and roofing due to moisture issues and extreme temperature changes. When you establish a range for how much you should save for home repairs, you can further narrow it down by looking at each component or system that makes up your home. It might be a good idea to schedule a home inspection, so you have an accurate idea of the level of wear and tear you’re dealing with. Factoring in a professional assessment can provide a better answer to ‘How much should I budget for home repairs?’
Saving for Emergency Home Repairs
Saving for emergency repairs is crucial because emergencies, by nature, require you to act quickly. It’s important to note that home improvement or maintenance is not the same as emergency home repairs. For instance, if you’re buying new window drapes, this money should not come out of your emergency fund for home repairs. Similarly, if you need oriental rug repair, this is hardly called an emergency, though it can improve the appearance of your home. Examples of emergency repairs include a burst or leaky pipe, an overflowing toilet, a leaky roof, a broken water heater, or a broken air conditioner.
When saving for emergency repairs, you need to have the money somewhere where it’s easy to access. The best place to save money for emergency home repairs is in a savings account, preferably one that has been specifically created for this purpose. That way, you don’t accidentally dip into your emergency fund for something that’s not exactly an emergency. That’s because when your roof is leaking and there’s a storm coming, you need the funds to be as liquid as possible. If the cash is tied up and something unexpected happens, you could be left stranded. Remember, the best time to save for emergency repairs is before one actually occurs.
Key Takeaways for Budgeting for Home Repairs
Whether you need to hire a garage door service for garage door repair, there’s a lot to consider when thinking about how much to budget for home repairs. So far, we have looked at the 1% rule, which says you simply save 1% of your home’s value to cover the long-term costs of repairs. The square footage rule uses the size of your home to come up with an estimation. These are the two main methods that are used to determine how much to budget for home repairs. For a more accurate estimation, be sure to look at factors such as the age and condition of your home.
When you ask, ‘How much should I budget for home repairs?’- this is a very valid question, and the answers provided above can help with your calculations. Being a homeowner comes with many responsibilities, and one of them is staying on top of repairs. These costs can be huge, especially if you’re dealing with unexpected home repairs or home repairs that were not done in a timely manner and are now more expensive to fix. The trick is to always have a financial plan for doing home repairs. It’s better to borrow than save, so be sure to put something aside every month for those times when your AC unit starts blowing hot air or the water heater stops supplying hot water. By staying on top of home repairs, you can save more money in the long run and easily stick to your budget. You also boost the functionality of your home and get to enjoy a stress-free environment.
