How much should you budget for home maintenance?

Buying a home is probably one of the largest purchases you’ll ever make. Over the long haul, maintaining a home can be another of your most substantial expenses. While the upside of homeownership still outweighs these costs, homeowners need to be prepared to pay for both routine monthly maintenance and large repair/replacement projects. But, just how much should you be setting aside? In this article, we’ll walk you through creating a home maintenance budget and what you should consider before getting started.

Set your home maintenance budget

Many experts advise that homeowners should typically save between one and three percent of their home’s value and set that money aside in a maintenance and emergency-repair savings fund. However, while this rule-of-thumb is a helpful way of thinking about savings, it’s far from perfect. In the real world, your home’s value has no direct connection with its maintenance, repair, or replacement needs. After all, the cost of repairing your home is often unrelated to the economics of the real estate market. For example, a home worth $150,000 in Omaha, Nebraska, might need more upkeep and care than a home worth $900,000 in San Jose, California.

If you’re building a home maintenance budget and savings account, customize it to your home and its needs. Older homes generally need more work as they age, so you may need to save more if your home was built in the 1970s or earlier. If you live in a cold, snowy winter climate, you may want to save money ahead of time for roof upkeep, gutter repairs, or sump pump replacement. While it’s probably not realistic for every American family to squirrel away tens of thousands of dollars in a separate account, the more you can set aside, the better. After all, that money isn’t going anywhere and doesn’t expire at the end of the year, so you can roll your leftover budget into next year to keep your long-term fund growing.

Plan ahead for big projects

Thankfully, major home repairs are relatively rare — you might encounter only a handful of urgent, large projects throughout your time owning the home. However, when they do arise, they can be stressful and expensive. For example, replacing your home’s roof can cost thousands of dollars upfront — that can put a lot of stress on anyone’s monthly budget. Similarly, a leaking pipe, a cracked sewer line, or a broken-down water heater could all require you to dip into your savings account. In a best-case scenario, it’s more economical to pay for major home expenses with savings rather than debt. If you have that savings account in place, not only will you be prepared to cover these projects, you’ll also have peace of mind.

 

Of course, homeownership wouldn’t be any fun if it meant one catastrophe after another. That’s why your home maintenance savings account can be used for another purpose: proactive maintenance, upgrades, and remodeling. After all, styles change through the years. If your kitchen looks like it belongs in a sitcom from the 70s, it’s probably time for a refresh. Adding progressively to a savings account can help you accumulate the upfront investment needed for these value-adding improvements. Just make sure you keep enough in reserve for your emergency fund.

Take care of the small things

Make a habit of tracking the money you spend on home upkeep and manage that money out of your established home savings account instead of just your checking account. First, this helps you budget and relieves pressure on your routine month-to-month finances. Second, it allows you to see what you’re spending on home maintenance month-to-month and year-over-year. If you find that your maintenance account is barely getting the job done, you might need to invest more. 

 

On the other hand, if you have a ton of leftover cash in your savings account at the end of the year, you can either reduce your contribution or keep saving for that proverbial “rainy day” (when you discover your roof has a leak) to come.

 

Ultimately, a robust home savings account can be a significant stress-reducer when your home needs a sudden repair. Our final recommendation? Talk to a local contractor in your area about what kind of home maintenance your home needs on a regular basis. This will help you get started putting together an annual upkeep checklist, and give you a ballpark figure for how much to start saving out of your income every month.

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