What's the best thing about owning a home?
For some people, it's the fact that no one's ever going to raise the rent on them ever again (after locking in their fixed-rate mortgage, of course). For others, it's the freedom to make home improvements. If they want to paint the walls or remodel the bathroom, they no longer need to ask their landlord if they can do so.
But homeownership also comes with certain downsides.
Owning a home is expensive. Aside from mortgage payments, property taxes, etc., you also have to prepare funds for home repairs and maintenance.
Not sure how to do the last one? Don't worry.
Let's talk about how to budget for maintaining and repairing your home.
Your Repairs and Maintenance Budget: Some Factors to Consider
It helps to know the average costs for setting a home improvement/maintenance budget.
But keep in mind that your annual maintenance costs may be higher or lower depending on the condition of your home.
For example, is your home new or is it more than a decade old? What's the climate like in your area? Do you think previous homeowners did a good job maintaining your home?
Make sure to consider these things before you decide on the amount you'll set aside regularly for your home repairs and maintenance budget.
What's the 1% Rule?
One way to figure out how much you should budget for home repairs and maintenance tasks is to follow the 1% rule.
That means setting aside 1% of the purchase price of your home to cover maintenance and repair costs. So if you bought your home for $400,000, you should have $4,000 per year in your maintenance budget.
Now, some homeowners use the square foot rule. That is, saving a dollar per square footage of the home. So if you have a 3,000-square-foot home, your repairs and maintenance budget should also be $3,000.
Both rules have their drawbacks as they don't take into account labor costs, prices for building materials, and the type of repairs needed. You can follow both rules if you like.
Just take the average and add 10% for each factor that might negatively affect your home. Let's say you live in an older home (10%) in an area with extreme temperatures (another 10%). Using our earlier examples, you should have $3,500 as your average cost, plus 20% or an additional $700.
Bonus Advice for Owners with New Homes
If your home is new, you might think you don't need to budget for maintenance and repairs just yet.
You should still start saving money because no one knows when they'll need to pay for emergency fixes. Think about a storm-damaged roof or an emergency boiler repair.
Remember, even new homes aren't impervious to accidents and weather damage. And your insurance will not always cover these when you file a claim for them.
Need More Home Improvement Tips and Advice?
Now that you know more about how to budget for repairs and maintenance, don't think your work as a homeowner is done.
Keep learning more about how to improve your home by browsing our other articles.