Buying a home for your family is a huge milestone. Instead of paying rent month-to-month, you and your spouse are homeowners. While a new home can be a great investment, it also comes with many costs, such as taxes, new purchases and home repairs. These repairs often come when you least expect it. Even when you’re sharing the costs with a spouse, maintenance needs can add up quickly. The last thing you want is to end up in debt because of your home! According to Porch, a home services site, in the past year, about 90 percent of homeowners paid for at least one major home repair. During this time, the average American spent approximately $5,000 on both repairs and improvements.
While you may think purchasing a new house was the most expensive part, home repairs can amount to thousands of dollars throughout the years. Wear and tear is common, especially if you buy an older house. As an example, Home Advisor reports that the average roof can last for about two decades and can cost $7,000 or more to replace. A repair alone for your roof can cost you $2,500 at a minimum. However, you can plan for these "unexpected" repairs. With these four budgeting tips, you’ll be well on your way to managing these any home maintenance repairs that pop up with ease.
1. Set up an emergency fund.
There’s nothing worse than having a major home repair come up, and not having enough funds to cover it. So, as soon as you can, set up an emergency fund to account for any repairs beyond simple fixes. While there’s no definite amount of money you should have in this account, 3-6 months of living expenses could be a good starting point. As time goes on, you can gradually add to this fund as well, providing you with some peace of mind as you adjust to your new life as a homeowners. Although it will be hard to not touch that money, you will be extremely grateful you didn’t once a major repair comes up.
2. Save, save, save.
In addition to your emergency fund, you’ll also want to have a consistent method of putting away money. One way you can do this is by putting at least one percent of your home’s purchase price every year into a savings account, which can double as your emergency fund. If your house is older and appears to need repairs quite often, you may even want to bump up this amount to three percent, just to be safe.
3. Consider square footage.
While the above method is a good way to ensure you’re putting enough savings aside, another way you can account for home repairs is by saving $1 for every square foot of your house each month. This money can not only go to home repairs, but also upgrades as many of our tastes change throughout the years. However, it’s important to note that this budgeting technique does not take into account labor and material costs, which is why it’s always a good idea to have an emergency fund as well while you work towards growing your savings account.
4. Look at a variety of factors.
A lot of factors can impact the number of repairs your new house will need. Examples include the type of house, its age, the overall condition, its location and even the weather where you’re living. For each of these, add an additional 10 percent to your annual budget to ensure nothing falls through the cracks as you’re planning ahead for your expenses. Compared to condos, townhouses and duplexes, single-family homes are bound to have more maintenance needs, simply because of their size. Additionally, homes that are 10- to 20-years old require a moderate amount of repairs, with those that are 20 years and older most likely needing the most maintenance due to wear and tear.
5. Take Inventory of Big Ticket Repairs
There's a distinct difference between replacing a broken doorknob and a broken water heater. Take an inventory of potential large scale repairs and how old the current fixture is. For example, when was the last time the roof was replaced? If it's been a few decades, push the priority of saving for replacement up. Some other things you can look at here include foundation repairs, water heaters, air conditioning/HVAC, siding, or windows.
6. Make a list of wants and needs over the next 12 months
Sit down with your spouse and make a list of things you want and also must have for your home. If you thing the driveway needs repairs this year, put that down. You can also put down the accent wall for a kid's room. Things will come up unexpectedly, but make an effort to spell out what you both think is likely over the next year for housing expenses so you can budget and plan appropriately.
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