One of the benefits of renting an apartment is that you don’t need to worry about paying for repairs and maintenance. That’s your landlord’s job. But when you’re a new homeowner, it’s up to you to make those repairs yourself.
That said, you need to make an adjustment to your monthly budget for home maintenance now that’s a new homeowner.
Budgeting for disasters prevents a budget disaster
Just like how maintenance prevents small problems from becoming a major issue later down the road, so does preparing for a major home repair prevent that repair from taking an unexpected chunk out of your finances. But just how much should you budget for these potential disasters?
According to the one percent rule, it’s recommended to put aside at least 1% of your home’s value every year for regular home maintenance. For instance, if you have a home that’s valued at $360,000, you would need to save $3,600 per year or $300 a month.
Is it really necessary to budget for home maintenance?
So even though your home is in good shape now, there’s a chance that you could end up facing unexpected issues like roof leaks, burst water pipes, or water damage. It’s better to have money saved for those issues in case they happen. And, if they don’t happen, you still have a significant amount of money saved for maintenance and other projects.
Where should I put the money for my repairs?
It can be tempting to dip into your savings for a big purchase if your savings are kept in the same bank account as your regular spending money. It’s best to place money for emergency home repairs in a separate savings account that’s liquid.
You want to be able to access your money quickly and easily when something happens. Don’t try to put the money into long-term bonds in an attempt to earn more interest. This will only make it more difficult to get your money when you need it most.
When you have a new home that’s in good condition, the cost of home maintenance may be the furthest thing from your mind. But it’s a good idea to adjust your monthly budget to accommodate savings for home maintenance problems. The last thing you want to worry about is how you’re going to pay for new pipes or a new roof because of an unexpected disaster.