Are you worried that your home is due for some massive repairs shortly? Are you a first-time homebuyer that’s concerned about having enough to cover the cost of repairs? If so, then you need to learn all you can about how much to save for home repairs.
Doing so can place you in a much better situation financially. Rather than being blindsided by the cost, you can simply hand over cold hard cash and avoid payment plans entirely, how great would that feel?
See below for an in-depth guide listing how much money to save for home repairs and the best way to prepare for them.
Maintain a “When Not If” Mindset
If you talk to anyone about being a homeowner, one of the first complaints that they will have is the cost of repairs.
You’ve probably heard of the folklore that massive property repairs happen in threes. For example, you could go a year without paying for any repairs, then all of a sudden the HVAC system, dishwasher, and your roof all need to be tended to. That’s just the way it seems to go.
But allow us to challenge you with this: why wouldn’t you actively save during that year without repairs so that you can be prepared to pay with cash for any of the home repairs you have in the future.
Many property owners like to act as if they were blindsided by the costly repairs, but here’s the harsh reality: everything in your home will need a repair at some point.
If you have the mindset of preparing for those repairs/replacements when (not if) they occur, then you’ll find yourself in a much better place. From now on, you will save a piece of every paycheck for potential home repairs.
That way, when you notice the garage door not opening, you have the money to pay for it in full. But how much should you save? Let’s dive into that next…
The 1-Percent Rule
Here’s the question of the hour. It’s the reason that you clicked on this article in the first place: how much should you be saving for home repair costs?
As you might expect, that answer depends on a variety of different factors. It depends on the size of your property, how many people are living in your house, the region you live in (for things like roof condition), etc.
For that reason, we can’t confidently tell you one all-encompassing amount that will cover the costs at any time. But never fear, we do have a general guideline for you!
We refer to it as the “1-Percent Rule”. It’s easy to calculate and offers a simple rule of thumb when setting money aside.
Essentially, you take the total costs of your home, then place 1-percent of that total towards your “home repair budget” every year. To calculate the monthly contributions, you just divide the total of the 1-percent by 12.
For example, let’s say that your home was $300,000 when you bought it. That means you’d want to set aside around $3,000 annually (300,000 x .01). That means that you’ll need to set aside $250 per month (3,000 ÷ 12) to achieve.
That should be manageable for most of you and will help you pay for any future repairs in full, thus having the problem fixed quickly and giving you access to the highest quality of services.
List Your Potential Repairs
Look, none of us like to be blindsided by home repairs. We want to know what to look for before the emergency occurs, but that isn’t always how it works. Sometimes, unforeseen instances happen, it’s just part of being a homeowner!
Fortunately, we can manage our expectations by listing out some of the common repairs that will have to take place in the future, such as repairing or replacing your:
- HVAC system
- Kitchen appliances
- Windows & Doors
The list goes on and on. Be sure to use this list and assess each facet of your house. Based on their current condition, you can prioritize this list to project which one will need to be repaired/replaced first.
Expect the Unexpected
We as humans get so sucked up in our daily routines that any unforeseen obstacle can send us spiraling out of control. We aren’t able to adjust to things we weren’t expecting.
This is what’s referred to as mental imaging. We envision the day to go just as we expected, and if it doesn’t, then it seems like your entire world is ruined.
Having an emergency home repair budget can help you prepare for those unexpected emergencies ahead of time. You’ll pay for the entirety of the repair without any financial guilt!
Create a Savings Account
Last but not least, we want to clarify the proper viewpoint on your home repair budget. Some people take the term “budget” to mean monthly as if you’re budgeting for a payment plan after the service is performed.
We want you to be more proactive with those upcoming costs, so it’s better to view this as a home repair savings account.
By continually placing money in it each month, you’ll keep accruing savings and those costly repairs will look like a molehill instead of a mountain. How refreshing!
How Much to Save for Home Repairs: One Percent
One percent. That’s all it will take! Now that you’ve seen how much to save for home repairs, be sure to use this information to your advantage.
Take the time to browse our website for more articles on home repairs cost, as well as topics that we think you’ll find incredibly helpful.