Even with regular maintenance and planning, unexpected home repairs can occur. Whether you have to replace your water heater, put in new flooring due to a flood, or replace the sensors in your garage door, you’ll want to be financially prepared to take care of these issues quickly.
How much should you save?
While you can’t predict the future, you can set aside money to cover the costs of routine maintenance projects and unexpected home repairs. Most specialists recommend setting aside at least 1% of the purchase price of your home each year. For example, if you paid $300,000 for your home, you should save at least $3,000 annually. However, depending on where you live, the market conditions when you bought your home, and the age of your home, you may consider saving up to 4% of the purchase price to cover potential home maintenance and repair costs.1
What strategies should you take to save?
Consider the following savings strategies to help pay for regular maintenance and unexpected home repairs:
- Open a high-yield savings account to save specifically for home repairs and maintenance costs, and only access those funds for that purpose.
- Make regular automatic transfers from your checking account to your home maintenance/repair savings account. For example, you may want to transfer a specific dollar amount out of every paycheck into this fund.
- Deposit some or all of your tax refund (if applicable) into your home maintenance/repair savings account.
- Look for ways to cut expenses out of your monthly budget, such as reducing your grocery bill or eating out less frequently. Transfer the money you would typically spend on these things into your special savings account.
How can you manage your home repair budget effectively?
Setting aside money for regular home maintenance is just one way to stay ahead of unexpected expenses. Another is to take inventory of your home’s components as well as the condition of your appliances and adjust your budget accordingly. For example, if your water heater is 10 years old, there’s a good chance you’ll need to replace it soon, so you should budget for that expense.
Additionally, you should create a schedule for regular home maintenance. Consider using an app, such as HomeZada or Centriq, to stay on top of the tasks needed to keep your home in tip-top shape. Remember, regular home maintenance is a great way to limit unanticipated home repairs.
What if you need more than you’ve been able to save?
Sometimes you’ll run into a situation where you need to make a large purchase or pay for an unplanned expense — and you don’t have enough money saved yet. If that’s the case, consider a home equity line of credit. You can discuss the many benefits of using a Wells Fargo Home Equity Line of Credit with a Home Mortgage Consultant.
It’s time to get started
Homeownership is a big responsibility — with potentially high costs. By determining how much you should budget for home repairs, and following a plan to save, you’ll be more prepared to manage unexpected expenses when they arise. And you’ll enjoy your home that much more.