How to Realistically Budget for Home Repairs
At a Glance
If you’ve ever tried fixing a leaky faucet with a YouTube tutorial open on one tab and a prayer on another, then this article is for you. We get it – adulting is hard, and so is convincing yourself that duct tape is a legitimate solution to every household woe.
So, you’ve finally graduated from assembling IKEA furniture without leftover parts, and now you’re staring at your home thinking, “Maintenance? That’s a thing?” Fear not, we’re here to help you navigate the uncharted waters of budgeting for those inevitable home repairs without resorting to selling a kidney or convincing your cat to take on a part-time job. Read on to learn more.
In this article, you’ll learn:
Home costs depend on age, condition, climate
The cost of home repairs can be a significant financial burden for homeowners. The first step to budgeting realistically for home repairs is to understand that the cost can vary depending on several factors such as:
- Age of the home: Older homes often require more repairs due to wear and tear. These repairs may include fixing structural issues, plumbing, electrical systems, and more. Newer homes generally have lower repair costs.
- Condition of the home: A well-maintained home is less likely to have major repair needs. Regular maintenance and inspections can help identify and address issues before they become costly problems.
- Climate: The climate in which your home is located can also impact repair costs. Homes in areas prone to extreme weather conditions may require more frequent repairs and maintenance.
To get a better estimate of the potential repair costs specific to your situation, there are several online resources and calculators you can use, or consult with a professional contractor or home inspector.
$3,192
Is what the average homeowner spends each year on home repair and maintenance.
How much budget to set aside for home repairs?
Budgeting for home repairs requires planning and discipline. While it’s challenging to predict the exact repair costs, it’s a good practice to set aside a portion of your monthly budget for these expenses.
- Create an emergency fund: Financial experts often recommend having an emergency fund that covers at least three to six months’ worth of living expenses. This fund can be a valuable resource for unexpected home repairs.
- Use the 1% rule: A common rule of thumb is to budget 1% of your home’s value annually for repairs and maintenance. For example, if your home is valued at $300,000, you would set aside $3,000 per year (or $250 per month) for home repairs.
- Consider the square foot rule: Another approach is to use the square foot rule, which is where you budget about $1 for every square foot of livable space each year. For example, a 2,500-square-foot home would require about $2,500 annually for maintenance.
- Prioritize essential repairs: Identify the most critical repairs and prioritize them. Focus on addressing these high-priority issues first and allocate a portion of your budget accordingly.
Keep in mind that when you’re budgeting for repairs, you also need to budget for labor costs, materials, and other factors that can contribute to a higher price. It may be smart to budget a bit higher than the actual repair cost itself to account for this.
Other options to save for home repair costs
In addition to setting aside a fixed monthly budget, there are alternative ways to save for home repair costs:
- Personal loan: Personal loan funds can be used for just about anything, making them a good option for home repairs. Those with good credit can get a lower interest rate, and the fixed interest and monthly payments make them easier to budget for.
Find and compare the best loan options.
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