So you need to budget for your yearly home repairs and maintenance but you don’t know where to start; start here. We will walk you through a simple way to calculate this in your home budget.
You want to start each year by writing out a (Have To Do) vs. your (Want To Do) Project Lists. You may want to use our handy Have To Do – Want To Do Project Worksheet. We recommend doing this worksheet first to capture both the ‘Have to Do’ and the ‘Want to Do’ projects. It’s sometimes easier to brainstorm everything when you have no limitations on your mind. Then move on to establishing your budget requirements.
BUDGETING – RULE OF THUMB
Since we must determine the ‘Have To Do’ projects first, as they consist of home repairs and maintenance, we will begin there. Let’s look at how you can determine the cost based on a couple of rule of thumbs in budgeting for these expenses.
The One Percent Rule:
This would be one percent of your house price. The only problem with this rule is; if you bought your house for a premium because of inflated housing prices it won’t be accurate, so we recommend going with the square foot rule.
The Square Foot Rule:
With the square foot rule, you will budget $1 dollar per square foot. So if you own a 2000 square feet home your budget for repair and maintenance would be $2000.00 dollars a year.
Either way, this does not mean you will spend $2000.00 dollars each year on repairs and maintenance. It just means on average you will spend over a long period of time (10 years or more), approximately $2000.00 annually, according to the rule of thumb. Some years you will spend far more; new HVAC system $3000 – $5000 dollars, other years you will spend far less.
Aside from the rule of thumb mentioned above here are some additional factors to consider that can impact the cost of your repairs and maintenance.
Weather: Homes in areas with certain weather elements like snow, ice and constant freezing temperatures you are going to have higher maintenance cost while homes in the south may sustain more roof damage from hailstorms. Some of these repairs more than likely will be paid for through your homeowner’s insurance, but you will still have a deductible to pay.
Age and Condition: Plays a big role in determining whether you will be using your annual budget or not. A new home will require much less repair and maintenance. Once a house turns 20 years old, there is a good chance you will start replacing major components, such as the roof, appliances, and outdoor fixtures. If the house is 30+ years old and has had a previous owner your cost will be determined by how well they kept up with repairs and maintenance.
So, as you can see, there is no way to be 100% accurate in determining what your household repairs and maintenance will be, but you can get pretty close with this final tip.
Take the $1.00 per square foot rule and for each element factor listed above (weather, age, and condition) you will add 10% to that number. For Example – You have a 2000 square foot house so your budget is $2000.00, but you live in the south where you have hail storms you will add 10% for this element. That’s an extra $200 per year.
That means you should save $2200.00 each year or $183.00 per month for household repairs and maintenance.
So now that you have identified your known repairs and established a maintenance budget you can now see what you can afford for your extra (Want To Do) projects!
We hope this helped you. If it has, make sure to look for our upcoming posts in February that will help you plan, budget and CRUSH your WANT TO projects this year!