If you own a car, you're probably aware that ownership costs extend beyond just loan payments and fuel. You also need to budget for maintenance and repairs, which can be more expensive for older vehicles. The same principle applies to your home. It's important to budget for expected repairs and maintenance to avoid surprises.
Experts suggest setting aside 1% of your home's value each year for maintenance. For instance, if your home is worth $500,000, you should budget $5,000 annually. This is a general guideline, and if your home is older, you might need to allocate more.
Another approach is to budget $1 per square foot. So, for a 2,500 square foot home, you should set aside $2,500. Again, this amount should be higher for older homes.
When planning your budget, consider items that might need replacing in the next three years, such as roof shingles, furnace, air conditioning unit, deck, fence, plumbing, and windows. For example, a new air conditioning unit can cost around $4,000, depending on the size, model and efficiency. Planning for such expenses can help you avoid unexpected financial stress.
Remember, budgeting for repairs and maintenance doesn’t mean you’ll spend that money every year. However, having the budget available provides peace of mind, knowing you're prepared for any necessary expenses.
