For many first-time homeowners, and many not first timers as well, budgeting and actually setting aside monies for repairs and maintenance of their home can be challenging. Since variables like location, weather, age and style of your home all impact the cost to keep it up, there is no “one-size-fits-all” formula that’s 100% accurate for everyone. Here are some options to get you started:
The 1 Percent Method – Easy to remember and simple to calculate. Set aside 1 percent of the total purchase price of your home each year. Example: for a $350,000 home, you would set aside $3,500, or about $292 each month.
The Square Foot Method – Another easy one. This method would have you set aside $1 per square foot of your home each year (living space only. Exclude the garage sqft). Example: For a 3,000 sqft house, budget $3,000 each year, or $250 per month.
The 10 Percent Method – This method has you set aside 10% of your primary monthly expenses each month. Example: Mortgage payment: $2250, Home/Car/Life Insurance: $650. Budget 10% of the $2900 total, or $290 each month.
These three methods are just estimates and are not necessarily equivalent… and of course… there is no “requirement” to follow any of them. Remember, however, that just like an automobile, your home is going to require repair and maintenance. It’s just a matter of when, and how much it’s going to cost to remedy. If you’re following some plan to set aside funds regularly, you will have gone a long way in easing the pain when issues do arise.