$1 or 1%? Accounting for Home Maintenance in 2018
At the beginning of the year, many of us take time to review and set personal goals for the new year. In our newsletter from January, we offer suggestions on setting resolutions for your home, such as going greener or learning a new home maintenance skill.
In this post, we’re going to look at another key area for annual planning: monthly home maintenance costs. As a homeowner, you not only have to cover mortgage and taxes, you also need to account for ongoing maintenance, planned upgrades, and emergencies like burst water pipes or storm damage.
Establish a Baseline for Monthly Maintenance
Experts in home maintenance offer two ways to estimate monthly maintenance costs for your home.
- Calculate as a percentage of your home’s value; recommended percentages range from one percent to four percent. For example, if your home is worth $250,000 and you plan one percent for maintenance, it would be $2500 per year, or $208 per month.
- Calculate using the formula of one dollar per square foot. If your home had 3000 square feet, it would be $1 x 3000 for $3000 per year, or $250 per month.
Set Short, Medium, and Long-term Goals
Once you have a baseline amount per month, you can start planning for upgrades, replacements, and remodeling project
- –Systematically take inventory of your home from the inside out. What will need to be upgraded or replaced in the next two, five, and ten years?
- –Internal: plumbing, heating and cooling, electrical
- –External: siding, deck, paint, windows, roof
- –Surrounding: garage, driveway, sidewalk, landscaping
- –Compare the current age of big ticket items in your house to the average age for each. For example, a roof can last 20 years. If yours is 15 years old, you’ll need to budget for a new roof in the next five years.
- –As you budget for items, include the costs of permits. Even a simple item like a water heater can require permits for installation and connections to gas lines.
In addition to accounting for aging and replacement of specific items, consider the context in which the changes will occur. What types of life changes do you anticipate in the next few years? Are you planning to start or expand your family? Conversely, will your kids soon be leaving the nest for college? Perhaps you want to create a space for aging parents in your home, or you want to age in place in your current home.
Mapping these items onto your long-term plan will help you make shorter-term choices with these ends in mind, minimizing the chances that your decisions now will limit your long-term options.