How to Budget for Home Maintenance

In this post, we’re going to look at a key area for financial 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. You may be asking, “How much should I budget for home maintenance?”

How to Budget for Home Maintenance

Step One: Establish a Baseline for Monthly Maintenance 

Experts in home maintenance offer two ways to estimate monthly maintenance costs for your home.

  1. 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 $2,500 per year or $208 per month.
  2. 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.

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Step Two: 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, 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, remember to include the costs of permits. Even a simple item like a water heater can require permits for installation and connections to gas lines.

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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.

Give John a call at 612-861-0188 or Contact Us if you’d like to explore possibilities for your own update!

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