Home Maintenance Budget: How Much Should I Save?

home maintenance budgetDoes it feel like every time you turn around you’re needing to replace something?

First the refrigerator stops working. Next, the garbage disposal seizes up…when does it stop?

Of course the answer to that is “never”, but if you make home maintenance costs a part of your overall budget you won’t have to worry about where the money will come from…you’ll have what you need to get it fixed or replaced.

Popular budget guidelines

Do a quick search online and you’ll find a seemingly endless variety of methods people use to estimate home maintenance costs. Each of them have pros and cons, so don’t get stuck on which method to choose…simply pick one that seems to fit your situation and follow through in doing it!

The following “rules of thumb” guidelines are just two of the most well known suggestions offered to homeowners:

The Square Foot Rule

One method of calculating a maintenance budget is the “square foot rule”.

Set aside $1 for every square foot of your home. If you lived in a 2,200 square foot home then, you’d set aside $2,200 a year for maintenance and repairs.

The square foot rule can potentially give you a better idea of how much maintenance costs you’ll incur, however it fails to take into account the cost of materials and labor in your area.

The 1% Rule

One simple method to estimating maintenance costs is known as the one percent rule.

Simply put, you tuck away one percent of the purchase price of your home each year for maintenance costs. So for example, if you purchased your home at $250,000, you set aside $2,500 (1%) for maintenance.

Of course if nothing goes wrong you don’t consider the money as “extra” and spend it…it stays in your account – which is hopefully accruing some interest – until needed. Then, each year, you simply set aside the same amount until a maintenance cost is incurred.

It’s one of the easiest methods, but it doesn’t necessarily reflect your true maintenance costs.

For example, if you purchased at the top of the market you would be setting aside more money than if you bought at a rock bottom price. Does that mean your maintenance costs rise or fall depending upon how much you paid?

Of course not.

The fact is, maintenance costs are indirectly tied to your home’s purchase price as both are dictated by building and repair costs in your area.

Does this mean that you shouldn’t use the 1% rule?

Not at all…you can use it as a rough guideline, however there are certain factors (discussed below) to consider when determining how much you should set aside for maintenance costs.

Figuring out your home’s maintenance budget

Just because there’s no simple answer that doesn’t mean you get away from doing the hard work.

Start with either of the two methods – or any other method you discover – and then adjust the figure you get, depending upon the factors that impact your home’s maintenance costs as listed below:

  •  – Age – new homes will typically cost less than older homes – unless you had a poor builder, but that’s a topic for another day…
  •  – Weather – homes in rougher climates (freezing temps, ice, snow, etc) are subjected to more wear, thus age faster, as do homes where termites, heavy rain, high winds, etc. are common.
  •  – Condition – if the home has been well taken care of throughout its life the maintenance costs will be less than if it’s been neglected over the years.
  •  – Location – (e.g. homes at the bottom of a hillside can be subjected to water pooling around the basement walls) 
  • – Single family vs attached – Obviously, if you’re living in a duplex, condominium or townhouse your home maintenance budget may be less than someone living in a comparable single family home because some of the exterior maintenance costs are paid for by your HOA (homeowners’ association)
  •  – The average cost of materials and labor in your area will impact your projected maintenance costs

Choose a budget guideline that makes the most sense for your home and your budget

The best way to determine a budget for maintenance costs should take into account everything that plays a part in repairing and/or replacing major components of your home.

The factors that play into maintenance costs are just too varied to fit into a nice, neat formula, so that’s why there’s no real “one size fits all” method of calculating home maintenance costs.

Remember…what matters more than how you arrive at your projected maintenance costs is that you simply start saving – before something else breaks!