If you have searched online for advice on how much to budget for home maintenance, you likely run across articles discussing “rules of thumb” about how much to set aside. Some articles even promise to help you “take the guesswork” out of the budgeting process by following “one simple rule” or “one weird trick”.
But then you read about that simple rule–typically the “one percent rule” and learn that it’s a bit more complicated than the headlines let on.
Here is the non-clickbait reality of budgeting for home maintenance and repair. A few caveats before we get started: this article is NOT intended to address how much you should set aside for EMERGENCY repairs such as might be needed after a storm, flood, fire, etc.
This article addresses what you should set aside for typical, routine maintenance including replacement of worn-out fixtures or features, roof issues, carpet, etc. In other words, this article addresses financial concerns for typical, garden-variety home maintenance needs and not the unexpected.
What IS the 1% rule mentioned above? Simply a bit of advice that says you should set aside 1% of the purchase price of the home for maintenance.
That one percent could be used to pay for replacement appliances, countertops, windows, or other features. It may also be used to pay for the labor required to make repairs in your home. But the 1% rule has its limitations. Some feel this is the baseline amount you should set aside–the bare minimum.
And when you take into consideration the fact that no two houses are exactly the same in terms of age, condition, amenities, problems…the 1% rule seems like more of an entry-level approach that doesn’t factor in the specific needs you may have in your home.
In 2022 the median home price for a home in America was just around $425,000, which makes the amount of money you would need to save for the 1% rule $4250. Is that enough? That depends on the age, the condition of the property in general, and how large the home is.
Some feel the 1% rule is most accurate when applied to newer construction homes built with quality materials in temperate, dry regions. It may not be so accurate in areas prone to flooding, high heat and humidity, extreme cold, etc.
People in such areas may need to up their minimum “set asides” for maintenance higher; think 4% of the purchase price of the home, not 1%.
This may apply for older homes, also. Any property that is aging out of its roof or appliances is a great example–a replacement refrigerator/freezer alone could run between $800 and $2500 depending on brand, features, etc. A fridge typically lasts 10 years…how old is the one you currently use? And how much of your maintenance budget will that eat once it needs to be replaced?
Another way to view your maintenance budget is to set it using the square footage of your home as the guide. Some believe setting aside one dollar per square foot can be an effective way of anticipating your repair and replacement costs. But like the 1% rule, the location of your home and other variables will be important factors.
And the nature of the repairs can also play a role; for example, if you expect to have to replace your roof at some point, that expense is likely to far exceed the amount you have saved based on a dollar-per-foot. Why?
Let’s look at the numbers. A typical U.S. home is 2,500 square feet. Saving one dollar per square foot here does not offset the amount you might pay for the roof–typically between $5k and $11k.
It may seem obvious to some based on the information above that both techniques for establishing a maintenance and repair budget are places to START your calculations rather than a final determination.
What can help you get closer to an actual budget? Reviewing your home to see how soon you might need to make major replacements or repairs and anticipate those specific expenses in addition to whatever baseline you set otherwise.
If you decide to set aside $5,000 for repairs in other areas but you know your gas clothes dryer is in need of replacement soon, it’s smart to build the cost of that replacement into your budget on top of the money you set aside for other work down the road.
How can you anticipate some of your needs in this area? Consider that a roof replacement may be needed 20-40 years after it has been installed (much may depend on the materials used and if you know your roof only has a few years left based on that guideline, you can begin setting money aside to replace it.
Other areas in the home have typical lifespans, too. For example, did you know the average home with wood siding will need to be repainted three to seven years after the initial job was done. A home with aluminum siding may last five years, and stucco could last as long as six years without a touchup. Fiber cement siding can last as long as 15 years.
Cheap appliances and fixtures wear out faster. A cheap bathtub made of acrylic may only last 15 years but a porcelain equivalent could last much longer. Knowing the lifespan of your appliances, fixtures, countertops, and other essential parts of the home can go a long way toward helping you establish a replacement budget.
StateFarm.com estimates the typical lifespan for certain features in the home to be between nine and 14 years. If the appliances were all purchased at the same time you could find your washer, fridge, and dryer needing to be replaced one after the other depending on how they age:
- Dishwasher: 9 years
- Washing machine: 13 years
- Dryer: 13 years
- Refrigerator: 13 years
- Range: 14 years
Some sources advise thinking of your home in terms of systems and categories. Heating and cooling, plumbing, electrical, appliances, floors, all of these are more holistic views of the home that could serve you better when trying to form a budget than thinking of individual fixtures, appliances, rooms, etc.
Take a survey of all the categories and systems in your home; their age, replacement cost, estimated remaining life, etc. This can help you establish priorities for maintenance in terms of the most immediate needs, and you can put less urgent work into a “to be determined” category until the most important fixes are made.
Before you personally pay for any repairs or corrections to the home, it’s smart to determine what kind of warranty protection you may have. It’s easy to assume we’re only discussing home warranties here, but remember that even if your house no longer has a warranty, some of your fixtures, appliances, or other features might still be covered depending on age and other factors.
In other words, don’t schedule a replacement HVAC installation without first checking to see if your current HVAC is still under warranty. In some cases this might be a long shot, in others you may be well justified to explore your options.
The key here is NOT leaving money on the table by failing to look into your options. If you have recently purchased a home and you have a home warranty, contact a representative and discuss your options.
If you buy replacements such as a washer, dryer, stove, fridge, etc. make sure you understand the warranty coverage you’re getting and for those who are leery of spending too much on these items, be very careful when offered an extended warranty–the terms and conditions of extended warranties can trend towards consumer-unfriendly.
Make sure you know how much of a personal burden you are required to carry in order to claim an extended warranty. Paying for these may not make sense, especially if the terms and conditions put too much responsibility on the consumer for returns, repairs, etc.
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Joe Wallace has been covering real estate, mortgage and financial topics since 1995. His work has appeared on ABC, The Pentagon Channel, Veteran.com plus a variety of print and online publications. He is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.