Top-rated financial planners tell our team that homeowners should build up an emergency maintenance fund of about $5,000. That way, you can handle a sudden expense, such as the need to replace a roof or a furnace.
Of course, how much you can set aside for home-related matters will depend on your home’s condition, your income and other expenses and savings goals. Planners say it’s important to take a balanced approach to financial priorities, with attention to saving in case of job loss, paying off consumer debt and taking advantage of retirement savings options.
But since your home is such a major investment, it’s also smart to be prepared to afford routine maintenance and surprise repairs.
If you don’t have a good sense of your home’s current condition, consider the services of a reputable home inspector. Plan to take advantage of the inspector’s knowledge by accompanying him or her during the inspection. You can use the detailed written report you should receive soon after the inspection as a starting point for planning home project priorities.
Remember that you don’t have to do a big project all at once. For instance, you can have new windows installed one room at a time.
If money is tight and you can only build a home emergency and project fund slowly, postpone purely cosmetic projects and focus on necessary maintenance.
If you’re not sure how to get started on a home fund, open a savings account that’s attached to your checking account. Set up the accounts so you automatically transfer a regular amount from checking to savings every month or pay period.
Out of this, you can plan to pay for routine maintenance and emergencies. Savers often notice that they forget about automatically set-aside money, so that it builds up faster than they might have imagined. That makes dream projects easier to afford.
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