How to Budget for Unexpected Home Maintenance Costs

Don’t get caught with unexpected home maintenance costs. AHS is here to help you better protect your budget so you are prepared for unexpected repair needs.

Oven maintenance costs

Do you have home buyer’s remorse? You’re not alone. According to a recent survey from Bankrate, 44 percent of homeowners – and a whopping 63 percent of Millennial homeowners – struggle with buyer’s remorse after signing those mortgage docs and taking possession of a new home. And, while homeownership might embody the American Dream for 79 percent of Americans, it’s not hard to see why many homeowners regret their major purchase after the fact.

For 20 percent of Americans – and 25 percent of Millennials – who suffer from home buyer’s remorse, it’s the unexpected maintenance costs that have them wishing they’d kept renting. When you’re renting a place, you’re not responsible for maintenance and repairs to systems and appliances, so you don’t fully understand just how expensive they can be – and just how hard it can be to make room in a budget to cover those repairs.

The Hidden Costs of Homeownership

Buying a home is a financial goal that many Americans spend years working toward. If you haven’t bought a home yet, the best advice we can give is to do your research to understand the hidden costs of home ownership. In addition to the down payment and closing costs, you’ll also have to shell out for home inspections, potential renovations, new furniture or even just new odds and ends that you didn’t realize you needed until you started to settle in. Most new homeowners find themselves strapped for cash in the months after a new home purchase, and that’s without even considering the biggest hidden expense of them all – maintenance.

The go-to rule of thumb when budgeting for home maintenance is to set aside one to two percent of your home’s cost each year to cover repairs to or replacement of home systems and appliances. So, if your home cost $250,000, you should set aside $2,500 to $5,000 a year, or $208 to $417 a month, in order to build up a cushion for those unexpected expenses.

Will it be enough? You never know when some vital component of your home, such as your water heater or refrigerator, will fail. It could happen after years of diligent saving, or it could happen the day after closing.

Besides, many Americans don’t have an extra couple hundred bucks to set aside each month. According to the Federal Reserve, about 40 percent of Americans don’t have enough spare cash to cover an unexpected $400 expense. Typical yearly home maintenance costs can easily be two or three times that amount, if not more. If you don’t have the savings to cover repairs as they’re needed, you could end up going into more debt in order to pay for your home’s upkeep.

Take Control of Home Maintenance Costs

Gutter cleaning costs

Now that you’re good and scared about the costs of maintaining your own home, here’s the good news – home maintenance costs are totally manageable, even for homeowners on a tight budget. It just takes some planning and foresight. You can take charge of your home maintenance costs with a three-pronged plan that includes saving for unexpected costs, keeping your home (and its appliances and systems) in good shape, and buying a home warranty.

You may not be able to spare an extra few hundred dollars a month to save for home maintenance costs, but that doesn’t mean you shouldn’t make a column in your monthly budget spreadsheet for home maintenance. Put aside whatever you can afford to save – even $10 a week will add up to more than $500 in a year’s time.

Staying on top of regular maintenance tasks is another good way to minimize maintenance costs. Flush your water heater once a year. Change your furnace filters regularly. Clean your gutters in the spring and fall. Take good care of your home, and the systems and appliances that keep it running smoothly, and you’ll have fewer unexpected breakdowns and lower overall maintenance costs.

Of course, no matter how diligently you care for your home, its systems and appliances will eventually fail and require repair or even replacement. There’s no getting around it – entropy is a fact of life. A home warranty can help you defray the costs of those inevitable breakdowns, even if – especially if – you’re a homeowner who struggles to budget enough for home maintenance expenses.

A home warranty is a service contract that provides coverage for specific home systems and appliances. American Home Shield® (AHS), the founder and leader of the industry, covers components of up to 23 home systems and appliances that you rely on every day. You’ll pay a yearly or monthly cost, and if something breaks down, AHS will send out a qualified professional within our network of 17,000 contractors.  You’ll pay a trade service call fee (between $75 and $125, depending on your plan) for the visit, and AHS will either repair or replace the covered item.

If you’re a homeowner who’s struggling to put aside enough to cover home maintenance costs, you’re not alone – at least one-fifth of American homeowners find home maintenance costs so hard to bear that they regret buying at all. Consider buying a home warranty to help protect your monthly budget from those sudden, expensive maintenance costs.

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AHS assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.

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