Buying a home is a big decision and an even bigger investment. For many, purchasing a home will be their largest financial transaction in addition to becoming the most valuable asset they own. While some buyers look for “move in ready”, others are eager to reinvent a place to their own tastes. Once the home is occupied and mortgage payments ensue, the cost of improving and upgrading a home over the years to keep pace with wear and tear can really add up. Unless you’re Tim “The Tool Man” Taylor with an unlimited inventory of Binford tools and products to install around the home yourself, you’ll want to consider including these future costs in your money plans.
So just how much does it cost to maintain, improve and upgrade your home so that, when and if you decide to leave it, buyers will see it as a place they’d love to live too? If you plan and do things regularly on a schedule (like your oil changes and tire rotations on your car), then you’ll probably also need to plan for the cost of doing those items so that you aren’t tempted to put them on the charge card.
Experts will tell you to save regularly for ongoing home maintenance and improvement. What you save so that you’ll have the cash available when it’s needed should already be a part of your calculation for monthly home costs, just as are your mortgage and any homeowner association costs.
How much should you save – here are the two suggested ways to approach this additional home ownership cost:
- Save 1% (some experts suggest up to 4%) per year of the total cost of your home;
- Save $1 per square foot per year.
Obviously, it’s difficult to plan ahead for all repairs or maintenance needs. But having this kind of nest egg put aside makes it easier to cover the costs when the need (or desire) arises. Here’s a tip – add the amount you budget monthly for your household costs by this amount and make it a regular payment to a special savings account. When the water heater goes out, you’ll feel good knowing you have the cash saved up ready to go!