Why Is Budgeting for Home Maintenance So Important?

Guest Post by John Bodrozic

Everyone tells you that your home is your largest financial asset and biggest expense, yet no one tells you how to budget for home maintenance much less providing you guidance over what maintenance tasks to perform. Your car has a complete owner’s manual with a recommended maintenance schedule, and it probably has lights on the dashboard that blink alerting you of specific maintenance tasks.

Yet your home on the other hand does not have a singular owner’s manual and there is no dashboard blinking at you. Let’s review the details of how to maintain your home and how to budget for it.

A collection of fixed assets

Your home consists of many different products and materials that are assembled in a unique way. Think of your home as a collection of fixed assets in five different categories. First are the core building materials such as the concrete foundation, framing, roof, exterior siding, windows, ductwork, plumbing pipes, insulation and more.

Next are the major pieces of equipment such as your air conditioner unit, furnace, hot water heater, garage doors, electrical panels and gas fireplaces. 

The third category of fixed assets are the appliances such as the refrigerator, stove, oven, dishwasher, microwave, and washer and dryer.

Next are all the finish materials in the house like wood flooring, carpeting, tile, built in cabinets, plumbing and electrical fixtures. The last category is all the landscaping such as lawns, trees, shrubs, driveways, patios, and fences.

The important thing to understand is that most of your home’s fixed assets have a natural useful life in terms of how long it will last and that it is based on doing consistent preventative maintenance to preserve it.

Budgeting for home maintenance

Many homeowners completely forget or are not aware of the need to budget for annual home maintenance. These homeowners tend to completely ignore preventative maintenance tasks and then they start to believe their home is a money pit which affects their overall personal finances. Properly budgeting and staying committed to preventative maintenance tasks eliminates the many problems that come with ignoring maintenance.

A simple strategy is to calculate between 1 percent and 4 percent of the purchase price of your home for an annual maintenance budget. The key is to determine how old your home is by finding out when your home was originally built, which you can find from various property and county records.  If your home is less than five years old, then use 1 percent for your budget because the fixed assets are still relatively new; therefore, more of the budget is allocated to cheaper preventative maintenance tasks.

If your home is between 5 and 15 years old, then use the 2 percent figure because you will naturally have more expensive repair costs as various materials in your home wear out. Use 3 percnet if your home is between 15 and 25 years old and 4 percent if your home is over 25 years old. The reason is because all those different fixed assets are reaching the end of their useful life and you will need to spend more on significant repairs and probably even replacement costs.

Know what maintenance to do with your home

Since your home did not come with a complete maintenance schedule, it is important to create a recurring task list that itemizes all the preventative maintenance your home needs. Some people will do this with spreadsheets but the drawback to this approach is you don’t get automated alerts and reminders.

Other homeowners are turning to digital home management software like HomeZada because not only do they automatically create a recurring preventative task list for you, but they also send email and push notification alerts. This means you don’t have to remember when it is time to perform these seasonal tasks.

There are many websites like one from the Housing and Urban Development that will provide you a list of typical preventative maintenance tasks that you can incorporate into creating your own personalize maintenance schedule. As with most things, the 80/20 rule applies where there are common tasks across any type of home such as cleaning gutters and changing air filters. The other 20% of your tasks are things you can easily personalize.

When customizing your home’s maintenance schedule, consider where you live, the weather and climate changes throughout the year, and the specifics about the products and materials in your home. Homes where the temperature drops below freezing with snow in the winter have more preventative maintenance tasks such as insulating pipes and shoveling snow and ice off the house and driveways.

Homes in hot climates with swimming pools have a lot of pool maintenance tasks. Another example is that homes near a coastline or in the mountains will have more severe weather that takes its toll on the house which requires more frequent maintenance.

Track your actual costs

Creating a budget is important but tracking your actual costs is equally valuable. With many preventative maintenance tasks, these are things that most homeowners can do themselves such as cleaning out coils in the refrigerator to pressure washing your driveway. These DIY tasks may have consumable costs such as buying air filters, caulking, and other tools and products necessary to perform these tasks.

Many times, homeowners end up hiring a service provider for either regular maintenance tasks or specific one-time tasks for things they can’t or don’t want to do themselves. A few examples include hiring a window cleaning service to keep your exterior windows and screens clean and another is hiring a tree trimming service to prune your larger trees.

Keeping track of these maintenance costs, whether they are outside contractors or things you need to do the task yourself, is important because you can build an annual history of your actual maintenance costs. Then you can review these costs and determine if there are ways to save money with your home maintenance in the future.

The value of doing home maintenance

Saving money on your variable utility bills like electric, gas, and water is a big value when keeping up with your preventative maintenance tasks. When your equipment, appliances, and building materials are operating efficiently because they are clean and maintained, your costs to run the house can be decreased because they draw less energy and hot and cold air don’t escape your home. Here is a list of energy saving tips from the Department of Energy.

Preventive maintenance tasks usually only take a minimal amount of time to do and they don’t cost a lot of money. But neglecting those tasks will cause the equipment and building materials to wear out quicker which means you will spend more money on more expensive fix it and repair costs. It also means you will need even a bigger replacement cost much sooner than the expected lifetime of that building material.

A well-maintained home is a home that maintains its overall value and may even increase the value. If you ever decide to sell your home, most buyers will do a home inspection. If the report comes back with a lot of things that need fixing, it may be more difficult to sell your home and many buyers will negotiate a lower value because of the backlog of needed repairs.

Staying on top of home maintenance is also valuable for the health of your family. The National Center for Healthy Housing reports that over 40 percent of homes in the United States have at least one safety or health hazard. This is over 35 million homes with a multitude of problems due to lack of maintenance where many of them result in mold and bad air in the home which leads to significant health issues. When our families spend most of the time in the home, you want to make sure the air, water and other systems are in great working condition.

Keeping a safe home is also aligned with staying on top of home maintenance. Checking smoke alarms, checking the pressure of fire extinguishers, and checking carbon monoxide detectors are important to your family’s safety. Other preventative maintenance tasks focus on minimizing a fire from starting in the home which include cleaning out highly flammable lint from the dryer duct, cleaning the grease from your kitchen fume hood, checking ground fault electrical receptacles, and cleaning out wood burning fireplaces.

Ignoring home maintenance tasks and not budgeting for them leads to spending way more than you need to manage your home. It then negatively impacts other aspects of your overall personal financial situation. As with anything in life, a little proactive planning and creating a system to track your maintenance activities along with the budgets and costs for them make being a homeowner that much easier. You will have more peace of mind for your family, save money, and have more time to enjoy other aspects of life.

John Bodrozic is a co-founder of HomeZada, a digital home management software platform that empowers homeowners to manage, maintain, protect and improve their home. John was previously a co-founder of a construction project management software business that grew to a global business with an eventual sale to a public company. John received a Bachelor of Science in Mechanical Engineering from the University of Notre Dame.