Home systems and appliances break down, usually at the most inconvenient times. Having money set aside for these expenses can prevent them from throwing your budget off track or landing you in credit card debt.
Many experts recommend saving 1% to 4% of your home’s value each year for repair and replacement costs. Here are 7 tips to help you save more.
1. Schedule Routine Maintenance
Creating a maintenance schedule is one of the most important things you can do to save money on home systems repair. It can help you avoid unnecessary downtime, keep your equipment running properly and improve operational performance.
Maintenance schedules should be divided into mandatory and non-mandatory tasks. Mandatory tasks are those that must be performed as soon as they are due and often include safety checks. Non-mandatory tasks are less critical and can be delayed without adverse effects.
When defining the optimal schedule, it’s also important to take into account the cost of additional maintenance and the law of diminishing returns. In some cases, irrevocable wear-and-tear or asset depreciation renders continued inspection and repair financially moot.
2. Buy in Bulk
Buying in bulk is almost always cheaper than purchasing items one at a time. The reason behind this is that a large quantity requires less manufacturing and packaging time, which reduces overall costs. These savings are passed on to consumers in the form of lower prices.
However, when it comes to bulk purchases, it’s important to know exactly what you’re getting into. Only buy food or non-food items in bulk that you will use, warns Bellaman. Otherwise, they may end up sitting in your pantry or attracting pests.
For contractors, she suggests focusing on purchasing materials that can be used across multiple projects—such as concrete, framing materials and siding. This way, they won’t be wasting money or inventory on products that go unused.
3. Invest in a Home Warranty
Even the best-maintained systems and appliances are bound to break down eventually. The cost of repairs and replacements can quickly deplete your emergency funds or push you into debt.
Having a home warranty can help avoid these scenarios by covering some or all of the costs. If you are wondering what is covered by home warranty, educate yourself on the company’s coverages. However, it’s important to shop around to find the best price and coverage options. You should also be aware of potential service fees and other costs before signing up. The long-term savings that come with a home warranty often make it
worth the initial investment.
4. Look for Deals on Appliances and Systems
When home appliances and systems break down, they seem to do so at the most inconvenient times. Whether it’s a refrigerator that goes on the fritz while stocked full of food or an A/C system that sputters out during a heat wave, these problems can be stressful and expensive. Creating an emergency savings fund by setting saving goals, sticking to a budget or opening a savings account can help you cover these expenses. Also consider investing in a home warranty to help you save money on repair bills.
5. Create a Maintenance Budget
Even the best-intentioned homeowners can find themselves in a pinch when their water heater blows up or their dishwasher stops working. That’s why creating a maintenance budget is important.
A common rule of thumb is putting aside 1% of the home’s value each year to cover maintenance costs. However, that’s not a foolproof guide, says Max Anderson, product director of Porch Group.
He explains that labor and supply costs differ widely across the country, making it difficult to use this figure as a budgeting gauge. He also suggests analyzing data from past maintenance and reliability programs to forecast expenses more accurately.
6. Get a Home Equity Loan or Line of Credit
Homeownership can be expensive. It’s essential to have some money set aside for unexpected repairs and replacements. Ideally, homeowners should save 1% to 4% of their home’s value each year.
While it’s important to have a maintenance budget in place, many homeowners still find themselves unprepared when an issue arises. Whether the water heater blows or the oven breaks, emergency repairs are costly and can lead to financial stress. To help avoid this, Collins recommends that homeowners create a savings account dedicated to repairs and maintenance and set up automatic transfers from their checking accounts.
7. Avoid Credit Cards
While it may seem counterintuitive, it’s best to avoid putting home maintenance expenses on credit cards. Credit card interest rates tend to be much higher than personal loans, and accumulating debt can end up costing you more in the long run. If you can’t set aside a lump sum, consider getting a personal loan with lower rates and a predetermined payoff schedule instead. Also, try to find ways to cut costs by bartering with family members or friends who have skills you don’t. Ultimately, skipping home repairs or neglecting routine maintenance can backfire—that little bit of dry rot could turn into a collapsed deck, and that neglected dryer vent might catch fire.
