Creating a Home Maintenance Budget: What You Need to Know

Creating a Home Maintenance Budget: What You Need to Know

We’ve started this year’s blog devoting one post a month to monthly maintenance; however, we have yet to discuss the finances behind it all. Well, strap in, this is a post you’ll want to save. It’s timing is appropriate, too, as many of us are filing taxes and we can ear-mark those returns for our home maintenance budget. It can be a bit overwhelming, so we’ll cover the big picture down to specifics. 

The Big Rules of Thumb

There are two prevailing idea camps when it comes to your big bottom line: 1) the 1-4% rule of thumb or 2) the square footage method. Both will work just fine, but you need to decide which to stick with for your house. 

With the 1-4% rule, you want to estimate your home maintenance costs by basically assuming you’ll spend between 1 and 4 percent of your home’s value each year. According to the Northern Virginia Association of Realtors (NVAR) for January 2022, the median sale price for Northern Virginia was $571,000, so let’s use that figure. If you bought a home for that price, you should plan to spend between $5,710 and $22,840. Now, there’s a substantial difference between those two numbers, so there are other factors to consider. 

You can expect to be closer to the lower estimate if you can check the following boxes: 

• You have a newer home (generally, <10 years)

• You have a small to average size home (generally, less than 2,000 sq. ft.)

• You, or the previous owner, have taken good care of the home– and if you do have a relationship with the previous owner, they may have the average cost of maintenance for you and you can stop reading now ;-)

• Your home is located in a mild climate– there aren’t typically major snow storms, tons of rain, or high humidity in your area. Generally speaking, the DMV does have a pretty mild climate, but there are areas more prone to flooding.  

You can expect to be closer to that $22k figure, however, if your home is the opposite of those factors above: older home, larger home, hasn’t been well-maintained in the past, or a severe weather climate or a home near water. Thinking logically, if you checked half of those boxes, you would want to budget for 2-3%. 

Let’s say, we have a newer home that’s been well-taken care of, and is average size, but our area is prone to some flooding in the spring. We’ll set our budget at 2%. We’ll convert that to a decimal (0.02), multiply by our home value of $505k, and divide by 12 (months/year) to determine our monthly budget: $11,420 ÷ 12 = $951.67. 

With the square footage method, you want to save $1 for every square foot of your home. The average home size in Virginia was 1,896 in 2021. So, if you had an average-sized house, you would plan to spend $1,896, which is much lower than the 1-4% method and much simpler. This method does not account for outdoor services and maintenance, like lawn care, nor does it consider factors like age and location of the home and climate. If you don’t have a large yard or are a big DIY person, you could probably get away with the square footage method if you’re just looking for an easy ballpark number. 

$1,896 divided by 12 would give you a figure of $158 to set aside each month for your budget. Remember, you want to keep adding to this fund. It’s not, “let’s go celebrate with a $158 dinner because we didn’t have any major repairs this month!” This money should be kept in a savings account or earmarked within your regular savings for when the inevitable does happen. 

What Should Be Maintained and Typical Maintenance 

Now, what all needs to be maintained or possibly repaired will vary from house to house. Obviously, the more items you have, the more money you’d need to set aside. If you have a multi-level home, you’ll have a HVAC filter on each level (at least), so you’d multiply that cost by the number of registers you have and so forth. If you’re equipped to mow your own lawn and check your gutters, then you can cut down on these costs or adjust for the cost of buying gas for your mower. Adapt and change each category as you see fit or narrow down costs by Googling each service for your specific area. 

We suggest starting with the following list and average maintenance costs and services and adding to or subtracting from it after considering all of your home’s features: 

• Lawn mowing- $29- $65 (every 1-2 weeks)

• Landscape maintenance- $133- $370 (every month)

• Gutter cleaning- $120- $203 (2-4 x per year)

• Pressure washing- $183- $379 (1-2 x per year)

• Roof cleaning- $374- $696 (once a year)

• Roof inspection- $100 - $450 (once a year)

• Preventative pest control treatments- $110- $250 (3-4x a year)

• Replacing HVAC filters (DIY)- $3- 4 (per month x # of filters) or $10-$30 (per filter every few months with nicer filters)

• Minor HVAC repairs- $159- $525 (depending on the repair)

• Minor plumbing repairs- $158- $417 (depending on the repair)

• Minor electrical repairs- $146-$442 (depending on the repair)

• Appliance repairs- $100-$415 (depending on the repair)

It’s a great idea to have your appliance binder with original receipts or your best guesses of cost, so that you can decide if replacement or repair is the more economical option. Remember, too, that the more features and fancier the appliance, the more it will cost to repair or maintain. For example, if your refrigerator dispenses water, those water filters that need to be replaced every 3-6 months (or whatever it may be) should be accounted for in your budget if you want to be as accurate as possible. 

Big Ticket Repairs

Eventually, one or more of these big items will need to be repaired. That’s just what happens when living in your home for more than 5 years. You could get lucky and max out the average life spans of your roof, HVAC system, etc., or everything could break at once. When you purchased your home and the inspection was completed, you should have received a summary of the report. Based on this report, you can guess when you’ll likely need to replace those big ticket items, like your roof or HVAC system and factor that into your budget. For example, if your furnace lasts 15-20 years and you bought your house in year 10, we’d suggest adding additional funds the next 5 years as it will likely need to be replaced within that time frame. 

Typical large repairs and what most U.S. homeowners spend:

• Roof replacement- $5,706 - $11, 185

• Siding replacement- $5,630 – $17,388

• Septic tank replacement- $3,138 – $8,518

• Water heater replacement- $876 – $2,054

• Furnace replacement- $2,383 – $6,110

• Air conditioner replacement- $3,787 – $9,125

• Mold remediation- $1,373 – $3,325

• Termite removal- $135 – $1,390

• Foundation repair- $2,075 – $7,250

You may also want to consider a home warranty company if you’re not quite ready financially to take all of this on yourself. If that’s the case, our team would be happy to suggest some local company’s or you can ask Google or apps like Nextdoor for recommendations in your particular area. Many repairs will be covered under your homeowner’s insurance as well, especially if the repair is due to weather. It’s a great idea to ensure that a roof replacement or siding replacement is covered with your insurance– especially if summer storm, tornado, or hurricane damage is expected in your area.

The bottom line is you will need to decide on a budgeting system that works best for you and your home. Saving now and also maintaining your home now will save you tons of money and stress  in the long run. We hope you’ve found this helpful. Check back next month, and we’ll have March’s maintenance list ready for ya!