It is no secret that managing a home is a large responsibility. There is a long list of tasks that need to be completed weekly, monthly, quarterly, and even annually to ensure your home is in excellent condition. Some of these tasks can be completed with very few supplies and pieces of equipment while others can be more expensive.
What is the 1% Rule?
To help you prepare financially for these maintenance tasks and to ensure you have enough in your budget to cover many of these costs, many experts suggest the 1% rule. This rule says that you should save 1% of the home’s purchase price each year for maintenance tasks. This means that if you purchase a home in Collingwood for $750,000, you should set aside a minimum of $7,500 for ongoing maintenance and repairs.
Of course, you can make adjustments to this rule depending on your specific situation. For example, inflation and the current market may cause you to pay more than is needed for your home. In this situation, you will not need such a large sum of money for yearly maintenance costs. However, it is not a bad idea to have extra money tucked aside for when those unexpected and emergency purchases occur such as a broken fridge or heating system.
How To Save for 1%
It can be daunting to determine how you are going to save up such a large sum of money year after year for home maintenance costs. Luckily, you don’t have to. You can put away much smaller amounts throughout the year so it equals 1%.
For example, if you need to set aside $7,500, break it up. To make it a little more manageable, set aside $625 a month or $312 a paycheck if you are paid twice a month. If money is still tight, simply set aside what you can. Even just $150 a paycheck can give you approximately $3,6000 in repair and maintenance costs over the course of the year.
Sometimes, money is tight and you don’t have the proper funds to cover necessary home repairs. Luckily, there are options available to assist. Talk to a local lender for home improvement loans that can cover many repairs and upgrades to a home. You may also work with individual companies who can provide interest-free payments or offer other deals to make financing and working with the company more feasible.
Caring for your home should be a priority as a homeowner. Check out my blog for more information on home improvement, home design, the current real estate market in Collingwood, and more.