Owning a home comes with its own set of responsibilities and risks. The cost of owning a home doesn’t end with your deposit and mortgage costs; there are taxes, council rates, home insurance, and annual maintenance costs. Every week, Australians spend $150 million on home renovations. Yet, many homeowners forget to account for emergency home repairs or disasters like flooding, roof repairs, or home heating malfunctions during the winter. Over half of Australians don’t have adequate home insurance that covers all their assets, should a disaster strike. If the situation does arise, most homeowners end up paying out of pocket or turning to high-cost credit options. Whether you end up needing it or not, being financially prepared for those emergency home repairs can be the answer to managing your home budget and avoiding debt.
Save Per Square Footage Or The Age Of Your Home
One of the most common questions homeowners ask is: How much do I budget for when savings for emergency home repairs? Experts recommend saving between 1- 4 percent of your purchase price, for home repairs and maintenance. A good rule of thumb is to adjust your savings budget according to the age of your home. If your home is less than 5 years old, a home repairs budget closer to the 1 percent mark should be adequate. However, homeowners with older homeowners should aim for the higher end of savings due to increased likelihood of repairs and also inflation of prices since its constructions.
Another tip to help you save enough for your emergency repairs is to increase your budget according to your risk. Homes in New South Wales and Victoria, which experienced the unprecedented bushfires earlier this year, would automatically be at more risk for fire and smoke damage. Similarly, many homeowners had to pay for flood repairs including waterlogged ceilings. According to an estimate by PayScale, the cost of repairing a flood-damaged ceiling can be between AU$2,000-$3,000. Another common emergency home repair is paying to fix your home boiler which can cost between AU$140 and AU$200. Use this as a guideline when deciding how much to save. Lastly, increase your budget according to your home square footage. Naturally, the larger your home is the more footage you have to budget for in terms of labor, repairs, and raw materials.
Create A Built-in Home Repairs Emergency Fund Into Your Monthly Budget
To make it easier on your home budget when saving for emergency home repairs, consider including a standard savings amount in your monthly household budget. Many homeowners already include household utilities such as water bills or home insurance in their monthly bills. To work out your monthly savings amount, divide your annual savings target for home repairs (see above), before diving it by 12 to get your monthly savings target.
Cut Costs On Utilities And Redirect The Excess To A Home Repairs Fund
If you are short on cash and finding it hard to save enough for emergency home repairs, take a look at your home maintenance budget and find ways you can cut back. Make use of utility comparison tools and negotiate with your energy supplier to get yourself a better energy deal. When it comes to your home insurance, do your research before choosing a policy. According to Finders, the average cost of a home insurance policy is AU$112 per month but homeowners can reduce it further by either paying annually, taking time to install home security measures such as smoke detectors, and combining your home insurance policies to access discounts. With the savings you make on these changes, choose to redirect it to a contingency fund for home repairs.
Finally, remember to keep your emergency repair contingency fund replenished. Make your budgeting and saving habits a regular one so that you are always prepared for emergency home repairs.