Home improvement projects aren’t nearly as fun as the home improvement projects you see on HGTV.
Tasks like cleaning the HVAC pipes or replacing your roof aren’t as enticing as doing a fancy kitchen remodel. And in real life, you face the burden of paying to get the job done – shell out hundreds or thousands of your hard-earned money.
Many homeowners end up funding expensive around the house repairs, but setting up a home improvement budget can keep you from adding to your debt burden.
Planning all of your home improvement needs (or wants) in advance will give you time to save the costs that are incurred. Here are five things to consider when creating a home improvement budget.
1. Think about what needs to be done
As a homeowner, you will come across things that require routine maintenance such as: B. removing leaves from gutters or cleaning your sump pump. You also likely have a good idea of issues that need fixing soon, such as: B. a leaky roof or an air conditioning system that is on the last stage.
Prepare for these expenses by making a list of all upcoming projects. Think of everything you have planned to do in a year, but also think of the work you want to be done in a few years. The longer you give yourself time to save, the less money you have to stash away each month.
Think how much wiggle room you have in your main budget as you plan which projects need to be done. When you have a lot of disposable income and can easily set aside a few hundred dollars a month. However, as you live from paycheck to paycheck, you are giving yourself extra time to save.
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2. Prioritize what to address first
You might not have just one project on your to-do list. When creating your home improvement budget, prioritize key fixes over useful upgrades.
One more thing to consider: Do you need a minor repair or a full replacement? If a plumber comes out to fix a problem with your toilet, for example, it will cost less than installing a new toilet.
When it comes to non-essential projects, like changing the backsplash in your kitchen or upgrading appliances, prioritize the work based on what pleases you most – or what you offer the best selling valueif you plan to sell your home in the near future.
3. Get multiple quotes to help you determine the cost
You may have an idea of how much you can comfortably afford to spend on a project, but you won’t be able to accurately budget the work until you get some quotes from potential contractors. Look for offers from at least three different vendors so you have options – and so you know you’re getting a fair price.
You may even be able to negotiate a lower price from your preferred contractor by letting them know that a competitor has a better deal.
Jill Emanuel, finance coach at Fiscal Fitness Phoenixsaid The Penny Hoarder it received five offers last spring when it had all of its air conditioning and plumbing replaced. She also recommends reading home improvement blogs and podcasts, watching tutorials on YouTube, and asking friends and family for recommendations as part of your research.
4. Set up a sinking fund to save costs over time
Once you know what projects to tackle and how much it will cost you, it’s time to come up with a plan to save those costs.
Instead of taking out a loan and paying it over time (with interest), gradually put money aside until you can pay the cost in full and no longer have to go into debt. This is called a contribution to a sinking fund.
For example, let’s say you plan on replacing your old refrigerator with a new model that costs about $ 1,200. If you save $ 200 a month in your sinking fund, you will have the money to buy your new refrigerator in six months. If you can afford to save $ 300 a month, you will have the money in four months.
Even if you don’t have any dedicated home improvement projects on the horizon, homeowners should regularly put money aside for future repairs and maintenance. As a rule of thumb, you will save around 1% to 3% on the value of your home each year.
“If we can make it a habit to invest even a few hundred dollars [into] Savings every month, mark them for repairs and home projects, ”said Emanuel.
5. Keep money in an emergency fund
Despite our best planning, there are always things we can’t prepare for – like a severe storm flooding the basement or a neighbor’s child knocking a baseball through a window.
Personal finance experts recommend spending three to six months in an emergency fund. This is not money that you would need for routine maintenance of your home or for planned expenses like a remodel. The money from your emergency fund should be used for expenses that are urgent, unexpected, and necessary.
The cost of owning a home can far exceed a down payment and regular mortgage payments. However, with proper budgeting and savings, you will have the resources to keep your home in good condition for years to come.
Nicole Dow is a senior writer at The Penny Hoarder. Contributor and editor Tiffany Connors contributed to this article.
This article originally appeared on www.thepennyhoarder.com