Money BasicsManaging Money

Why you should save for general home repair and maintenance

When it comes to owning a home, your expenses don’t stop when you finish paying off your mortgage. To ensure your home looks as good as you imagined it to be, and feels 100% safe for you and your family, you need to spend on general repairs. Apart from paying for utilities and bills, you also need to be prepared to shell out for home maintenance and repairs, such as having your air conditioner cleaned out, mowing and landscaping (if you have a garden), keeping your roof clean and leak-free, plumbing and electrical wiring checks. But just how much do you need to set aside for home repairs? Knowing how much to set aside helps you build a home maintenance or emergency fund, so you have money prepared in case of the unexpected.

One school of thought says you should follow the 1% rule of thumb, which involves budgeting around 1% of the home’s purchase price for repair and replacement expenses. Setting aside a home maintenance budget in your emergency fund saves you from financial stress if and when you’re faced with home repairs down the line.

Having the money already set aside in your emergency fund lessens the stress when it comes to your home’s maintenance. Regularly checking for minor problems and acting on them immediately, or just regularly maintaining your home even before it needs repairs will come out cheaper than if you wait for certain features, like your roof, to give up completely.

What is the 1% rule of thumb for home maintenance?

A good place to start when planning your home maintenance budget is the 1% rule of thumb. This rule states that you will most likely spend around 1% of your home’s value for its upkeep. Using the 1% rule, if you have a house that costs PHP 6,000,000, you should put aside at least PHP 60,000 for annual home maintenance costs. There are various factors, though, that can make this rule inaccurate for some. Things like your home’s age, current condition, and even the common weather conditions it faces can affect this.

So instead of thinking of the 1% rule of thumb as a fixed number, think of it as a starting point.

If you have an older home, you may need roughly 2 to 3% of its value in order to maintain it.

Keep in mind that you may not always spend your entire budget in a single year. Using the earlier example of a PHP 6,000,000 home, budgeting for 2% of its value would equate to PHP 120,000. Some years, you could end up using just a few thousand Pesos, while other years may require you to totally renovate or replace fixtures like your refrigerator or roof, which may mean spending the entire PHP 120,000.

Making changes to the 1% rule

Treat the 1% rule as a starting point for your annual home maintenance budget. Here are some factors to consider and how they affect your budget.

Aim to budget for around 3% of your home’s value if:

  • Home is over 30 years old
  • Constantly experiences storms or is in a flood zone
  • Built with materials that need regular replacement, like wood siding

Aim to budget for around 2% of your home’s value if:

  • Home is around 10 to 20 years old
  • Experiences moderate climate
  • Built with lasting materials such as stucco siding

Aim to budget for around 1% of your home’s value if:

  • Home is between 1 to 10 years old
  • You live in a dry area and do not experience many storms
  • Built with strong building materials like fiber-cement siding and metal roofing

Other factors to consider

By now you know that the 1% rule should be treated as a guide, not a hard-and-fast rule. When budgeting for your general home maintenance, you also need to consider the current materials used, and the features of your house.

Here are some common things that require maintenance or replacement, and their frequencies,

Roof replacement:

  • Polycarbonate sheets: 10 to 20 years
  • Asphalt shingles: 20 to 30 years
  • Galvanized iron sheets: 25 to 50 years

Home exterior painting:

  • Wood siding: 3 to 7 years
  • Aluminum: 5 years
  • Stucco: 5 to 6 years
  • Modern siding materials like fiber-cement: 10 to 15 years
  • Brick: 15 to 20 years

Air conditioners (professional cleaning):

  • Inverter: every 3 to 6 months
  • Traditional: yearly

Air conditioners (lifespan):

  • Inverter: 15 to 20 years
  • Traditional: 10 to 12 years

What’s next?

Now that you know how much to set aside, you need to work on putting away that amount and use it only for home maintenance repairs. This should be kept in an account separate from your savings, so you don’t risk the temptation of using it. It’s best to keep it in your emergency fund account, and only use it for emergencies, like a leaky roof and broken windows.

With an emergency fund or home maintenance fund in place, you’re also spared from draining your savings account in the event you do need to shell out for repairs and fixes.

Open a savings account at Metrobank today and start building your emergency fund.