Establishing a home maintenance fund dedicated to the ongoing needs of your home can be just as important as any other emergency fund or long-term savings plan. 

But just how much should homeowners set aside to protect and improve their return on investment?  Arriving at the perfect number can be a bit tricky as there are varying recommendations on just how much to save based on the cost of your property, its age, and what its unique needs are.

To break all this down, let’s start with an industry term known as the “1% rule”. 

In this model, homeowners are advised to save 1% of their home’s purchase price each year for home maintenance. So if your home is $500,000, your recommended annual budget for home maintenance would be $5,000 which breaks down to about $417 per month. 

Then there’s what’s known as the square footage rule. With the square footage rule, homeowners set aside $1 per square foot of the home’s livable space. So if that same $500,000 home was 2,000 square feet, then this would work out to be $2,000 per year or $167 per month. 

To muddy the waters even further, some financial advisors recommend a savings plan based on a certain percentage of total household income.

Ready to Keep Your Home Protected?

Explore our luxury home concierge membership for maximizing your quality of life while also ensuring your property is always under expert care.

With such a huge disparity between approaches, it’s no surprise that homeowners struggle with zeroing in on just how much home maintenance savings is adequate.

And this doesn’t even take into account pretty important factors such as the age or condition of your home, whether it has been properly maintained prior to your ownership, and any other factors such as big-ticket items that might need replacing in the near future.

A more aggressive and universally-promoted approach is to use the percentage rule but expand on it, up to as much as 4 to 5% based on the age of your home. And insurers like State Farm recommend this number be based on the home’s current value, not its initial purchase price.

If your home is new construction, setting aside 1% of its value would be a safe bet, especially if you’re still covered under a builder’s home warranty. But if you’ve just bought an early 1900’s home, ranging up to 5% wouldn’t be out of the question considering the special care required for much older homes and their often antiquated systems.

Most homeowners will fall somewhere in between, and saving 2 to 3% of their home’s total value each year would provide enough financial resources to stay on top of maintenance while also preparing for unexpected and often financially painful expenses like a furnace replacement.

So for that same $500,000 home we mentioned earlier, the homeowners might be setting aside more per year – $10,000 or $15,000 versus just $5,000 with the bare minimum 1% rule – but they would be in a much better financial position to handle that surprise furnace replacement. 

The critical benefit to having enough financial reserves on the ready is the ability to not only anticipate and execute the big repairs but also to stay on top of the routine home maintenance items too.

Proactive home maintenance not only reduces the future costs of repairs, but this approach also protects your investment by reducing depreciation.

Keeping appliances and household systems cleaned and fine-tuned will often extend their longevity and result in fewer costly repairs. Things like freshening exterior paint, replacing missing shingles, and sealing woodwork can ensure that your home stays in premium condition and increasing in value throughout the duration of ownership.

To further maximize your planning and return on investment, we recommend meeting with a home maintenance concierge company such as Willow Home, based in Boulder, Colorado, offering home maintenance service plans. 

What is a Home Concierge? 

—

We see a home concierge as a dedicated home care specialist focused on the unique needs of your home.

With Willow, it starts with a thorough evaluation of your property, identifying any short and long-term maintenance needs, customizing a plan to tackle seasonal maintenance or anything else you might need, and integrating it all into our custom home care dashboard.

We’ve wrapped everything into one convenient subscription home maintenance plan so you can get back to doing what you love most!

Establishing a home maintenance fund dedicated to the ongoing needs of your home can be just as important as any other emergency fund or long-term savings plan. 

But just how much should homeowners set aside to protect and improve their return on investment?  Arriving at the perfect number can be a bit tricky as there are varying recommendations on just how much to save based on the cost of your property, its age, and what its unique needs are.

To break all this down, let’s start with an industry term known as the “1% rule”. 

In this model, homeowners are advised to save 1% of their home’s purchase price each year for home maintenance. So if your home is $500,000, your recommended annual budget for home maintenance would be $5,000 which breaks down to about $417 per month. 

Then there’s what’s known as the square footage rule. With the square footage rule, homeowners set aside $1 per square foot of the home’s livable space. So if that same $500,000 home was 2,000 square feet, then this would work out to be $2,000 per year or $167 per month. 

To muddy the waters even further, some financial advisors recommend a savings plan based on a certain percentage of total household income.

Ready to Keep Your Home Protected?

Explore our luxury home concierge membership for maximizing your quality of life while also ensuring your property is always under expert care.

With such a huge disparity between approaches, it’s no surprise that homeowners struggle with zeroing in on just how much home maintenance savings is adequate.

And this doesn’t even take into account pretty important factors such as the age or condition of your home, whether it has been properly maintained prior to your ownership, and any other factors such as big-ticket items that might need replacing in the near future.

A more aggressive and universally-promoted approach is to use the percentage rule but expand on it, up to as much as 4 to 5% based on the age of your home. And insurers like State Farm recommend this number be based on the home’s current value, not its initial purchase price.

If your home is new construction, setting aside 1% of its value would be a safe bet, especially if you’re still covered under a builder’s home warranty. But if you’ve just bought an early 1900’s home, ranging up to 5% wouldn’t be out of the question considering the special care required for much older homes and their often antiquated systems.

Most homeowners will fall somewhere in between, and saving 2 to 3% of their home’s total value each year would provide enough financial resources to stay on top of maintenance while also preparing for unexpected and often financially painful expenses like a furnace replacement.

So for that same $500,000 home we mentioned earlier, the homeowners might be setting aside more per year – $10,000 or $15,000 versus just $5,000 with the bare minimum 1% rule – but they would be in a much better financial position to handle that surprise furnace replacement. 

The critical benefit to having enough financial reserves on the ready is the ability to not only anticipate and execute the big repairs but also to stay on top of the routine home maintenance items too.

Proactive home maintenance not only reduces the future costs of repairs, but this approach also protects your investment by reducing depreciation.

Keeping appliances and household systems cleaned and fine-tuned will often extend their longevity and result in fewer costly repairs. Things like freshening exterior paint, replacing missing shingles, and sealing woodwork can ensure that your home stays in premium condition and increasing in value throughout the duration of ownership.

To further maximize your planning and return on investment, we recommend meeting with a home maintenance concierge company such as Willow Home, based in Boulder, Colorado, offering home maintenance service plans. 

What is a Home Concierge? 

—

We see a home concierge as a dedicated home care specialist focused on the unique needs of your home.

With Willow, it starts with a thorough evaluation of your property, identifying any short and long-term maintenance needs, customizing a plan to tackle seasonal maintenance or anything else you might need, and integrating it all into our custom home care dashboard.

We’ve wrapped everything into one convenient subscription home maintenance plan so you can get back to doing what you love most!