If you own a home, repairs are going to happen. Unfortunately, they aren’t always cheap.
The average cost of a heat pump ranges from $6,800 to $21,000, depending on what type of system you choose. A roof repair, an AC unit, and a refrigerator replacement can also cost thousands of dollars.
Because repairs can be so costly, they can be scary. It has the potential to drain your savings account or send you into debt if you aren’t prepared.
Even if you don’t foresee a repair in the near future, you should still save, as you never know when you’ll need to replace everything from your garbage disposal to your water heater.
Here are five ways to start saving money so it’s there when you need it for your next home repair.
Open a Dedicated Savings Account
It’s better to have just one savings account than none at all, but once you’ve started saving, you should have different savings accounts for different purposes. For example, you might save up for your next vacation or put money away for Christmas. You should also add a home repair account to that list.
A dedicated account ensures that repairs are top-of-mind. When something does need to be replaced, you won’t have to scramble to figure out how you’re going to pay for it. You know exactly what money to use.
It also gives you the opportunity to save for updates. If you’ve got a good chunk of change saved, you might decide it’s time to replace the countertops in the kitchen or update the bathroom.
Save the Same Amount Every Month
If you decide how much to save on a month-to-month basis, chances are you won’t save as much as you would if you automated your savings. Make a plan to put the same amount into your home repair savings account, then do it. Either work it into your budgeting routine or have it automatically withdrawn on a weekly, bi-weekly, or monthly basis.
Not sure how much to save? It’s a good rule of thumb to save one or two percent of your home’s purchase price. If you can’t save that much, start smaller. If you anticipate big projects in the near future, you may want to save more. It’s about saving what’s doable for you.
Make a Plan for Large Sums of Money
Saving consistently can be a challenge. It can also be difficult to come up with the thousands of dollars you need for a replacement by saving just a little bit every month.
You can boost your savings by having a plan for large sums of money. For example, it’s always a good idea to have a plan for your tax refund. Instead of using it to buy a new TV or go on vacation, consider putting at least a portion of the money in your home repair savings account.
Make a commitment to save portions of other large sums of money for home repairs. Whether it’s an inheritance or a work bonus, being able to afford home repairs as one of your financial goals means you’ll use your money wisely.
Don’t Forget the Change
Large sums of money can boost your account quickly, but don’t discount the power of small change. It can also add up fast!
Put excess change in a jar, cash it out at the end of the year, and add the money to your home repair fund. You can have a little fun with your savings goals by creating a swear jar or a meanness jar. Collecting cans and bottles can be a great way to put a little extra change in your savings account too.
Try a Money Saving App
There are more money saving apps than ever before with some cool ways of saving you may not have considered:
- Oportun analyzes your checking account according to what it thinks you can afford to save
- Qapital lets you create savings rules, like rounding up your purchases
- Acorns lets you put your spare change into an investment account so it grows
- Rocket Money identifies subscriptions you aren’t using so you can save that money instead
Home repairs are an easy thing to forget about. That is, until something serious breaks down and needs to be replaced. Don’t charge it to your credit card or get stuck on a payment plan for the foreseeable future. Have a savings plan in place so you can tackle the cost of home repairs whenever they crop up.
