It’s tough to know exactly how much to set aside for home-related emergencies, but the following information may help to make preparing for unexpected events a little easier.
From keeping a general household emergency fund to planning for the unexpected, there are many ways for you to prepare to manage your upcoming expenses. Carefully structure your emergency savings to be able to handle home repairs.
Here are some tips to help you save for emergency repairs.
Keep a General Household Emergency Fund
The most basic way to plan to save is through a general household emergency fund. Because life is uncertain, every independent adult and family unit should have an emergency savings account regardless of whether they rent or own their residence.
Most experts recommend having at least three to six months of living expenses on hand at all times, but even having $1000 squirreled away can keep you from being forced to borrow money to make ends meet during a temporary work interruption or to cover a basic household emergency.
According to the one percent rule, you should try to save at least one percent of your home’s value for every year of home maintenance. By saving this much, you can have a good amount prepared for emergencies.
Plan Ahead for the Unexpected
If you own a home, it’s always a smart idea to have a home repair savings account that’s separate from your general savings fund. This small step can prevent an unexpected household expense from becoming a true financial emergency.
The amount of money that you choose to put aside should be based on several factors. Owners of newer homes will likely find themselves in need of fewer repairs than owners of older, fixer-upper properties and can probably get by with a smaller household repair fund. Your ability to pay out-of-pocket for emergency repairs as they come up should also be a consideration.
Prepare to Manage Upcoming Expenses
Roofing, siding, flooring, appliances and other household items have expected useful lifespans, so every homeowner should put a plan in place ahead of time to handle their replacement costs. In addition, property owners must stay on top of small household repair and maintenance tasks in order to head off bigger problems down the road.
Taking a few preventive measures like roof waterproofing, concrete resurfacing, and basement sealing can protect the structure against some types of damage and may prevent more costly repairs later on.
other valuable tips:
Carefully Structure Your Emergency Savings
Savings that are intended for use in a true emergency should be available in cash or kept in a personal checking, savings or money market account to allow immediate access to the money. Certificates of deposit provide a slightly better rate of return than a traditional savings account but offer less accessibility, so they should only be used for long-term repair and replacement savings. Placing emergency savings in higher-risk investment instruments should be avoided.
Image Credit: save for emergency home repairs by twenty20.com
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