Given that your property is likely the most expensive asset you’re ever going to own, any decisions regarding it can be costly, as well. For instance, real estate mistakes can end up costing you thousands if you’re not careful. However, this goes well beyond the buying process. Indeed, caring for your home can cost you magnitudes more than it needs to. When a home emergency arises, not handling it the right way can drain your bank account. Here, we’re going to look at how you can prevent that.
Have An Emergency Fund At The Ready
One of the best ways to make sure that you can withstand a financial blow, of just about any kind is to make sure that you have cash set aside. When it comes to home maintenance and repair costs, the experts typically recommend that you save up to 3% of the home’s value. However, another general rule of thumb for an emergency fund is to make it cover three months’ worth of your typical income. In this case, you want to go with whichever of the two is bigger, to make sure that you’re ready for any eventuality. You don’t have to put it aside all at once; just make a little contribution every time you get paid until you have a nice level of cushioning in an emergency.
Make Sure Your Home Insurance Works For You
Of course, in most cases, you shouldn’t have to rely on an emergency fund, because you should have insurance at the ready to pay for the vast majority of household emergencies. Home insurance is required by most lenders when you take out a mortgage, but you shouldn’t stop thinking about it when you buy a policy. Take the time to look at it once a year to make sure that it covers as much as it should. Most policies cover events like fire, theft, and storm damage, but if you live in an area that’s affected by other natural disasters like earthquakes, you should make sure that your policy offers all of the protection that you need.
Invest In Routine Maintenance
In reality, not all home emergencies are entirely unpreventable. In fact, many of them can cost you a lot less money if you simply take the time to maintain your home on a more routine basis. General home care tasks such as cleaning your gutters, servicing your HVAC system, and checking for roof leaks not only reduce the chances of issues popping up, but you’re typically able to catch them earlier, which means they’re likely to cost less to fix. Ignoring small warning signs often turns minor repairs into major, budget-busting emergencies. For instance, a $150 plumbing inspection could prevent a $5,000 flood. Keep your home in good shape with a seasonal maintenance schedule, and your bank balance will thank you for it.
Research Your Local Professionals
Sometimes, you have a fix that you need to spend money on, and there’s simply no way of getting around it. Even when that is the case, however, you can end up spending a lot more if you don’t know your local contractors. Rushing to find contractors can lead you overpaying or, even worse, hiring someone who is unqualified. Take the time to research your local professionals ahead of time, reading their reviews, checking any pricing information they have, and asking others in your area for recommendations. This way, you can have a contact list at the ready when an emergency does arrive, making yourself less likely to get taken advantage of.
Get To Know Your Contracts
Most of the most expensive items in the home, such as your kitchen appliances, HVAC systems, and your roof, come with warranties. When they work right, these warranties can save you thousands in repair and replacement costs. However, homeowners often forget to register them, keep documentation, or read the fine print. Take time to understand what’s covered, for how long, and under what conditions. You should also consider extended warranties for the higher-cost systems. Know who covers what, as well. Your home contents insurance might cover a lot of the items in the home, but for appliances, their warranties might come from the manufacturer or the company that sold them to you. Know the fine print so you can make sure you’re not caught without the coverage that you thought you had.
Focus On Safety
Sometimes spending money up front saves you from costly emergencies later. Safety upgrades like smoke detectors, carbon monoxide alarms, sump pumps, and surge protectors act as first lines of defense. Indeed, it might feel like you’re spending money you don’t have when you’re not using them, but when you do need them, you will be glad you spent it. Otherwise, what could have been a small hazard that you quickly deal with can become catastrophic damage. The expense of a surge pump is surpassed by magnitudes by flood damage. These are small preventative steps that reduce both the likelihood and severity of emergencies, ultimately keeping your finances intact.
Budget For Long-Term Replacements
While this can be covered by your emergency fund, if you’re not planning to build one, then you should make sure that you’re aware of the systems of the home that you’re going to need to replace. Everything in the home will eventually need a replacement. Roofs wear out, furnaces fail, and water heaters eventually lose effectiveness and efficiency. Planning for these inevitable expenses helps you avoid financial panic when the time comes. Create a schedule that gives you an idea of which home systems you’re going to have to replace next, as well as how much you’re going to have to pay to replace them. That way, you’re not forced to scramble to put the money together during emergencies.
You can’t prevent yourself from having to spend money on maintaining your home, fixing problems when they arise, and paying to handle emergencies. With the tips above, you can, however, make sure that they don’t cost way more than they need to.
