Most people know about the official recommendation to have an emergency fund. But this fund has to be even larger for homeowners than for those who rent. That is because home repairs can come up unexpectedly, and some are incredibly expensive.
But how much do you need to have on hand?
Still Aim for Six Months, But Do as Much as You Can
The general recommendation is that you have enough savings in your emergency fund to last you six months. For homeowners, the difference is that there are more costs. From taxes to insurance to repairs, you will need to have more money set aside.
Ideally, you want to save as much as you can in your emergency fund. After all, what happens if you are laid off on month four of your six months of savings, then you find out you have to replace your roof?
What to Save for Maintenance
That six-month recommendation is just for your emergency fund. You should also know how much you will have to spend on maintenance for your home.
Home maintenance costs are not consistent as the significant expenses don’t occur every year. The most common recommendation is to save 1 to 3 percent of the value of your home and put that aside for yearly maintenance. So, if your home is worth $300,000, you should expect to spend $3,000 to $9,000 on maintenance each year.
Go with a higher figure if you have an older home, as there is a greater chance that expensive repairs will come up.
Start Building Your Emergency Fund
If you don’t already have the recommended amount of savings, then see what you can do to start building it up. Get rid of unnecessary subscriptions, cook at home more, and look for other opportunities to spend less.