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Budget for home maintenance from the house's own list rather than from a percentage: add up the recurring tasks and what each costs per year (filters, service visits, gutter cleaning, the things you hire out), add the yearly cost of the repairs a house of that age tends to need, and add a replacement fund built from each major unit's replacement cost divided by the years of life it has left. The total is your number, and it changes as the house ages and the list changes.
Rules of thumb exist because most owners have no list. Once you do, the rule is the thing to discard. This post shows how to build the number in an hour, using the maintenance schedule and the equipment record you already have or can make.
Why is a percentage of home value the wrong starting point?
A percentage of home value is the wrong starting point because value is mostly land and location, and maintenance cost is mostly equipment, roof area, climate, and age. Two houses worth the same amount can need very different budgets: one has a five-year-old roof and a new furnace, the other a roof and a furnace both past twenty. The percentage rule cannot see that. Your equipment list can.
In the houses we track, the recurring part of the budget (filters, service, cleaning) is steady and modest, and the replacement part is where the surprises live. Owners who set aside for the two or three oldest units stop being surprised.
What are the three parts of the budget?
The three parts are the recurring tasks, the repair allowance, and the replacement fund. Recurring tasks are known and repeat on a schedule; the repair allowance is a modest set-aside for the year's unplanned fixes; the replacement fund is each major unit's replacement cost spread over the years it has left. The first is a list, the second is a habit, and the third is arithmetic from the install dates.
| Part | Where the number comes from | How it behaves |
|---|---|---|
| Recurring tasks | Your maintenance schedule: each task's frequency and the cost you log when you complete it | Steady; rises with what you outsource |
| Repair allowance | The last two or three years of repairs, averaged; more for an older house | Lumpy; set aside monthly and roll over what is unused |
| Replacement fund | For each major unit: replacement cost divided by remaining years of expected life | Grows as units age; drops to zero when one is replaced |
How do you build it in an hour?
Print the maintenance schedule and write a cost next to each recurring task (the filter you buy, the tune-up invoice, the gutter company), multiply by frequency, and total it. List the major units with their install dates and a rough replacement quote each, estimate remaining life from the manual or the technician, and divide. Add a repair allowance from recent history. Add the three, and divide by twelve for the monthly set-aside.
- Export or print the task list. In Property Station the Maintenance page's tasks carry a Cost field on each completion, so a year of logging produces the recurring number on its own.
- For each task, write the cost per occurrence and the occurrences per year. Total the column.
- List the major units: roof, furnace or heat pump, air conditioner, water heater, range, refrigerator, dishwasher, washer, dryer, garage opener, and anything else expensive. Note the install date from the label (how to read it) and a replacement estimate from a recent quote, a technician, or a retailer.
- For each unit, estimate remaining years (expected life minus age; the DOE's 10 to 15 years for a water heater is the one published figure on this site, and the technician's view is the source for the rest) and divide the replacement cost by it. Total the column. A unit already past its expected life counts its full replacement cost this year.
- Add a repair allowance from the last few years of invoices, or a modest monthly amount for a house with no history yet.
- Add the three totals. Divide by twelve. That is the monthly transfer to the maintenance account.
How does the budget change over time?
The budget changes as units are replaced (their fund line drops to zero and restarts), as you take on or outsource tasks, and as the repair history accumulates. Review it once a year, ideally after the fall service visits, when the technicians have just told you which units are heading toward the end. The repair-or-replace decision is the moment the replacement fund gets spent, and the budget is what makes that decision a plan rather than an emergency.
Common questions
Is the one-percent rule any good?
The common rule of thumb to set aside about one percent of the home's value each year is a starting point for a house you know nothing about. It ignores the age of the equipment, the climate, and what you do yourself. Once you have a task list and the install dates of the major units, replace the rule with the numbers from your own house.
Should the budget include the replacement fund?
Yes, and it is usually the larger part. Filters and service visits are predictable and small; a roof or a furnace is large and arrives on its own schedule. Setting aside a share of each major unit's replacement cost every year, based on how much of its expected life is left, is what keeps the large expense from being a crisis.
What about a new-construction home?
A new home has lower repair costs for a few years and the same recurring costs from day one, plus the first-year tasks that catch warranty items. Budget the recurring list fully, start the replacement fund small, and grow it as the equipment ages. The warranty windows are when to find and report, not to spend.
What should you do next?
Start logging the cost on every completed task from today; a year from now the recurring number will be real. Then do step three this weekend: the list of major units with install dates is the hour that turns a guess into a budget, and the first-year schedule is the recurring list if the house is new.