Avoiding a Common, Costly Budget Mistake
- Tuesday, January 17, 2012
Homes and cars are typically two of the biggest expenses for most people.
With a house, just think of the mortgage, the property taxes, and the insurance. With a vehicle, even if you don’t have a loan, just think of today’s mortgage-like fuel expenses and the insurance.
But wait. I missed something. Did you notice?
I missed maintenance. Lots of people do. In fact, as I’ve reviewed countless spending plans over the years, failing to plan for the maintenance costs of homes and vehicles is one of the most common mistakes I’ve seen.
The Dangers of Not Maintaining Maintenance Budgets
The first problem with not planning for maintenance expenses is that you might not keep up with basic maintenance. With no money budgeted for oil changes, you’ll let it go. Until you hear a strange banging noise coming from under the hood. What I’ve discovered is the louder the bang, the bigger the bill.
The second problem is that when unavoidable major expenses come up, like the need to replace a broken dishwasher that dates back to a time when olive green made a positive decorating statement in the kitchen, you’ll have to go into debt to pay the bill.
How Much to Budget for Maintenance
In my Recommended Spending Guidelines, you’ll see that I combined home maintenance with utilities and I grouped vehicle maintenance with vehicle insurance, fuel, and fees.
Here’s some more specific guidance. While maintenance costs vary, depending on the age and condition of your home and car, a decent average is to assume vehicle maintenance expenses of $75 per month per vehicle and at least $100 per month in home maintenance. There are many months when you won’t spend any of that, but there are others when you’ll spend a lot more.
With our home, I’ve found that budgeting $100 a month is what it takes to keep up with the basics – furnace filters, staining/weatherproofing the deck, the daredevil who clears our gutters of leaves each fall.
With vehicle maintenance, there are plenty of months when we don’t spend anywhere close to $75. But throw in the need for new tires every five or six years, the occasional major tune-up, and replacing the side view mirror that we scraped off backing out of our own driveway, and $900 per year comes out about right.
Where to Keep Maintenance Money
Maintenance costs are periodic expenses. You won’t usually spend the full budgeted amount every month, but you will spend it by the time the year is over. So, automatically transfer the budgeted amount each month into a separate savings account. That way, the money will be there when you need it.
How much do you budget for vehicle and home maintenance?
Matt Bell is the author of three personal finance books published by NavPress, including the brand new "Money & Marriage: A Complete Guide for Engaged and Newly Married Couples." He teaches a wide variety of workshops, including MoneySmart Marriage, at churches, conferences, universities, and other venues throughout the country. To learn more about his work and subscribe to his blog, go to: www.mattaboutmoney.com.
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