Budgeting for Home Expenses
I'm a first time homeowner who is going through the process of a renovation prior to moving in. Some of the renovation items are for replacement/fixes that came out of the Home Inspection (i.e. fixing GFCI outlets, replacing broken faucet, etc).
I had a few questions on how to budget for Home expenses. I have some questions on how to budget/categorize home specific expenses.
- If you budget 1-2% Monthly for Home Maintenance, what expenses fall under that bucket?
- How would you categorize:
- tools needed for around the house
- home furnishings like carpet/couches, blinds, mirrors, etc.
- replacement vanity for bathroom, lighting (are they home furnishings if you are replacing things by choice, or do they fall into the 1-2% Home Maintenance)?
- Grill for Outside
- Kitchen Items
- Items you would get at Container Store
- Alarm system installation (monthly service would be a separate monthly expense)
- Do you go with the wish farm method for every large home category, or do you fund a "Home Furnishings" category monthly?
- What is considered a renovation vs. something that falls into your Home Maintenance bucket? If our water heater is replaced by choice (20 years old) before it goes is that no longer Home Maintenance? I.E. is it only Home Maintenance if it's a "Need" vs a "Want"?
- I have a renovation and budgeted to the micro level (i.e. Washing Machine, Dryer, Wood Floors). Is there a benefit to going to that level of detail vs. keeping things more general?
- Any other general advice on things I'm not thinking about
Thanks in advance!
- tools needed for around the house - home improvement
- home furnishings like carpet/couches, blinds, mirrors, etc. - need - home maintenance, want - home improvement
- replacement vanity for bathroom, lighting (are they home furnishings if you are replacing things by choice, or do they fall into the 1-2% Home Maintenance)? need - home maintenance, want - home improvement
- Grill for Outside - home improvement
- Kitchen Items - home improvement or household goods
- Items you would get at Container Store - home improvement or household goods
- Alarm system installation (monthly service would be a separate monthly expense) - Alarm system
In general I use home maintenance for a need, and Home Improvement for a want. I have separate line items for recurring home maintenance that I outsource (lawn care, pest control, alarm system, etc.)
For small kitchen items we have a Household goods category.... smaller things you'd buy at Bed Bath and Beyond.
The fact that you are having to do a lot of the work up front doesn't make a difference.
I would put the water heater in "maintenance" because it's likely on its last legs. However, I would probably wait to replace it until it dies. (Possibly buy a replacement on a major sale like Black Friday.)
I view Renovation as something you want to do but really don't have to. A replacement vanity & lighting would fall in this category for me -- again, because you could use what's there (at least that's my assumption).
I have a category called Household Goods which would cover tools, furnishings, grill, kitchen items, and so forth.
I favor a more detailed plan on the renovation so you don't leave yourself short on whatever is bought "later".
I like the Home Improvement and Home Maintenance categories discussed above. I also use a Home Furnishings category which slots in between. Home furnishings are things like new furniture, blinds, curtains, mattresses, and other furniture-like durables that have some degree of optionality (you generally have some flexibility on when or if you choose to make the purchase) and tend to last for more than a year. I might eventually budget this category directly, but for now it gets budgeted from flex categories and things like a couch or mattress would probably be wish farmed first.
Home Maintenance is a reserve fund for medium sized "keep the lights on" items like a new dishwasher or dishwasher repair, a new oven or microwave, repairing a broken window, leaky faucets, ac repair, and so on. These are things that keep the home functional and generally aren't elective. When it breaks, you need to replace it ASAP.
If I had an ongoing item like lawn care, I'd probably give it it's own category.
Larger planned items like roof replacement, water heater replacement, AC replacement, new carpeting, and similar big budget items that tend to need replacing on a timeline get their own budget categories based on expected replacement date.
Home Improvement is a category for nice-to-have, durable, big ticket improvements. These items generally grow in the wish farm. This might include new landscaping, an addition or remodel, or adding a new shed. In principle, this is the only category of improvements that has the potential to significantly increase the value of the property.
Based on other comments, I also added in a Household Goods category. I plan to use this to absorb some of my grocery budget, which currently includes things like cleaning sprays. I want this category to contain smaller items that could be in Home Furnishings but that have a lower cost and/or shorter lifespan and may be less optional. Things like shower curtains, sheets, cleaning agents, laundry detergent, brooms, trash cans and trash bags, and a new vacuum might go in this category. It flows somewhat freely into Home Furnishings and the distinction between the two is somewhat arbitrary, but having these two categories will help me distinguish between how much I'm spending on small items to keep the house running vs larger items that will last and might require more thought. If an item needs to be wish-farmed, it's almost definitely a Home Furnishing and not a Household Good.
I guess I keep things simpler than most, reading through the comments! I don't necessarily break things down by need vs want - it's too subjective for me...
I have a Home Items category where everything from kitchen utensils to sheets to the new bathroom vanity we just purchased goes. I budgeted a lot to that category for the first month and add a reasonable amount for each month after. A new couch would go there as well. If there wasn't enough money in there for a new couch it would probably become it's own saving or wish farm item
I have a Home Maintenance category where all of the "necessary" home stuff gets put. Things that either need to be or should be fixed/replaced. Painting supplies, tools, anything hubby buys at Home Depot for which he doesn't give me a receipt so I have no idea what it really is, appliance repair people and appliance replacements. New faucets for the new vanity - Home Items. New tube of caulk for new vanity-Home Maintenance.
Outdoor stuff- mulch, plants, grill, lawnmower etc. goes to Lawn/Garden.
I'm not sure what I would do for the pre-move in work. If you're having the kitchen completely redone I would put that in a separate Kitchen Reno category. If your're just having outlets replaced then Home Maintenance. If a combination of things then maybe something like Stuff Done to get House Ready to Move into (joking on the title!) since that's a one-time event...