When it comes to safeguarding your financial stability amidst the uncertainties of structural home damage, a budget is your best friend. In the United States, 93% of homeowners have a home insurance policy. However, insurance coverage alone may not always shield you from the financial impact of unexpected structural issues. Planning your budget to include emergency expenses like structural damage repair costs is essential.
1. Review Your Insurance Coverage
Review your homeowner’s insurance policy before making budget adjustments to cover structural damage. In some cases, your insurance will have a clause that covers structural damage repair; in others, it will not. It’s important to audit your policy to decide if you need to make changes and increase your coverage if you can.
Review your home insurance policy to understand what structural damage it covers. Determine whether you have adequate coverage for various scenarios, such as natural disasters, fire, or water damage. If it doesn’t, reach out to your agent. The right coverage will protect your budget.
2. Start an Emergency Fund
The importance of budgeting for structural home damage cannot be overstated, especially in a financial landscape where the total value of loans of U.S. commercial banks exceeded $17.3 trillion (about $53,000 per person in the U.S.) as of August 2022. You can protect your wallet and financial well-being by proactively budgeting and preparing for potential structural issues.
Establish an emergency fund designated for unexpected home repairs within your budget. Set a goal to save at least three to six months worth of living expenses to cover potential structural issues. Structural repairs can be very costly and can be expensive enough to bankrupt you. Bankruptcy filings have increased 17% this year; don’t let that happen to you. Be prepared.
3. Budget For Home Maintenance
When you prioritize home maintenance, you’re reducing the risk of experiencing structural damage. Periodic inspections of your foundation and roof can help to catch problems while they are still small problems. You can save costs via early interventions and maintenance. Yes, you’ll have to invest money from your budget into home maintenance. But it will be much less than paying for structural repairs due to maintenance neglect.
Your monthly house maintenance budget can be calculated by reviewing annual maintenance costs like roof inspections, gutter cleaning, and other maintenance activities from the year before, then breaking it up into equal monthly parts. Set up a separate account for maintenance costs. It will be easier to prioritize maintenance when you have the money to cover the costs.
4. Review Current Home Expenses
Reducing your home’s operating expenses can help prepare you for covering the cost of structural damage to your home if needed. Cutting the fat from your home operating costs doesn’t have to be a grand gesture. Simple changes to how you operate your home can result in impressive savings.
For example, by bumping up the thermostat in the summer and lowering it in the winter, you can realize significant energy savings. A two-degree difference in the thermostat can equate to a 10% overall savings. Keeping up with the filters on your HVAC system is another easy way to ensure top-notch efficiency and savings. Evaluate ways to save on running your home and put the savings in your emergency fund.
Nothing is better than having peace of mind knowing that you are prepared for anything coming your way. Budgeting for life’s unexpected mishaps, especially in your home, will deliver the peace of mind you need. Learn more ways to budget for big and small expenses and everything in between.
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