6 Benefits of a Home Emergency Fund

If you own property, you want to make sure you always have a home emergency fund set aside. When home issues arise, you are responsible for repair and maintenance right away. If you leave small issues, you could be left with a big issue costing thousands in repair to handle all at once.

Naturally, small issues turn to big issues such as a leaky pipe soon to cause water damage or an old furnace causing a fire. These situations are not ideal, and you can’t avoid all of them. As many people know, a leaky basement is likely to cause water damage, and if that isn’t taken care of immediately, it will turn into a hefty mold issue—costing thousands instead of tens or hundreds. We see this all the time in the cleaning and restoration business.

**If you don’t have an emergency fund but have a major home repair, you might want to read How to Pay for Emergency Home Repairs if you have No Savings Fund.

How Much Money Should be in My Home Emergency Fund?

Your home repair fund should be no less than 1% of your home’s value. So a home with a value of $100,000 should have at least $1,000 in a home maintenance fund per year.

How Much Money Should I Put in My Home Emergency Fund Monthly?

First, use a mortgage calculator, like Rightswitch, find your basic monthly cost. Then, add one extra percentage to the interest rate. Take this new monthly cost and subtract the basic monthly cost to see what your home savings should be.


If your home is valued at $100,000, you would enter 100000 for total amount, set deposit to 0, keep the mortgage rate and term as the prefilled amount. Click calculate, and you will see your monthly payment—record this number. Then, increase the interest rate by 1% and recalculate monthly costs. Take this new monthly cost and subtract the first monthly total from this new number.

Example in numbers:

  1. A home valued at $100,000 at 3% interest rate over 30 years is $421.60/month.
  2. Add the 1% to interest rate (4%) changes the monthly total to $477.42/month.
  3. $477.42 – $421.60=$55.82/month.

So with a home valued at $100,000, you should plan on saving $55.82/month in your home savings fund.

We have outlined 6 key benefits of having a home emergency fund. So somehow, someway, find the patience and fortitude to build a repair fund. You will never regret it.

  • Preserve Home Value

Having a home repair fund allows you to easily pay for the property maintenance without leaving your home at risk of falling in disrepair. Typically, the longer the damage lasts, the more likely the damage will spread to other parts of the home. And the more damage there is, the more likely your home value decreases.

Do you intend to ever sell the home? Then having a home repair fund is necessary, to say the least. A maintenance fund usually allows you to solve problems when they are still relatively minor, meaning that the value of your home is far less likely to be affected. Having a home emergency fund *should* leave you with a property that can retain its value.

  • Maintenance Reduces Major Break Down

Avoid the frustration of major problems forming later and fix smaller issues right away. Again, a few moisture issues now could, in time, turn into a flooding disaster. If you deal with the problem right away, you are more likely to have a property that continually retains its working condition for long durations.

Routine maintenance helps us avoid major problems. Having a fund and addressing maintenance repairs as they appear will save thousands on repairs over the years. Your fund assists in catching problems as soon as they begin so you can easily avoid extensive maintenance costs that regularly cause massive financial pressure.

  • Improve the Resale Value

Let’s say you build up your home repair fund by more than 1% of your home’s value. In theory, you now would have “extra money” to put towards upgrades in your home that could increase your home value. Just make sure to always have the 1% of your home value available to you even during the upgrading. If keeping up on all the maintenance and repairs, while also adding features to increase your home’s value, you can almost guarantee you will make money on your home when the time comes to sell. Most buyers in the market for homes want a property where they don’t immediately have to update certain things like plumbing, roofing, flooring, cabinetry, major appliances–stove, furnace, or water heater.

  • Bring Peace of Mind

Maintenance is essential for your living quality. Simply imagine spending more time enjoying being at home instead of worrying about the next structural damage. Imagine not worrying anymore about moisture build-up or broken appliances.  When your home is maintained using this fund, you will usually avoid uncomfortable financial situation regarding your home. Having this fund is reassuring to most people because, in this modern world, many of us feel like we could just be a moment away from disaster. This fund offers confidence, which brings peace of mind.

  • Maintained Home is Money Saving

You will save money in the long run when you spend money on all necessary maintenance and repairs as they happen. When your home is in good condition, it is more efficient. Energy efficiency, as well as quality, will become far more impressive in terms of living costs. You’ll spend less money on electricity, water, and on everything else if your property is well maintained.

From better insulation conditions, to sealing cracks, to fixing physical damage, maintained homes tend to save you money. You will spend less on a monthly basis in many areas, which encourages the continued savings of your home repair fund.

  • Change your Living Experience

Living standards and a general sense of comfort will improve when maintenance and repairs are made regularly. Over time, this leaves many positive feelings. It’s an excellent feeling when you know you’re safe, secure, and healthy in your home.

You will be ultimately spending less money, reducing risks at home (like living with mold), and saving money on energy bills. Your living environment affects your state of being, so continue to feel happy and healthy at home!


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Author:Barry White

Barry White is the owner of RightSwitch, he has a passion for web design and user experience and When not working he enjoys hiking and sea swimming.

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