Rebuilding Your Emergency Reserve After You Buy
After you buy your home, it’s time to focus on rebuilding your emergency financial reserve for any of the unexpected problems that plague new homeowners. Owning a home comes with a host of potential problems, and smart homeowners have an emergency savings account to help deal with those problems. Your emergency reserve can also help sustain you in the event of a job loss or other unforeseen circumstance.
Emergency Financial Reserve and Household Problems
Owning a home includes all of the responsibilities that go along with home ownership. When you own a home, it’s your job to replace the furnace, fix the plumbing, repair the roof; you can’t just call a landlord to report the problem and wash your hands of it. Many people deplete their emergency financial reserves during the home purchase process, but after the sale is complete, it’s time to build up those reserves again.
Think about the most expensive system in your house to replace, and save enough money to replace that system. If the roof is the most expensive thing to save, make sure you have enough money to replace the roof. If the furnace or plumbing need to be redone, save money for that. Conventionally, $5,000 is a good minimum for an emergency savings account; depending on your home, you may need far more than that.
Savings can Sustain You After a Job Loss
Your emergency reserve isn’t just for making repairs to your home home; having that reserve cash can also sustain you after a job loss. Financial planners recommend that you save enough money to pay all of your bills for at least six months in the event of a complete loss of income. Hopefully, that will never happen, but you can rest more comfortably knowing that you have a cushion if you should be laid off or involved in an accident that renders you unable to work. Make sure to include all of your bills when calculating how much you should save, including your mortgage, utilities, credit cards, the cost of food, car payments and any other regular monthly costs.
