Should You Upgrade to a Smart Home?

Smart home technology is gaining popularity for its convenience, improved energy efficiency and ability to increase home value. If you can shoulder the upfront costs, making these upgrades can also benefit your finances in the long term. Understanding the pros, cons and costs of smart home technology can help you make informed decisions tailored to your financial situation.

A smart home, also known as a connected or automated home, employs advanced technology to enhance and simplify daily household tasks. It offers the convenience of managing your home remotely through a smartphone or tablet or via automated schedules.

Smart home devices are interconnected and accessible through a central point such as a smartphone, tablet, laptop or game console. These appliances have self-learning capabilities to adapt to the homeowner's schedule and preferences. Integrated services like smart doorbells, security systems and appliances are part of the Internet of Things (IoT), which enables physical objects to collect and share data.

Smart home modifications automate tasks and manage resources efficiently, reducing energy usage and potentially increasing the home's value. However, the benefits aren't always immediate and come with initial and ongoing costs, as well as privacy concerns due to data collection. Understand these advantages and drawbacks to budget smart.

Smart home upgrades come with costs varying significantly, from minor improvements to extensive modifications, including initial upfront and ongoing costs. On average, according to HomeAdvisor, setting up a smart home costs about $927. Most homeowners spend between $182 and $1,677, though some setups can cost as much as $3,000.

For comprehensive automation of an average-sized four-bedroom, three-bathroom home, expenses can reach up to $15,000. For luxury, fully-integrated homes, costs range from $10,000 to $150,000. A clear understanding of these costs helps you make informed home improvement decisions and optimize your budget.

Upfront costs are the initial expenses incurred for smart home modifications. These primarily include the purchase of smart devices and their installation fees. Note that installation costs are separate from the purchase price of the devices.

Smart home device costs vary greatly depending on the system's complexity, specific requirements and brand. Different brands often provide a range of packages and subscription models, significantly affecting the overall cost. Cost is also affected by the size of your home. Basic smart home features, like a smart thermostat, can start at around $800. By contrast, a comprehensive whole-house security system may cost over $2,500.

Installation costs vary depending on the need for professional services, the installation's complexity and the modifications' scope. Basic, plug-and-play smart home upgrades can be installed within a few hours. However, more complex installations may require hiring an electrician, technician or a specialized professional.

Professional installation costs about $80 to $100 per hour. While most homeowners can handle plug-in systems, hardwired systems are best installed by professionals. Wireless installations might take only a few hours, costing around $150 to $200. By contrast, wired installations could take a day or more, potentially adding $500 or more to the overall cost. Some manufacturers may offer installation services as an add-on or included in the purchase price.

When investing in smart home modifications, consider the initial purchase and installation costs and the ongoing expenses. These costs typically include maintenance such as repairs or software updates, potential energy usage and internet connection increases and possibly higher insurance premiums.

Maintenance expenses can be one-time, recurring or unexpected and vary by device. The cost of maintaining these enhancements is influenced by several factors, including the device's complexity, the quality of components and manufacturer support. Another consideration is the cost of internet connectivity. Larger smart home projects might necessitate rewiring or upgrading your internet connection.

You can upgrade your smart home without breaking the bank by planning ahead. Start by focusing on affordable technologies and adjustments that easily integrate into your daily life, considering their long-term impact on your budget. Some energy-saving devices may even qualify for financial incentives from the government.

Integrating smart technology into your home can often lead to lower homeowners insurance premiums, because these technologies decrease the likelihood of costly claims. However, these upgrades can also enhance your home's value, potentially requiring broader coverage and increasing premiums.

The impact of these changes varies depending on your insurance provider and the specific upgrades made. Always consult your insurer before purchasing smart home modifications to help you understand their potential impact on your coverage.

Insurers often recognize the preventive advantages of smart technologies, like improved safety and security, and may offer discounted premiums for such upgrades. Here are tips for optimizing your policy:

We've compiled a list of resources to help you navigate smart home modification projects.

• AARP: Focused on empowering aging individuals, AARP provides advice on smart home modifications for comfort and accessibility.
• Consumer Reports: Consumer Reports offers comprehensive reviews and comparisons of consumer products, including smart home technologies.
• Department of Housing and Urban Development (HUD): HUD offers various programs and grants that can assist in financing smart home modifications, especially for low-income households or those needing accessibility improvements.
• Energy Star: Energy Star, run by the Environmental Protection Agency and the Department of Energy, provides information on energy-efficient smart home products. This could be particularly useful for readers interested in reducing their energy bills and carbon footprint.
• National Association of Realtors (NAR): NAR often publishes studies and reports on how smart home features can impact home values, which would be valuable for homeowners considering resale value.