Setting a Renovation Budget

The first order of business when planning any renovation is setting a budget. A budget can be a tricky thing to understand, but staying within a budget is much easier when you plan accordingly. You need a firm grasp on your income, a set amount for bills and expenses, and your savings goals. It would be smart to track your spending for a few months prior to setting a budget. Once you decide on a rough budget, it is time to be realistic and try to get a more set in stone idea from local contractors. First, make a list of what is most important and prioritize these items accordingly. If it is most important to you to ensure you replace all of your appliances and you also wouldn’t mind granite countertops, then appliances should be at the top of your list and granite could possibly be later switched out for a more affordable alternative. It is important to stay reasonable when remodeling and understand that premium options will add a significant amount on to your budget.

It is vital to understand realistic costs for your home. While these numbers are just a guide, it is always better to overestimate for a project and leave room for what might be crucial expenses later on. The percentage rule is a great place to start. You can use the value of your home to determine how much experts recommend spending on different rooms of your home.

You also want to understand the return on investment for your renovations. Your ROI is how much value you can potentially add to your home through renovations when it comes time to sell. Cost vs Value Reports analyze average homeowners projects and their returns every year. Below is the best home improvement ROIs from 2017.  

Budgeting 2017 ROI Tables

Keep in mind that while return on investment is important, if you are planning to live in your house for at least the next five years, you should really concentrate more on what you really want. If you are planning to sell sooner rather than later, then it might be important to take these things into account.

A great way to keep track of a remodel is to make a binder or an organized list of everything you are changing. Remember to account for material costs, labor costs, taxes and fees, and shipping costs. You should compare costs and keep track of the range in which your items are priced. When it comes time to calculate your final costs this will come in handy to see where you can potentially cut from and save. Always allot for at least 10%-20% in unexpected costs.

You should check with your contractor periodically to make sure you are still on budget and keep track of how your project is progressing. When getting estimates, make sure to ask specifically about money that will be set aside for allowances. Make sure to match that your budget and the primary things you want, like those new top of the line appliances, are budgeted for. This is an easy way to go over budget accidentally.

When should I start budgeting?

The sooner the better! It is always smart to plan your home renovation carefully and to not rush through big decisions. The sooner you start thinking about your budget, the more time you have to save your money. Also, if you can plan your remodel around different seasons and the benefits they may offer (like saving money on appliances by purchasing them during sale events) then you will thank yourself in the long run. There are several sources that offer free templates to help you keep a paper trail of your expected expenses.

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