How to Budget for Home Improvement
A perfectly planned and executed home renovation can be a dream come true. But what most people forget to take into account is that home improvement almost always cost more than you thought it would. There is scope creep or the unintended expenses involved in the process and then there’s that dreaded thought, “While we are at it, why not…”
Needless to say when it comes to home renovation, even the most frugal ones can get carried away. It is like pulling a loose thread on a cheap sweater – the job keeps unraveling. Sometimes, you overspend by placing wants over your remodeling needs and other times an unforeseen glitch in your project can rack up big costs.
Therefore, if you want beautiful renovation without breaking your bank, you need some keen home remodeling budget planning. The good news is we have done most of the leg work for you.
How to Budget for Home Improvement : How to Stick to Budget
Here’s how much to spend on house renovation and how to budget for it!
Determine the Total Cost of Remodeling
Figuring out exactly how much to spend on house renovation can be a bit complicated. But as long as you stick to some general rules and guidelines, you can be well within your means. Usually, the average cost of renovating a home that is less than 1000 sq.ft. in size is $18,347. For homes double or bigger than this size, the cost keep on climbing.
Here is a sheet that outlines how to plan a DIY home renovation.
Similarly, renovating a old home will probably cost you much more than a newer one. This is because all those plumbing, wiring, and other construction features have to be updated. With everything considered, you can expect to spend between $100 to $200 per square foot on home improvement.
Thus, for home improvement budgets, it is better to prioritize projects by rooms. You can then build a budget around the cost of each small project or individual room to plan accordingly. A broad rule of thumb is to spend about 5-15% of your home value on kitchen renovation and 3-7% on bathroom. Similarly, the cost of renovating your basement should remain between $10,000 – $27,000.
The better is your home remodel budget planning, the more is the chance to come in on budget for your renovation. Therefore, depending on your remodeling needs, lay out the renovation projects you want done and estimate the total cost.
Prioritize Your Remodeling Needs
Once you have estimated all the costs for your home improvement budget, the next step is to prioritize your remodeling needs. If a room is causing some trouble or is in urgent need for a renovation, that project will come first. Similarly, if you want to renovate a space more than anything else in the house, you should budget for that remodeling need first.
However, if all places are in equal need of renovation you can start off with the project which brings the most value to your home. Mostly, there are two primary objectives of home improvement projects; to increase home value and functionality or to make the place look better. If your goal is the prior one, prioritize projects that will increase the worth of your home and optimize functionality. Similarly, if the purpose is latter one you can go for economic cosmetic fix for your house. This could include replacing faucets, door handles, and bedraggled landscaping features.
Set Spending Limits for Rooms
An important thing to remember is never to spend more on renovating a room that the value of that room as a percentage of of the total worth of your house. For instance, your kitchen generally, makes up to 15% of the value of your house. So, if the total worth of your house is say $100,000, you can spend no more than $15,000 on kitchen renovation. Set spending limits for every room accordingly and make sure you do not go overboard.
Find the Right Contractor for your Budget
Now that you know what you can afford to pay and what are your needs, the last step is to request bids from different contractors. The idea behind getting various bids for your project is to compare them and find a contractor that can do your home renovation within your budget. Get bids from at least three different contractors to get a good idea about all the costs.
While you do not want to go over your budget, it is also important to avoid bids that are too below than others. This is because cheap labor often also means a lot of errors that might even cost you more money later.
Once you have picked your contractor, you can get them to take a look at your plan and home improvement budget. This will help you to find any additional costs that you might have overlooked in your plan. Lastly, update your plan to make sure you stay on budget as you start the renovation.
Home improvement projects are an odd combination of incredibly gratifying and awfully tricky. But as long as you have a home improvement budget in place and you have taken these above steps to plan it, you should be able to complete your project within your means.
So, take the time to gauge all costs and do some keen home remodel budget planning. Not only will save yourself plenty of headache, but you will also meet all of your remodeling needs successfully.
The Doctor Money app can help you have all your budgeting information you need right at your fingertips. It can help you understand what you can afford and where you are in terms of your financial goals. Download the app now and start budgeting for home improvements. You can make your home renovation completely worth it while taking the financial pinch out of it!