Creating a budget for a home renovation is challenging. It requires plenty of research and a detailed plan. When deciding on your home renovation budget, it can be easier and more affordable to prioritize certain projects and build a budget around the cost of each individual project. When considering how much to spend, you shouldn’t spend more than 10 to 15 percent of the value of the home.
Determine financing before finalizing your budget
Before you set a budget for a renovation, it’s important to think about how you will finance it. If you want to pay in cash, apply for credit or take out a loan, the budget has to fit within the limit of the funds available.
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Set aside a certain amount as a cushion
With every project, there can be unexpected expenses. Something can go wrong or cost more than originally projected. You need to set aside a certain amount before construction begins. If you hire the right contractor to do some exploratory work before you begin, there should not be too many unexpected expenses. It is suggested that you set aside from 5 to 10 percent of your total renovation budget.
Decide exactly what you want
One of the easiest ways to stay on budget during a renovation is to know exactly what you want. Think about the proper order in which to do renovations. It doesn’t make sense to get new kitchen cupboards if you are going with your kitchen floor plan at a later stage. If you do things in the right order, you can save time and money. Figure out where you are willing to compromise and where you don’t mind spending more.
Create a plan
A detailed plan, including cost estimates, will help you to set your remodeling budget and communicate with contractors about what you want. It will help to create a spreadsheet for different parts of the project and your estimated costs for labor and materials.
Materials will usually account for two-thirds of your budget and labor for one-third. Include proper estimates for all materials, such as cabinets, flooring, tiles, and more. Material costs can vary considerably depending upon market conditions so you will need accurate estimates.
Choose all your fixtures and fittings and what you will spend on them. Include any appliances and what they will cost. Make sure you include smaller costs that can easily mount up over time, such as sandpaper, paintbrushes, adhesives etc.
Get bids from contractors
When you know what you want and how much you can afford to pay, you need to find contractors that can help you to do the renovation within your budget. You can look at various online cost estimates, ratings and reviews before deciding on the right contractor.
Make sure contractors fully understand your needs and how you plan to prioritize. You can use competing bids to negotiate with contractors. Don’t necessarily go for the cheapest quote, as this could cause more expense for you down the line if you use cheap materials and labor.
Once you have selected a contractor, give them a look at your plan to see if you have overlooked any costs. Use their estimate and their feedback to update your project plan and make sure the final project stays within the budget.