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How to Budget for Home Renovations


Embarking on a home renovation project is an exciting prospect. As a homeowner, it’s your chance to put your stylistic stamp on the place you call home. 

But home renovations can get expensive quickly. You’re looking at tens of thousands of dollars. And depending on the scope of the renovation and the size and type of house, it could be as much as $75,000 or more. 

That’s why it’s essential to map out a budget before jumping into a renovation. 


How to Budget for Home Renovations

Whatever your reasons for starting a home improvement project, it’s essential to consider the budget. If you jump in without one, you might not have the funding you need to finish the job. Additionally, overspending on a home renovation could significantly derail your other financial goals. 


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To avoid those pitfalls, follow these steps to create a home renovation budget you can stick to.

1. Get Specific About Project Scope

Every home renovation project is a little bit different. When you start planning a renovation, it’s easy to get carried away with the beautiful ideas you come across on sites like Houzz. Once you get started, it’s tempting to push into other rooms. 

So before you start ripping out walls, narrow down the specific scope of your project. For example, if you want to remodel the kitchen, determine whether you want to stop there or continue into the connected living or dining room. 

Whatever your project, get specific about your goals for the space. Are you trying to create a more functional space for your family and guests? Or are you looking to recreate the latest design trends? There’s no right or wrong reason for a home renovation. But staying on target with your goals can help you create the space you want on a budget. 

2. Create a Remodeling Plan

When you decide to remodel, it’s tempting to jump in feet first. After all, this is a very exciting step. But it’s crucial to take the time to create an extensive remodeling plan. 

Putting time and effort into a remodeling plan leads to a smoother process from start to finish. This step helps you visualize the entire process. You can use this time to ask questions and find answers that will impact your home renovation plans. 

With your specific project scope in mind, break down those project goals into subgoals. For example, let’s say your goal is to remodel the bathroom. To break it down, you might have subgoals like demolition, installing a new vanity, putting down a new floor, and updating the plumbing. 

This breakdown allows you to consider each step in the renovation process carefully. In many cases, homeowners underestimate the number of steps involved in renovating a space. A better picture of the entire process might lead you to eliminate parts you can live without. 

3. Research Renovation Costs

One of the key parts of any remodeling plan is researching the costs. Although you won’t get an exact price without a quote, you can come up with a reasonable estimate. 

Start by looking at any permitting requirements for the projects you have in mind. You could have to pay a few hundred or even thousand dollars just for that. 

From there, research each individual cost. Understanding the price of materials is useful. But don’t forget to factor in labor costs. At the end of this research, you will have a ballpark number in mind for your home upgrades. 

4. Get Multiple Contractor Bids

With a clear idea of your home renovation goals, it’s time to get bids on the project. Instead of working with the first contractor that comes along, get multiple quotes. 

The cost of the bid is a big factor when choosing a contractor. But look at the contractors’ reputations too. It’s typically worth paying a little more for a reliable contractor with a proven track record. 

If you aren’t sure where to look for a contractor, get recommendations (or warnings in the case of bad contractors) from family and friends. Also, check out the online ratings of contractors in your area to see what others think of their services. 

5. Add a Cushion to Your Cost Estimate

Even with a contractor in place, it’s possible your final costs will exceed the original bid. Changing material prices and unexpected issues can lead to a more expensive project than you initially expected. Adding a cushion to your cost estimate ensures your project doesn’t grind to a halt when you run out of money earmarked for the renovation. 

When saving funds or securing financing, a little extra padding in your savings account can go a long way. Budget at least 10% extra for unexpected project costs. If you don’t use the funds, you can put them toward another financial goal or use them to pay back your home improvement loan. 


How to Stick to Your Home Remodel Budget

Making a home renovation budget is one thing. But sticking to the plan is an entirely different beast. Fortunately, there are strategies you can use to prevent overspending on your project. 

1. DIY When You Can

Doing it yourself is one way to keep your home remodeling costs within budget. Although you still have to pay for materials, cutting back on labor costs represents major savings. 

When deciding what to DIY, look for parts of the remodel process that fit within your skill set and time restrictions. Time commitments like a full-time job or child care can prevent you from finishing a project as quickly as you’d like. And you should never undertake projects you don’t have the skills to accomplish, or you may cost yourself in the long run if a pro has to come behind you and clean up your mess.

A few jobs to consider tackling on your own include demolition, painting, flooring installation, and landscaping. But depending on your DIY know-how, you might be able to tackle more specialized projects to cut down on your home renovation costs. 

2. Buy Materials, Fixtures, & Appliances Yourself

If you rely on a contractor to help you select the materials and fixtures, you’ll probably pay more than you need to. Plus, you won’t get to pick from all the available options. Instead, head to the stores yourself to find the items that most suit your style and budget. 

Buying materials and light fixtures yourself can help cut costs. Although choosing basic materials offers some savings, don’t go too cheap. The cheapest materials available usually aren’t the highest quality. You might have to replace them more often than you’d like. 

Appliances are another place to look for cost savings. In today’s market, there’s a wide range of appliance options. You can go with a high-end model with a high price tag or opt for an affordable model that functions without all the bells and whistles. 

3. Consider Lower-Cost Materials

Lower-cost materials are out there. You don’t have to go with the cheapest option to find savings. In fact, you can find some high-quality materials on most budgets. For example, you might opt for durable laminate flooring over hardwood floors. 

Look at used or reclaimed materials for your project. In some areas, you can find thrift stores that exclusively sell donated building materials. For example, Habitat for Humanity ReStores are very helpful resources. 

You might not find exactly what you’re looking for. But you also just might hit the jackpot of building supplies. So it’s worth a look. 

It’s also wise to look at the materials currently in your home. For instance, check out the existing kitchen cabinets. If they are functional, you can refinish the cabinetry instead of replacing it. 

Additionally, you can look at easy swaps for lower-cost materials. For example, you could choose quartz countertops over granite during a kitchen renovation. Or choose a gravel driveway over paving the area. 

4. Sell Your Old Fixtures & Appliances

In some cases, you can reuse existing appliances and fixtures in the updated space. But sometimes, they just don’t fit into the new design. 

As you pull out old appliances and fixtures, you can sell them to offset the costs of your renovations. Although you likely won’t get top dollar, any extra funds help offset the cost of an extensive renovation. 

5. Plan Around Existing Plumbing

If you’re changing the floor plan of your home, plan around the existing plumbing. The cost of a bathroom remodel skyrockets if you move it to an area that currently lacks plumbing. 

6. Consider Financing Charges

Home remodeling projects are major expenses. In many cases, you must borrow money to cover the costs. But the type of financing you choose can significantly impact your costs. 

Although turning to credit cards is tempting, other financing options may have lower interest rates. For example, home equity loans, home equity lines of credit, and personal loans generally have better interest rates than the notoriously high rates attached to credit cards. 

If borrowing funds, seek out the most affordable interest rate possible. 


Final Word

A home renovation is a major undertaking. Before jumping into this project, it’s crucial to map out your budget. Without one, it’s easy to let costs spiral out of control. 

Whether you’re remodeling your basement, kitchen, or multiple rooms, researching the costs upfront can help you make a realistic budget before heading into the fray. You may decide to cut costs through DIY adventures and more affordable material options. 

It can be challenging to opt for the more affordable route in the midst of a renovation. After all, splurges like high-end tile or top-of-the-line appliances feel like must-haves in the moment.  But at the end of the renovation, you’ll be thankful you stuck with your budget. 



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