How to Budget for a Home Renovation

How to Budget for a Home Renovation

For most home owners a home renovation represents a financial commitment that they hope will pay off for their family as well as for resale value. When considering a home renovation how do you determine if you can afford it, and how to budget for one? Determining your family’s financial resources and life commitments should come before starting to think about a home renovation. Once you are ready to assess your home renovation possibilities use these tips to help you budget.

  • Assess your wants over needs: Renovations can be split into two categories: wants and needs. Meaning, renovating your kitchen to upgrade to granite counters from your plastic laminate ones would most likely be considered a want. While upgrading your kitchen from 40 year old appliances, cabinets, and finishes for safety, appearance and livability could be considered a need. Either way, decide what is the motive for renovating and if your financial pockets can afford the wants or needs.
  • Choose a small project first: This tip is going to vary based on your experience with home renovation. If you are a seasoned veteran, you may be up for being rooted out of your home for 6-9 months to add on a wing to the house. If you are a novice, and would prefer a shorter time line, than choosing a smaller project like a porch addition may be more in line with your plans. Smaller renovation projects will also allow you to budget less and learn from the process of estimating costs, labor, and materials.
  • Hire a professional to give you an estimate: Unless you are experienced with construction, it’s best to hire a professional contractor or estimator to help you determine what materials, labor, and time estimation will be appropriate. Many home renovations turn out negatively because of lack of accurate estimations in the beginning. This step will help you budget with realistic goals, instead of guessing. Consider getting several estimates to compare and contrast each professional’s calculations.
  • Be patient and realistic: The reality of home renovation is that it will usually take longer and may be more expensive than calculated. Often unforeseen circumstances arise during construction that a contractor didn’t account for in the estimate. When budgeting for a renovation, add a ‘cushion’ of time and money to be realistic of all circumstances. Patience should also be exercised when preparing for a renovation, as all the pieces may not fall into place as planned.

Home renovation can be an exciting and rewarding time for your family and your home. With careful planning ahead of time and a good assessment of your resources, you can make well informed decisions about your budget. Remember, the period of time that a home renovation takes can be considerably short when compared with the lifespan of a home. Your inconvenience for a few months will be well worth it when you see the rewards of your home renovation. Use these tips for budgeting and your “new” home may be closer than you think!

Freshome readers tell us how you have budgeted for your home renovations. If you have any helpful advice, please leave it below.


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  • Tomas Turecek January 10, 2011 at 07:40 AMLogin to Reply →

    Thanks for these tips. When we were planning a renovation of our apartment (one floor in old family house) we knew what should be done and how it should look like when all the renovation work is finished. We made a rough guess on how much we would like to spent for it, then we invited couple of companies doing such type of work, compared their price offers and chose one. By that time we already knew that we can’t fit into our original guess. After tens and tens of hours spent on the web looking for inspiration we decided for a style (look) that we wanted to have in our rooms. Then we started to look for furniture and accessories on the web first to get an idea about prices. We made a list of everything we wanted to have in renovated rooms and we started creating price list. At the end the price of renovation was twice higher than our original estimate even though we decided for cheap furniture from Ikea. Perhaps we were too optimistic about prices in the very beginning.

  • Rose January 11, 2011 at 00:03 AMLogin to Reply →

    One thing you should also remember. You get what you pay for. In other words, if you are willing to sacrifice some of the finishes, then by all means, award the contract to that much lesser bid that Mr. Contractor A presented to you. Just be aware of what type of compromise you are making. Keep in mind that there should not be any compromise made regarding the structural elements of your home. Safety first, savings next. Always hire a professional to make sure your investment is not going to be a waste of money.

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