4 Essential Budgeting Tips for Your Home Remodel

Posted On Friday, 24 September 2021 22:03

Budgeting is the first step of your home remodel, and it’s not exactly an easy one. If you make a mistake, you could find yourself with a drained bank account and no clue how to cover the rest of your remodeling projects. 

To do it right the first time around, follow these four essential budgeting tips:

1. Think Beyond Labor Costs

Your remodeling budget needs to account for more than what the contractor will charge for labor. They will need funds for materials and necessary building permits to complete their projects. You might have to pay steep delivery fees for these materials, depending on your location. All of these factors are just the tip of the iceberg for your budget! 

There is so much more that you need to think about. For instance, are you going to live in the house throughout the remodeling project? If you are, you’re going to have to spend extra money to make the construction zone as livable as possible. You’ll need to purchase air purifiers to make sure that your air quality is safe enough to breathe. You’ll need to get plastic tarping, tape and other materials to block off unsafe areas of the home. And if your kitchen space is going to be tampered with, you’re going to have to order your meals through takeout or delivery until the area is usable once again.

And what if you’re planning on leaving during the home remodel? Then, you will have to account for the additional costs for a temporary living space, whether it’s a hotel room, an Airbnb, or a rented apartment. These costs could take up a significant portion of your budget. 

What other costs should you think about?

• Childcare (daycare, camp, babysitting, etc.) for kids who need to be away while contractors are working

• Petcare (daycare, pet-sitting, walkers, kennels, etc.) for pets who need to be away while contractors are working

• Storage costs for furniture and other valuables

• Cleaning/sanitizing when work is done

• Raised energy costs

2. Give Yourself a Buffer

It’s not a good idea to make your budget the same amount as your estimated costs. There are going to be expenses that you can’t predict. If you set this strict budget for yourself, you’re bound to spend more than you originally planned and cause yourself undue stress. 

So, what should you do instead? You should add a 10-20% buffer in your budget to account for any additional expenses. It will protect you from immediately going overbudget and jumping into financial distress. 

The precaution might seem unnecessary at first until you realize that a considerable amount of homeowners underestimate how much they’ll spend. According to a Houzz survey, 31% of homeowners went overbudget during their home remodels in 2019. Only 3% went under it.

3. Prepare for Surprises

Your home remodel could come with some unwanted and expensive surprises. What types of surprises? Your contractors could find pests behind the walls, mold, water damage, faulty electrical wiring, asbestos and code violations that they have to fix. These aren’t problems that you can ignore. You have to address them.

These surprises won’t just slow down a contractor’s progress — they will cost you more money. So, how can you prepare your budget for this? You can use the buffer in your budget to pay for these costs. This is exactly what your buffer is made for. It’s a safety net that can help you cover emergency expenses without breaking a sweat.

Another thing that you can do is make a list of projects that you can drop if something goes wrong and you need to save money. These should be non-essential projects that can be performed later in the remodeling process, like picking an expensive countertop in the kitchen or adding a barn house door in the living room. You can sacrifice one of these projects to help cover the surprise expenses. 

Just make sure that you discuss your list of throwaway projects with your contractors ahead of time. You don’t want to give them expectations for work that you can’t guarantee will happen.

What if your budget is not enough? It’s possible that you still don’t have enough to deal with a surprise. In that case, you could apply for a personal loan to cover the small emergency expense. Before you send in that application, do your research. Click here to see what you need to know about personal loans and what qualifications you will need to apply for them. You’ll want to be informed before you turn to this financial back-up plan. 

pexels anthony shkraba 5244033

Credit: Anthony Shkraba via Pexels 

4. Do Your Research First

Speaking of research, you should do plenty of research before putting your budget together! It will give you a good estimate about what projects and materials will cost so that you know the bare minimum of what you should set aside. 

How can you start? Ask for quotes from contractors to see what you can expect to pay for general projects. Browse stores for materials and décor that you want to use and compare prices. Read home remodeling/design articles, magazines and web forums to get tips and inspiration for your own plans. Look into the home renovations with high ROIs (returns on investment) to see which ones will add more value to your home — and which ones won’t. 

The information that you get from this research will help you make better decisions with your remodel budget and even the remodel projects themselves. It’s much wiser to take the time to look up all of this stuff than to go into the experience without a clue about how much things should cost, where you should save, where you should splurge and whether something is a waste of money. In this scenario, knowledge is power. 

Start your home remodel off on the right foot by making a smart, effective budget. It will make the entire remodeling experience much, much easier on you and your wallet. 

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