For any large purchase, you should consult your budget before making a decision. For large home improvement projects, this is especially important. When you have taken out a loan for the project, failing to appropriately budget can be the difference between the project being completed the way you wanted and an incomplete room that you don’t want to spend time in. A well thought-out budget ensures that all aspects of a project are accounted for and funded.
Your budget will help you know how much money to save or the amount you need to finance before the project starts. If you are financing the project, you can work with your lender to determine how much you are able to borrow. That will dictate what changes must be made to your final budget.
To ensure that your budget fits your project, follow these steps. They will keep your project focused on what is most important and make sure you aren’t surprised by the total cost.
- Determine your priorities. Think about what you absolutely want or need out of this project, and are not willing to compromise on. If you are remodeling a bathroom because you need greater accessibility, or really want stainless steel appliances in your kitchen, make sure those go into the budget first. Then you can easily pick out where to cut costs if your project is over budget. Think about what will best serve your family and, if you will be selling in the future, what projects will net the best return on your investment. During this stage, spend some time researching all of your options to decide what is best for you and your space. Understand the cost and usability of different types of finishes to know how they will work in your home. Making educated decisions at the beginning means there will be fewer things to prevent your project from being finished on time.
- Get a hard quote. Most contractors will give a free estimate for a potential project, but these are usually 10-20% off the actual costs. Because creating a hard quote takes a lot more time, you should have the option to pay for the contractor’s time to build a solid quote that will serve as the basis for your budget. Make sure this quote includes all the items that will be purchased, as well as the cost of labor, permits, and other necessary items. Let your contractor know what your budget is, and they can advise you if it is reasonable and where the best places are to cut expenses if necessary. If there is a big splurge you really want, make sure they know that too.
- Account for all expenses. If you are building your budget yourself, include all the hidden expenses like disposing of old appliances and building permits. Think about how much you will spend on food if you don’t have a functioning kitchen for a few weeks. If you are doing the work yourself, be sure to account for all the supplies such as paint brushes and rollers, glue, sandpaper, drop cloths, and more. While each item doesn’t cost much, they can quickly add hundreds of dollars to your budget.
- Set aside money for surprise costs. There are lots of variables that aren’t accounted for in your quote. Once the project starts, you could find improperly wired electricity or mold. Plan an additional 10-15% of the total project costs for these unexpected expenses. If you are lucky enough to not need that much, you can put it towards furnishing the room or your next home improvement project.
- Trim your costs to fit your budget. If your dream doesn’t fit in your budget, you’ll need to cut some costs. Be smart about where you do this. Don’t sacrifice the overall quality of the work. Instead choose lower cost fixtures such as flooring or counter tops. You could also save money by refurbishing something you already have or buying gently used items. Consider doing some of the smaller tasks yourself if you are comfortable with demolition or painting. You could even volunteer to find sales and purchase items yourself instead of having your contractor do that for you. They generally purchase everything at one location, regardless of the current price.
A budget is not something you do once and then put aside. It is most helpful if you keep it updated with the actual cost of the items as the project progresses. Knowing where the money goes will help you better anticipate any problems and not be caught off guard by a huge overrun in the final week of construction. Your project budget will guide you through the whole process and help you make educated and informed choices.