How to Budget for a Home Renovation: What You Need to Know
May 17, 2022
The process of remodeling your home can be daunting, but it’s not as difficult or expensive when you plan ahead. How much money do I have available? What is a contingency fund for and why should we use one in this type of situation?” These questions may seem overwhelming at first! But worry no more because today we are going over the basics on creating an accurate budget… So let’s get started!
When you are looking to remodel your home, one of the first things that need to be considered is how much money will I have available? This includes savings and other sources of funding like income from your job or family help with expenses (elders). Once this has been figured out it’s important to decide what percentage should go into a contingency fund.
A contingency fund is an essential part of any remodeling budget. It’s a buffer between your estimated costs and the actual costs of your project. Contingency funds are important because remodeling projects rarely go exactly as planned. There are always unforeseen expenses, such as structural damage or code violations that need to be addressed. Having a contingency fund ensures that you have the financial flexibility to cover these unexpected costs.
How much should you set aside for a contingency fund? A good rule of thumb is to set aside between five and ten percent of your total budget for contingencies. For example, if your remodeling budget is $20,000, you should set aside $1000-$2000 for contingencies. It’s best to keep your contingency fund in a separate account from your other remodeling funds. This will help you avoid dipping into other parts of your budget to cover unexpected costs.
What if you don’t have enough money in your contingency fund to cover all of your unexpected costs? If this happens, you may need to dip into other parts of your remodeling budget or take out a loan to cover the remaining costs. However, it’s always best to try to stick to your original budget as much as possible.
Now that you know how much money you have available, it’s time to start researching different remodeling options and pricing. A great way to do this is by looking at online resources and speaking with contractors. This will give you a better understanding of what to expect in terms of costs and what materials will work best.
Once you have a general idea of the costs involved, it’s time to start setting your budget. When doing this, it’s important to keep in mind that remodeling projects often go over budget. As such, it’s a good idea to set a max budget that you’re comfortable with, while being prepared to go over it if necessary.
Budgeting for a home remodel can seem like an exhausting task, but with a little planning and research, it doesn’t have to be. By following the tips outlined in this blog post, you’ll be on your way to creating the home of your dreams!
Looking to renovate your home but not sure where to start? Click the link below and book a free onsite consultation!