What is a renovation budget and how do I go about creating a renovation budget? Here is what you need to know about a process that works and will ensure success.
What is a renovation budget?
A renovation budget is money you have saved or set aside that is specifically for paying for renovations, whether that means hiring a contractor, or a Do It Yourself style project that needs materials and tools. This must be money that is not for your mortgage or bills or any other expenses. And you want to have a little wiggle room and not be counting on every penny of your savings or emergency fund to bankroll your reno.
Do I need a renovation budget?
If you are doing a renovation of any size, you need a renovation budget! Again, this applies whether you do it yourself or hire out the job. If you begin without a budget you simply do not know what you can afford, and you are bound to overspend.
Having a budget that you can consult as you get estimates and bids can help you select which contractor to work with. It can also tell you if maybe the project should be done as a DIY if it is simple enough, but too expensive to get a contractor to do. Knowing exactly how much money you have available to you for your renovation often dictates which materials you are able to buy, if you should buy tools as well or try to borrow them instead, and how upscale your renovation or remodel can be.
For example, if you only have $300 to give your kitchen a facelift, you probably won’t be paying someone to come in and do work for you. Instead you’ll be researching paint for your cabinets and maybe some lighting or storage alternatives that can help give the space a fresh look, but without breaking the bank.
If you don’t have that budget in place beforehand, you may find yourself buying things you don’t actually want or need, simply as impulse purchases, instead of putting the money towards something you really want or need. Then when you still have to fix or replace the things you really need, you’re working outside your budget and spending money that should have been allocated elsewhere.
What do I include in a renovation budget?
Your renovation budget will begin with taking stock of your income vs bills and expenses and seeing how much money you have to spare or add to savings each month. Any money that doesn’t go towards required expenses can be considered the funding of your renovation budget, so “how much should I spend” is really dependent upon your individual income.
Next after looking at the income a good consideration is to give yourself a buffer. Maybe you allocate $50 or $100 to not spend but to keep in your renovation fund so that if something goes wrong that you’re not anticipating, that you have some cash up front to be able to handle that. Or, if the prices of building materials change, this is good to have a small surplus. Sometimes even if you’ve hired a contractor and they’ve fulfilled their contract, you realize you want something a little different, so you either do it yourself or hire it out again. Either way, it is important to not be spending right up to the last penny unless you are continually funding this renovation budget from a stable source.
Finally, it is time to look at the renovation you want. First take into account the parts that are non-negotiable and absolutely need to be done. If the plumbing is leaking that is more important than wanting a different color paint on your walls. Set aside money for the plumbing first. Price out how much you need to spend in materials based on the stores nearby, or on what you can find online. Then you can either go ahead and do the project, or if you have leeway, you can wait until you have saved even more and are able to throw in the “perks” for whatever project you’re doing. Like replacing your whole bathroom vanity instead of just fixing a sink trap that’s leaking.
Just remember that the longer you save, the spiffier your upgrades can be!
So long story short, include everything in your budget. Don’t let yourself overlook the tools you need, the small things like screws and tape, or the upgrade things, like a better quality primer so you need fewer coats of paint. If you include all these things in your budget from the very beginning, then when the times comes to do that part of your renovation, you can rest easy knowing that you’re not “borrowing” money from some other essential thing in your regular budget, like the electric bill money!
How do I stick to a renovation budget?
There are various ways to stick to your budget once you’ve set it. For instance you can move your renovation fund to a separate savings account so you don’t accidentally spend it. Or you could pull it out of the bank in cash and tell yourself that this is all the money you are allowing yourself to use for this particular renovation.
But what about when it comes to which renovation to spend your renovation budget on? Well, just remember that if you spend the money to paint your walls instead of fixing your leaks or insulating your walls, or more vital repairs, then even if your home looks great for the moment, you’re bound to regret that choice down the line. Plus, you’ll have to start saving all over again and depriving yourself of that weekly Starbucks just because you failed to prioritize which of your home repairs are the ones that really count at the end of the day.
So just say “no” to the extras for your first initial projects, and return to those when the required repairs are done. It’ll be icing on the cake of your wonderful home when you do get to save up to repaint or refurnish a few rooms.
But the best way to stick to any budget is to write it all down – both a list of what needs to be done (and in what order), as well as how much you have saved and what it is for! If you keep your plans written down right under your nose, you’re more likely to stick with what you decided, even when you’re standing in Home Depot looking at that gorgeous Behr paint that would look so good in your guest bathroom.
What are some resources I can use for my renovation budget?
There are a lot of resources out there for budgeting in general, and those are a great place to start. A quick search like “how to set up a budget” is very informative. Everyone is going to have a different financial situation going into home repairs, so it’s hard to give much more specific advise. Everything I know about budgeting I learned from Dave Ramsey – he’s got a great (free) podcast that outlines so much in terms of real life examples and financial advice. 10/10 recommend his programs in general too.
I also have started to create spreadsheets and documents for myself to keep track of renovation spending. It’s great both so that we don’t overspend, and also so we know exactly where the money is going, and how much a certain product cost when we purchased it. (Also great to know these things if you ever have to return a product.) Keep all your receipts, my friends!
Soon I will have a downloadable PDF of our budget “worksheet” we’ve created for ourselves to keep track of all our renovation finances. Check back and download when it comes available!