There are many reasons why you might decide to renovate your home. Regardless of your reason, if you are planning to embark on the home renovation journey, you will want to ensure you budget properly. If you are unsure how to do this, we’re here to help. Read on to learn how to budget your home renovations like a total pro.
Figure out your budget, plus more
Ideally, you’ve been contemplating this for a while and have already saved up your desired amount. However, it’s perfectly fine if you are only just starting.
If you’ve been saving for a while, then you may be prepared to complete a more extensive scale renovation all at once. However, if you are a little more constrained, you may need to consider breaking your reno into parts.
Arguably, one of the most critical aspects of the budgeting process is ensuring that you have extra cash set aside for contingencies. No matter how prepared you are, you will almost always encounter unexpected costs. Consider an additional ten to twenty percent of your budget as your emergency cash to balance any budgeting issue you face.
Scope to the cent
Your final goal should always be to avoid budget implosion. While you may get cash elsewhere to finish the job, ideally, try to avoid a small loan. The best way to do this is through extensive scoping and planning.
This means you need to learn how much things cost. And I mean everything.
As you research, include demolitions, installations, all the materials, and the trades you use. It is very easy to forget that you will most likely require the help of various services. Unless you have experience as a builder, carpenter, plumber, etc, you will need to pay for help.
When it comes time for this, you’ll need to get quotes for the work. Consult multiple companies for a single service to find who is offering the best deal. Then, question these quotes intensely.
Identify precisely what you are being quoted for, and ensure you aren’t being overcharged. Don’t forget to book your trades in the right sequence so you don’t waste your money if a trade turns up and realizes they cannot work with the circumstances.
Nominate a spreadsheet manager
If you are renovating with a partner, a friend, or a family member, one of the best things you can do is appoint an accountant.
Picking a budget manager to control the finances minimizes your chances of overspending. You should run every purchase by your manager first to avoid unaccounted for costs.
At the end of each week, it’s a smart idea to be diligent in reviewing your spending and ensure you’re still in line with the budget. This allows you to rearrange your expenses if you’ve gone over budget.
The best way to stay on top of this is to use spreadsheets or a renovation cost organizer. Doing so will save you from a shock bank statement at the end of your statement period.
Keep your receipts
Finally, keep a hold of all your receipts. Put them in a folder if they’re hardcopy, or file them if they are digital. Not only does this mean you can get refunds if a purchase arrives damaged or if a job is completed poorly. It also means that you can go over your receipts at the end of each week and add the purchases to your spreadsheet if you missed them.
Your initial reno or design plans may change. Your builder may approach you to say the original plan isn’t going to work, and they may counter-offer you as a solution. Even if you like their new suggestion and agree to it, it helps to have a process for this outlined in your contract.
If you don’t have a contract, agree with your trades that they must note any changes in writing. This prevents a change from taking place that you were unaware of. So, if you end up not liking it, it can be fixed per the contract. Regardless of how significant the change, a system like this prevents you from wasting your money.
This is merely a place to start; as long as you make it a golden rule to plan, write down and review, you will minimize how likely you are to overshoot the budget. Regardless of the size of your renovation, good luck! Here’s to you taking the initiative to reinvigorate your home.