Budgeting Tips for Homeowners Planning a Renovation

Renovating your home can be a very costly process. There are so many expenses, from the materials you’ll need to the labor cost. If you’re not careful, it’s easy to blow your budget and end up with a much higher bill than expected. About 35% of homeowners renovate their homes every five years, and the average home renovation cost is about $10,000. Many of them could save a lot of money if they knew how to properly budget and manage their renovation project.

So how can you save money while renovating your home? Here are a few tips.

1. Get multiple quotes.

Get multiple quotes from different contractors when you’re getting work done on your home, painting, electrical, or plumbing. This way, you can compare prices and make sure you’re getting the best deal. You can also use this opportunity to negotiate with contractors and see if they’re willing to lower their prices.

Depending on the work to be done, you may get away with only getting two or three quotes. But for larger projects, like a kitchen or bathroom renovation, you should get at least five quotes to ensure you’re getting the best price. You want to be sure to compare apples to apples, though. Ensure the contractors include the same materials and labor in their quotes.

2. Be wise with funding.

Some people finance their home renovations with a home equity loan or line of credit. They refinance mortgage loans for the renovation and pay it back over time, often with a lower interest rate. This can be a good option if you have a lot of home equity and are planning a large renovation project.

But beware, this can be a risky move. You could lose your home if you cannot make your loan payments. So only use this option if you’re confident in your ability to make the payments. A good rule of thumb is only to borrow what you can afford to pay back within five years. Try not to stretch your loan out any longer, or you could end up in financial trouble.

3. Do some of the work yourself.

If you’re handy around the house, there are probably some aspects of the renovation that you can do yourself. This will save you money on labor costs. Just be sure that you’re only taking on tasks you’re confident you can handle; otherwise, you could end up doing more harm than good and have to pay even more to have the job done right.

A man getting distracted by his dog while renovating his home

Some tasks that are entirely okay to DIY include painting, tiling, and installing new light fixtures. But leave the more complicated work, like electrical and plumbing, to the professionals. These are not areas where you want to cut corners or take risks.

4. Shop around for materials.

When it comes time to buy materials for your renovation, take the time to shop around and compare prices at different stores before making a purchase. You might be surprised at how much money you can save just by doing this one simple thing. Some stores will also offer discounts if you purchase a large number of materials from them. So, it’s worth asking about this when you’re making your purchase.

Depending on the project you’re working on, you may be able to find some of the materials you need secondhand. For example, if you’re renovating your kitchen, you could look for used furniture or appliances. You can then repair and refinish them to save even more money. Just be sure to thoroughly inspect any secondhand materials before buying them to ensure they’re in good condition.

5. Have a contingency fund.

No matter how well you plan, there’s always a chance that something will come up that you didn’t anticipate and will cost more money than you thought it would. That’s why it’s crucial to have a contingency fund set aside for unexpected expenses. This way, if something does come up, you won’t have to put everything on hold until you can come up with the extra money needed to finish the job.

Try saving 10-20% of your renovation budget for your contingency fund. This may seem like a lot, but having too much money aside is better than not enough. Once you’ve started the job, you can always use any leftover contingency fund money to splurge on finishing touches or upgrades.

Renovated homes usually add value when placed back on the market. But unless renovations are adequately planned for, they could also cost you more money than you expected. Remember these tips to save money while renovating your home, and you’ll be sure to stay on budget. With a little planning and forethought, you can have the home of your dreams without breaking the bank.

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