Home renovations will never go out of style. Whether it’s for the purpose of selling your starter home or just to breathe new life into your precious abode, renovations are here to stay. Also here to stay, their cost. The cost of renovations will always be quite high – and a bit daunting – but never let that discourage you from making a sound investment in your home. The key to a successful remodel, though, is owning your budget and making it work for you. But with such a hefty challenge ahead of you it can be a little scary, especially if you don’t know where to start. Follow these tips and tricks to master your budget and your reno.
Start At The Beginning
It all starts with an idea, right? Indeed. However, before you solidify your visions of grandeur you need to have a realistic discussion with yourself and your partner about budget. What can you afford to save or pay back in a timely manner without creating a financial burden? Answer this question first and you’re well on your way to a great reno.
Borrowing funds for a renovation is very common and can be done through home equity loans or lines of credit (lump sum with fixed interest all at once or multiple withdrawals from a maximum amount over time, respectively). Another popular method for borrowing is with credit card offers, such as 0% interest for a year. However you choose to acquire the money, being able to pay it back without causing yourself undue financial stress is an absolute must. Never borrow more than you can comfortably pay back with interest.
Line By Line
The most organized people are the least stressed. Debatable. Yet, when it comes to balancing and keeping track of your budget, detailing your budget line by line is imperative to a successful renovation. Obviously, you’ll need to do your research with contractors, average costs of materials and labor, as well as specifics. You’ll want to combine the research portion with the first step (to give yourself an idea of what you’re likely to spend) but once you have your budget, create a spreadsheet with each item accounted for and reference it throughout the process to ensure you stick to it and no penny goes wasted or missing.
It’s advised that you designate 20% of your budget to emergencies. Especially if you’re entering into a major home remodel where you’ll be working around utilities like gas, plumbing, and electrics, you’ll want a solid chunk of change set aside specifically for emergencies. Murphy’s Law reigns supreme in renos; if it can happen it will and you will be caught holding the bill. If you don’t end up using the emergency fund, you can either not use it (less to pay back) or splurge on something nice for your new room. Up to you. But wait until all construction is finished and your room is reassembled before dipping into it.
The Finer Details
Some renovations will require you to store your furniture elsewhere or restrict the use of certain amenities such as sleeping, bathing, or eating. Kitchen renovations will make it near impossible to cook at home for yourself and a week of eating out really adds up. There also might arise a time when you can’t be in the house for 24 hours or more and you’ll need to stay in a hotel. They may not cost the thousands of dollars you’re shelling out for this renovation, but these expenses add up. Give yourself a little buffer and account for these things in your budget.
If your reno lasts more than a few weeks, it’s wise to budget for a night away from the chaos of construction. Renos are stressful and taking a break from it all will do wonders for your sanity. Even if you think you can tough it out, plan to pay for this retreat anyway. Like with your emergency fund, if you don’t use it you can either put that money towards the loan or for a new decorative element for your new room as a reward for making it through the process.