7 Tips To Budget For Renovations

For many homeowners, buying a home is simply the start of a long, rewarding journey. Customizing and upgrading the home to better suit your needs is an important part of the home improvement process and a priority for many homeowners. In order to keep renovations running smoothly, it's important to have a plan and stick to it the best you can. Budgeting effectively for home improvement can save both money and headaches, allowing you to get busy enjoying the new perks that renovations add to your home.

1. Learn About the Average Cost of Renovation Projects
   The cost of renovations can vary widely depending on what room you're working on, how much you're changing, and how you shop for materials/appliances. The average cost of a renovation project is between $100 and $200 per square foot, with kitchens and bathrooms often requiring the biggest renovation budgets.
   
   
2. Plan By Prioritizing Specific Renovation Projects
   While renovating an entire home in one shot is possible, it's not always practical. Planning projects for individual rooms makes the process easier to manage, requires less cash upfront, and keeps disruptions to your day-to-day life to a minimum while work is ongoing. So, even if you aim to renovate the whole home over time, start by planning for and prioritizing renovation projects in individual rooms.
   
   
3. Consider Renovation Costs Based on the Value of the Home
   If you want a renovation to add value to the home financially, then it's important to consider the overall value of the home compared to the cost of renovations. Typically, you don't want to spend more than 10 to 15 percent of the home's total value renovating a single room if you want to the home's value to rise proportionally.
   
   
4. Decide How You'll Pay for Renovations
   Will you be paying cash upfront, paying with credit, or taking out a loan for renovation projects? How you plan to pay for the project will have a big impact on your overall budget, so it's important to have a financial plan in place when you're ready to get serious about renovations.
   
   
5. Create a Detailed Plan with Estimated Costs
   Once you have a general idea of your overall budget and which room you plan to prioritize, you can get busy drawing up a detailed budget for specific projects. Consider the cost of labor, materials, fixtures, finishes, appliances, flooring, and any added living expenses you'll incur during renovations. You can often save money by purchasing materials and finishes yourself, though you'll want to make sure that your contractor knows your plan ahead of time.
   
   
6. Request Bids from Multiple Contractors
   Choosing the right contractor is a big deal because the best contractors keep costs down while providing peace of mind with quality work. Interview multiple contractors, request bids, and don't settle until you find someone you're confident can lead your renovation project.
   
   
7. Set Aside Extra Cash for Unexpected Expenses
   No matter how well you plan, it's rare for renovations to be completed without a surprise or two. Set aside some extra cash, about 10 to 20 percent of the project's total cost, to ensure that you'll have funds to cover any unexpected expenses.

Preparing for renovations is so much easier when you have a detailed plan in place, and research costs ahead of time. By planning renovations based on the value of the home, building a detailed budget, hiring the right contractor, and preparing for the unexpected, you can comfortably navigate the process of budgeting for your next big home improvement project.

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