If you’re like most people, you probably have a long list of home improvements that you’d like to make. But before you start knocking down walls or installing new flooring, it’s important to create a budget and plan for your renovation. In this blog post, we will discuss some tips on how to properly plan your budget for a home renovation. We’ll also provide some helpful resources that can guide you through the process. So whether you’re planning a small renovation or a complete overhaul, read on for tips and advice that will help make the process smoother and less expensive!
Table of Contents
A home renovation is not cheap or something you can do on a whim
It costs both time and money, so it’s important you plan everything out as good as possible from the start. That means having a realistic budget in place. To get an accurate estimate of how much your renovation will cost, start by creating a list of all the improvements you’d like to make. Once you have that complete, you can start with constructing your budget. For instance, Credit Sesame provides a free credit report and score, which can show you where your finances stand before beginning a home renovation.
There are also a number of free online calculators that can help you estimate the cost of your project. Generally speaking, most people should plan to set aside at least five percent of their home’s value for a renovation. So, if your home is worth $300,000, you should have at least $15,000 saved up before starting any work.
First and foremost, be aware of the time you will need to complete the project
While a smaller job may not take as long, you need to account for any delays that could happen along the way. You also want to be sure you have the money saved up before starting, so you don’t end up in debt or have to put the project on hold halfway through. The main reason you should know the time needed to complete the project is, so you can budget your money correctly. If you have $15,000 saved up, but the project will cost $20,000, then you need to either save more money or find a way to finance the rest.
Find a way to finance the project
Luckily, there are many different ways in which one can finance their home renovation project. You could take out a home equity loan, which would give you a lump sum of cash to use for the project. You could also get a home equity line of credit, which is like a credit card with your home’s equity as collateral. Or, you could take out a personal loan from a bank or online lender.
The benefit of a personal loan is that you can get approved quickly and have the money in hand to start your project right away. The downside is that personal loans typically have higher interest rates than home equity loans.
Be mindful of the value of your home
You don’t want to over-improve your home for the neighborhood because then it will be harder to sell later on. For example, if you live in a neighborhood where the average home value is $100,000, you don’t want to spend $50,000 on a kitchen renovation because it will put your home out of sync with the others.
It’s important to find that balance between making the improvements you want and not overdoing it for the sake of your home’s value. Home renovations can be a great way to add value to your home and make it more comfortable for you and your family. But they’re not cheap or easy, so it’s important you do your research and plan everything out before getting started.
Take unexpected fees into account
There are always going to be unexpected fees when you undertake a home renovation. Whether it’s an unanticipated repair that needs to be made or a delay in the project, you should have a cushion in your budget to account for these types of things. A good rule of thumb is to add an additional 20 percent to your total budget. This will give you some wiggle room in case anything comes up. Furthermore, if you do end up with some extra money in your budget, you can use it to make an upgrade or two that you may have not been able to afford otherwise.
Always be aware of the budget and stay one step ahead
It is crucial that you are always aware of your budget and where you stand with your finances. This way, if anything unexpected comes up, you can quickly adjust and make changes as needed. It’s also important to be proactive and not wait until the last minute to start working on your budget. If you do that, it will be much harder to stay on track and on budget.
The project requires flexibility
Be prepared for anything and everything. If you are not flexible, then the project will quickly become overwhelming and stressful. This will later create financial tolls as well. There are a million different things that could happen, so it’s important to be prepared for anything. The best way to do that is to have a solid plan in place before you start anything. This way, if something does come up, you can quickly adjust and get back on track.
Communication is key
The final and most important tip is to communicate with your contractor. If you are not on the same page, then it will be very difficult to stay within the budget or timeline you have set. There need to be clear expectations from the beginning, so everyone is on the same page. If there are any changes that need to be made, make sure you communicate them as soon as possible. The sooner you do, the easier it will be to make the necessary adjustments.
Renovating your home can be a great way to add value and comfort for you and your family. But it’s important to plan everything out and be mindful of your budget, so you don’t end up spending more than you can afford. By following these tips, you can make sure your home renovation goes smoothly and doesn’t break the bank. Furthermore, if you need to finance your renovation, be sure to shop around for the best personal loan rates, so you can get the most affordable loan possible.
