Setting a Renovation Budget

computing home renovation budget on laptop

Few of us like to stick to a budget - it’s more so that we have to. Sticking to a budget means having to limit your options or search for more cost-effective alternatives. But a budget is a valuable tool especially for home renovations, which can have you spending thousands or even tens of thousands of dollars. With that much at stake, you need to know exactly how much you can allocate for renovations.

So even before you start contacting contractors, creating a budget needs to be your first priority. The last thing you want is to put yourself in deep financial trouble. Here we’ll look at how to set a renovation budget for your next home remodelling project.

Determine Your Renovation Goals

Why do you want to renovate your home? Is it to create an open floor plan to entertain guests or to have more kitchen counter space for meal prep? Whatever your reasons, the first step to setting a budget is to determine your renovation goals. Knowing that will help you drill down into specifics and give you a clearer picture on how to prioritise your funds.

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Assess Financing Options

The next question is how you’re going to pay for the renovations. Here are estimated renovation costs according to data from hipages:

  • Bathroom: $10,000 to $35,000+

  • Living room: $10,000 to $15,000+

  • Bedroom: $2,000 to $35,000+

  • Kitchen: $10,000 to $45,000+

  • Decking: $2,000 to $10,000+

The wide discrepancy is because there are many factors involved that contribute to a project’s total cost. If you plan to borrow, one option is to use the equity from your home to access a line of credit. Be sure to speak with your lender for more details.

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Get “Hard” Quotes From Contractors

Contractors are often happy to provide free quotes as it means more potential business for them. But without specifics, it can be difficult for them to provide accurate costs. For that reason, you generally want to get “hard” quotes. These typically require paying a small fee as they provide a more detailed outline of costs and timeline for your project. To stick with your budget, ask about fixed-price contracts where you pay a set lump sum upfront.

Allow Some Breathing Room

Unexpected expenses may arise once renovations actually start. Even if a contractor provides a quote, it could end up costing more if additional work is needed. One example is if the electrical wiring needs to be updated to be up to code. Set aside an additional 10 per cent to accommodate any hidden expenses. If you don’t use the extra money, it can always be put towards furnishings or even into a savings account for a renovation.

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Find Ways to Cut Costs

Costs can really start to add up with any kind of project. If renovations exceed your budget, you want to be smart about cutting costs. Some examples might include opting for lower cost alternatives, refurbishing older items, making the project smaller, or even purchasing some of the materials on your own. You can also greatly reduce labour costs by tackling some of the smaller tasks yourself. Be sure to coordinate these efforts with your contractor.