How to Create a Home Improvement Budget (And Stick to It)

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Home improvement projects are a great way to extend the lifespan of your home. If you’re looking to get organized, create a budget, and plan your next home improvement project, you’ve come to the right place.

Step 1: Do some pre-planning

Figure out which home improvement project ranks highest on your list. Determine what’s necessary vs. what you want. What would add the most value to your home, or what would make the most significant aesthetic difference? Do you really need that expensive granite countertop?

Once you’ve decided what project you want to do, start figuring out the ballpark costs. Depending on the scope and size of your project, it could end up costing you up to $200 per square foot. If you’re coming out of pocket for your upgrades, it may be time to take a look at what’s affordable for you. According to the financial planning people at Mint, kitchen makeovers can range up to $30,000 including labor, whereas a full bathroom remodel might cost around $16,000. Adding a deck could cost around $9,000, and a new roof could cost almost $20,000.

Step 2: Decide on a workable amount to spend

Once you have a project in mind and you know a base price, it’s time to decide how much you can spend. There are always going to be little extras that come up, so it’s a good idea to keep them in mind when deciding how high to set the bar. Another consideration is whether you’ll pay for these upgrades out of pocket or with financing.

Step 3: Consult with contractors

You should get three different estimates. You can consult friends and colleagues, the BBB, or online peer review sites that rate contractors. You should add between 20-25% to the total cost of the winning bid to account for those unforeseen issues that will almost certainly come up.

Step 4: Move forward or recalibrate

If you’re happy with the amount you’re about to spend, go forward and get started. If the project you want to do exceeds the amount you’re able to afford, there may be ways to scale it back. You could look for alternatives to reduce the cost such as substituting a more affordable material instead of Italian marble. You could opt for keeping older appliances that don’t have to be replaced yet. You could also scale back the overall scope of the project, or you could look into buying your own materials or even venturing into DIY territory, provided you possess the necessary skills and abilities to do the work.

Step 5: Embrace boundaries

You don’t have to do everything all at once. Remember that we discussed adding an extra 20% or so the total cost? That is to cover incidental costs that come up. It doesn’t account for the “while we’re at it” extras. That’s why there is a budget. If you don’t get to add on all the little extras that just come to you on the spur of the moment, it will be okay. That’s the beauty of doing one project at a time. In this way, your choices will be more intentional, and you won’t have to self-justify why you’re way over budget.

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