Budgeting Your Home Renovation

Whether you are renovating one room or the whole house, it's a good idea to think through the process of creating a budget for your project.

No matter the size of your renovation, it will be a big deal because it's happening under your roof. Starting with a realistic budget can reduce the stress considerably. Determining what you can spend ahead of time on flooring, lighting, painting, and other accessories helps to take some of the pressure off as you shop and compare.

Think big to small. One approach to creating your renovation budget is to first understand the anticipated costs of the must-haves. There are certain fixed costs you can't avoid. Most people have an idea of what they have available to spend on a renovation. So start by thinking about the most expensive things you must have to complete your renovation, such as electrical work or a new roof. Then, subtract those costs from your available funds. The remaining dollars can be broken down to cover finishes and other features.

Pick a must have! Choose one thing you feel you absolutely want for the space, such as some gorgeous tile, and make a few selections around it, such as cabinets. It's an exercise that's helpful in determining what you are dreaming about for the project and, once you understand costs, what things you may decide to compromise on."

Look ahead. When determining what you want to spend on your renovation, consider how much longer you plan to live in the house. Is this a short term home or a 20-year home? If you plan to live in the house only a few more years, make selections you like but consider spending less than you would on a house you plan to live in for many years to come. If you plan to sell, you will want the kind of quality that will entice people to buy your house. Just don't sink your entire savings into it.

Consider the neighborhood. Never spend more on your renovation than your location can support. You don't want the most expensive home in the neighborhood and not be able to recoup your expenses if you decide to sell. Visit with some local realtors and check comparable sales to find out how much homes are worth in your area and what renovations and features most buyers are looking for.

Plan for contingencies. Most remodeling experts suggest padding the budget by 15 percent to cover the unexpected.

Save and splurge. Find ways to cut expenses, such as buying all your appliances from one dealer and requesting a discount or purchasing floor models for less. Then apply your savings to something you've been dreaming about, such as granite countertops.

Indulge in the planning phase. Hours spent researching how you'd like your renovation to look and proceed is time well spent in the long run.

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