Before starting any home improvement project, make sure you know what those projects will cost and how much you are willing to invest. Projects have a lot of hidden costs, and things always seem to come up to make them cost more. In this blog I will give you some tips to budget your projects and to keep you on track with that budget.
Look at your overall family budget and determine how much money you want to use for home improvements. Do you have a lump sum that you set aside when purchasing your home? Can you spare $100/month to put towards home improvements? Make sure you don’t take away from your home maintenance budget (or other essentials), because things always come up outside of home improvement projects. Also, whatever amount of money you choose, make sure it is appropriate for the value of your home and your neighborhood. If you bought a home for $100k and the average home value in your neighborhood is $120k, it would be silly to add $100k worth of home improvements, unless you have the money and truly want to stay where you are at (in other words, you don’t care about ROI).
Start a list of projects that you want to complete. Think large and small; from remodeling the kitchen to replacing door knobs. Determine the priority of each project (I use a 1-5 scale with 1 being the highest priority); should it be done before you move in or can it wait a few years?
What is each project worth to you?
For each project determine a justifiable cost; for a kitchen remodel, would you be willing to spend $1,000 or $10,000 to have a new kitchen? This justifiable cost has nothing to do with the real project cost; this is simply about personal worth. Obviously a $1,000 and a $10,000 kitchen remodel will get you completely different results, but in the next step you may find that the $1,000 you can justify is enough to make the changes you really want.
Small projects are pretty easy to estimate costs on, so go ahead and tally up what they will cost (replacing door knobs, painting, changing your blinds). Big projects are a lot harder to estimate, so I suggest creating a separate spreadsheet for each one. Start with the major costs to get a good rough number; for a kitchen remodel these would be the appliances, countertops, cabinets, etc. As you go through this process, reflect back on the justifiable cost you already set. If you have a $1,000 budget for the kitchen and want slab granite countertops, it probably won’t happen; but would you be happy with granite tile instead? Come up with these alternatives as you budget the project, listing them as Choice A, B, or C. As you budget your individual projects, always overestimate and roundup. Depending on the type of project, I tend to add on an additional 10%-50% of my original estimate, just to be safe. Screws, glue, sandpaper, and other small items really add up quickly, plus I am known to add things on mid-project.
Determine Feasible Projects
Some projects will be pretty obvious no-goes, such as the “converting attic to playroom” shown in the example below. I was so stuck on this idea for the longest time; planning out where the stairs would go, and how we could finally take back our living room from my daughter’s toys. I finally called my contractor over (aka Dad) and asked about the feasibility of the project. Yes, it was technically feasible, but with the structural changes involved, it would be over a $5,000 project. Although the extra room would be nice, I’d rather put that money towards a larger home in the future, when we really need that extra space. Although the list below is mostly fictional, I like to use highlight colors to signify where each project stands; grey = ‘no way’, green= ’active’, yellow = ‘next in line’, and red = ‘done’.
Reviewing Your List
Once you have your project list, reflect back on it from time to time. As you live in your house or as other things come up, projects will continually change priority, their value to you will also change, and your home improvement budget may also go up and down. Due to some really bad golfers (we have a 16’ golf net that sits on a 2’ hill and they still manage to hit balls over it), my daughter’s swing set is in the “danger-zone”. We now need to build an overhead structure as soon as possible to protect her, and because it is for safety, the justifiable cost is whatever it needs to be and the priority is very high.
I hope you found these tips helpful. Please feel free to share any other budgeting tips you might have in the comment section below.