How to Stick to Your Renovation Budget
A home renovation can be a satisfying personal project or lifestyle improvement. However, all the excitement that comes with it can easily lead to overspending if you are not careful with its execution. Once you start renovating and seeing the improvements in your home, it suddenly becomes quite tempting to spend more than your initial budget. This is something that you’ll need to anticipate and learn to avoid if you don’t want your personal finances to suffer. To help you out, here are some strategies on how to stick to your renovation budget.
Plan your renovation carefully
People who plan their renovations in detail before the projects begin have the best chance of staying within their budget. Planning the details helps you define all the expenses associated with the renovation so you can set aside the appropriate budget for it. Knowing exactly where each dollar will go will prevent you from overspending on materials, avoid wastage and double handling, and easily make adjustments to the budget when needed.
Stick to your plan
Now here’s the tough part: you have to follow your plan to a tee. Planning well is half the battle, sticking to it is the true victory. How do you do it? With a lot of willpower and mindfulness towards your finances. Don’t entertain the urge to renovate home areas that are not on your approved plan. Refrain from browsing through luxury furnishings on Pinterest or Instagram, especially after the renovation has commenced. During the shopping stage, the best thing to do is let someone do the shopping for you, so you’re less inclined to divert from your plan.
Analyse your home’s market value
A common problem when renovating a property is overcapitalisation. It’s overspending on a renovation by splurging on expensive kitchenware, bathroom accessories, flooring materials and furniture. These things cost more than what they will add to your property’s value.
Prevent this from happening by finding out your home’s current market value when planning the renovation. The ideal renovation cost should not exceed 5% of that amount. It’s also advisable for you to research the market prices of the houses in your neighbourhood. This will allow you to set a desirable price range for your newly renovated property.
Set a realistic budget
Homeowners often set a budget that is too low for their renovation. In an attempt to save money, they initially will not consider getting professional services, but end up doing so in the end. They will initially commit to shopping for the best deals and lowest prices, but eventually, fail to do so. Don’t make the same mistake. Consider all the possibilities and set a realistic budget. It’s better to over budget and has the extra money in your pocket than to fall short right in the middle of the renovation. Finding new sources of funding can be extremely difficult at this stage.
Be as specific as possible
It’s okay not to know what you want, initially. People usually have second thoughts about home designs, materials, colours, and that’s totally understandable. But if you want to stick to your renovation budget, we advise you to be specific wherever and whenever you can. Determine the exact table top measurement, the type of flooring, the right paint colour, and all other things that need your on-point decision. If you are unsure, you can ask around, get advice from professional builders, or search for relevant information online. This will help prevent you from having to redo tasks and processes, which will incur more expenses to your initial estimate.
Research all costs
It’s a tedious job but one that needs to be done. Doing a cost analysis is a good way to avoid overspending for your home renovation. Make sure that you research costs attributed to renovating, including loan repayments, council fees, delivery charges and permit fees. All of these should be tallied so you can have a very good estimate of how much your total renovation cost will be.
Include a contingency cost in your budget
Another way to stick to your renovation budget is to set aside contingency money. No matter how well you plan, there will be unexpected costs like tool replacement and service charges. It’s not practical not to account for them in your budget. Experts agree that adding 15%-20% of the total estimated renovation cost is best for a contingency budget.
Keep track of the expenses
When the renovation is underway, make sure to keep track of all expenditures you make no matter how busy you become. Create an expense spreadsheet, whether in Excel or Google Sheets and input all invoices and receipts. Doing so will give you a clear picture of your budget status and will prevent you from splurging on luxury items. Take note that you can claim on possible tax deductions when renovating, including depreciation benefits. Make sure to consult a tax specialist before starting the project.
Hire expert services
Small DIY projects can be a good way to cut down your renovation expenses if you have the skills. If not, you may end up doubling the initial cost for those tasks. In which case, getting expert services is the best solution. With a professional renovation builder like Renovare, you’ll be assured that measurements, installations and repairs are done with the best quality at first try. There won’t be any need to redo tasks or to purchase a new set of materials, which prevent your expenditures from getting out of hand.
Carefully choose between contract types
If you choose to hire professional builders or contractors, you will have to choose between the three types of contracts:
- lump sum contract,
- guaranteed maximum price (GMP), or
- fixed-price contract.
Under a lump sum contract, you and your contractor will agree on a lump sum price for all the services before the project starts. The price can be changed on the course of project execution.
A fixed-price contract is similar to a lump sum contract, except that no changes can be made on the agreed price for the services.
As for GMP, it’s the contract where the builder will be paid for the actual costs of renovation, with an additional fixed fee. However, there will be an imposed ceiling or maximum price for the total cost.
Each contract type has its own pros and cons. You must choose the best one that will work according to your budget. Although, a fixed-price contract may be the best choice if you don’t want any unexpected expenses.
Stick to your renovation budget with Renovare
These steps can help you not to overspend, but with Renovare, you’ll be able to you stick to your renovation budget for sure. We will see to it that costs are defined as early as the planning stage and all works are done according to plan. Call us now and let’s accomplish your home renovation and improvement together at exactly your budget. We provide renovation services in Toowoomba, Hervey Bay, Mt Gravatt, Brisbane (Chermside) and the Gold Coast. Contact the team at Renovare today to discuss your renovation ideas.