Smart budgeting is key to a successful home improvement project. Key steps in this plan include identifying your must-haves and establishing cost estimates.
How much should you spend on home improvements? In 2024, U.S. homeowners spent $670 billion on these projects (source: NAHB). However, the specific budget depends on many factors, such as the household type and income.
Which Home Improvements Are Worth It?
Some types of home improvements tend to be worth it more than others. These include minor cosmetic upgrades and smaller exterior updates, such as:
- Garage door replacement
- Manufactured stone veneer
- Minor kitchen or bathroom remodel
That said, almost any project can have a solid remodeling return on investment if enough factors come together. The key to choosing your projects is to balance the resources you have with the real-world constraints you face.
How to Budget for Home Improvements?
The biggest issue with budgeting for home upgrades and renovations is the costs getting out of control. Here are five tips to help you prevent that:
1. Have a Plan in Place
Home renovation projects have a tendency to snowball. Let's say you just want to replace a bathroom vanity. However, you suddenly realize this will create a fixture mismatch in the shower, which leads to a clash with flooring colors, etc.
To prevent the costs from spiraling, start by creating a list of all potential upgrades. Consider how each of them may impact the aesthetic you're going for.
2. Determine the Must-Haves
Separate a list of your potential upgrades into needs and wants. If your home renovation budget can't support all the needs, you'll likely need to limit the scope of the project. Some questions you should ask yourself are:
- Which upgrades am I willing to compromise on?
- Which upgrades will help me save money later?
- How will these upgrades impact my daily tasks?
3. Establish Cost Estimates
When estimating the cost of potential upgrades, make sure to do your research. Look into the relative cost of labor and materials you may need. Shop around to get accurate pricing on any appliances or fixtures the project may involve.
For things like bathroom remodeling costs, consider consulting a professional. They can help you make sense of everything and avoid hidden renovation fees.
4. Consider Your Payment Possibilities
Home improvement financing should play a key role in your plan. For smaller projects, using a credit card with 0% APR allows you to pay off all or most of the balance before a higher rate kicks in. Other financing options include:
- HELOC
- Personal loan
- FHA 203(k) loan
5. Get Multiple Bids
Once you know what you want to do and how much to pay for it, it's time to look for contractor estimates. Get at least three quotes from reputable contractors. This will give you a reliable price range for your particular scope of work.
The best way to find suitable candidates is to ask your family and friends for recommendations. Online reviews and sites like the Better Business Bureau can help as well.
Get Your Home Improvement Project Started!
Carrying out a home improvement project can be a major financial challenge. One way to stay in control of this process is to focus on pre-project planning. Use this article to keep your project on budget!
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