How to Build a Home Renovation Budget

The first step in remodeling is building your home renovation budget. This consists of deciding how much money you plan to spend on the project, and allocating the total budget between materials, fixtures, labor, design services, permitting fees, etc. It’s important to figure out early if your budget is sufficient for the amount of work that you want to complete. If not, it may be best to wait a year or two to add to your savings. A worst case scenario is to start a project, then realize there may not be enough money to properly finish. This is where smart planning and budgeting becomes so valuable!

Be realistic with materials and appliance costs

In order to be realistic with material, appliance, and fixture costs, find as many of the exact items you would like to buy to buy prior to starting the project. Compile the items and materials into a spreadsheet with the name, price, links and other useful details. You will be surprised by how quickly costs add up. In doing this before buying anything, you have the ability to easily make edits.


If your heart is set on a certain brand of appliance, type of marble, or custom cabinetry, these will inevitably cost more. For example, you may decide that you want a European-style range for your new kitchen. Do your homework and find out what these items will cost so that you can factor them into the budget. From there, you can decide where to make compromises.

Keep in mind the items that you can easily upgrade in the future, versus what will be challenging to swap out. For example, you can easily upgrade your cabinet hardware or a light fixture, but changing out tile or a sink will be more labor intensive. This will help you prioritize what you need to spend more on in the short-term.

The most costly items to move are plumbing and gas. If your budget is tight, try to keep these things in the same spot.

Create a reserve for unexpected costs

When you start opening up walls, it is common to find unfortunate surprises such as mold, termite damage, or plumbing issues. If you have an older home, you can almost bet that you will find something that results in unexpected costs. It is important to have a contingency reserve set aside within your budget to fund these expenses. Evaluate your project to decide the risk level. Many contractors recommend that your contingency fund be 10-20% of your total budget. If you don’t end up having to use it, you can spend it on upgraded finishings.

Keep your purchases organized

build your home renovation budget

Keep a spreadsheet of your purchases and returns. You will be buying an endless amount of materials, so keep track of what has been purchased, what is backordered, what you still need to order, and items that need to be returned. Without this, it is easy to forget about an item that you need to return. Staying organized can help you ensure that you don’t miss any return expirations.

Find a contractor that provides transparent pricing

Find a contractor who will give you line-by-line pricing, outlining what they will do and charge for each item. Depending on your market, this may be surprisingly difficult to find. If your contractor includes material “allowances” in their estimate, keep in mind that this is just a general idea of what something may cost. This is usually not for top-of-the line or custom materials.

Get quotes from multiple contractors. You can negotiate with them based on the other bids you receive.

Don’t be afraid to do some work yourself

If you are handy and have the time, tackling some of the work yourself can help you save thousands of dollars! If you plan to do this, let your contractor know early on. Agree upon a timeline for when your work will start and be complete so that the project timeline will not be affected.

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