Why is home renovation budget management so important?
Home renovation budget management is the basis of your whole renovation. If you don’t have your budget properly organised, your renovation is likely not to run so smoothly. On the other hand, even if you are the most organised renovator in the world, there is still a chance that your plans will not play out exactly how you want them to. At any point in the process, you may come across some hurdles – some of which will cost you extra money. An organised budget will allow you money for these unexpected costs. Most importantly, this will ensure that you get all of your plans completed when and how you planned. Not to mention, it is much easier to plan a renovation when you know exactly what you can afford before you start.
How do I organise my budget?
We have come up with 5 steps you can follow to help you manage your home renovation budget.
Work out exactly how much money you have to spend
Whether you are taking out a loan or have been saving money for your renovations, you should know exactly how much you can allocate to the renovation. If your budget is tight, make sure to make this obvious to anyone you hire. Most of the time there will be ways that they can accommodate your needs. This will be up to you if you are managing the project yourself. If you are hiring a builder to organise contractors, you can ask for a fixed-price contract which will ensure they will not take you over your budget. Remember, some things are out of even the builders control so it will still be subject to contingencies but this will give you a general limit.
Keep 10-20% of your budget as a contingency fund
Make sure you have a contingency fund for any problems or unexpected costs that may come up. No matter how small your budget or quote is, we recommend you make sure you still do this. It may be tempting to eat into your contingency fund to afford that little bit extra but then you won’t be covered for any unexpected costs. This could result in the job not getting finished – so it really is not worth it.
Decide on valuable places to splurge
This is an extremely important part of your budget management process. The list we suggested in last weeks blog will come in handy here. You can look at what you have deemed the most important and put them as a priority within your budget. These are the things that you would choose to do if you couldn’t do everything you want. You will find that in some areas you can make savings without skimping on quality, where some areas are really worth allocating a little extra to. There are some areas that have been proven to be valuable splurge items when it comes to the value of your property as a whole. This includes high traffic or frequently used areas such as the kitchen bench top and storage. A spare bedroom on the other hand, can get away with being more simple or less “impressive”.
Keep track of your paper work
Keep all receipts and invoices together in a safe but accessible place, you may need them down the track if certain things aren’t completed as you had agreed originally. Along with this, understand every form you sign – read all terms and conditions carefully.
Keep a spread sheet of your spending’s
You can quickly make a basic spreadsheet in excel. Ours might be more complicated. However this should give you the basic idea of how to set yours out. You can build this easily using Microsoft Excel – if you are having trouble using it there are many tutorials on google that will help you. A spreadsheet will just help you ensure you haven’t forgotten anything or spend more than you realise. We are quite confident that if you follow these 5 steps, you should make life a lot easier while have renovations done to your home.
Consistent effort and organisation within your budget management will always pay off, you will be less likely to over spend and miss out of parts of your plans because of it.