How to Make a Budget for Home Improvement Projects
Before you dive into renovating your family room or kitchen, you'll need to know which projects give the best return on investment. That helps you make better choices for the biggest increase in your home's value.
Kitchen renovations and finished basements and attics are the big winners here, accounting for as much as 10% to 15% of the total value of your home, according to CNN Money. Bathrooms lag behind slightly, accounting for 5% to 15% of property value, but smaller baths such as powder rooms or half baths contribute less.
Use these percentages, and any others that you can find, as guidelines when planning for home improvement projects. If your living room or bedroom is so sad and dated that you can't imagine living with it for one more day, personal satisfaction can trump ROI to a certain extent.
Costs Related to Typical Projects
Americans love their kitchen renovations. So much so, the Huffington Post says four out of ten renovation dollars has been spent on kitchens in recent years. The trend is expected to continue. On average, kitchen makeovers cost just under $30,000. This includes flooring, new appliances, lighting, cabinetry, countertops, and labor for anything that you can replace without a full alteration of the room's footprint.
Consumer Reports says the average bathroom renovation comes in at about $16,000, including labor. The big-ticket considerations are cabinets, plumbing and plumbing fixtures, and flooring.
The median costs of some other home-improvement projects are listed by Remodeling Magazine as follows:
- New roof -- $18,488
- New vinyl siding -- $11,192
- Basement remodel -- $61,303
- Deck addition -- $9,327
- Attic bedroom -- $47,919
Where to Cut Back and Save
There are places to splurge, and places you can pinch pennies without losing much quality. One big way to save is to perform as much of the labor yourself as possible. You can paint and hang wallpaper, more than likely, but brave DIY folks are also learning to set tile, install new light and plumbing fixtures, and lay hardwood and laminate floors.
Areas where you'll want to hire out labor might be major plumbing and electrical, structural changes, replacing windows, installing cabinets, and replacing siding or the roof.
A surprising way to save money is by hiring an interior designer, even if it's only for an hour or two. A designer offers professional home improvement advice, which can save money since you'll make the best choices the first time. Even the wrong color of paint can add up if you have to paint a room twice.
If you really want to be frugal, consider a few of these options:
- Shop for clearance-item floor and wall tile
- Replace cabinet doors instead of buying new cabinets
- Consider vinyl flooring instead of tile
- Rethink laminate countertops, or opt for composites instead of granite or marble
- Replace appliances with white, as pricey stainless steel won't remain popular forever
Fitting Everything into Your Budget
Once you know what you want, start a goal account in your budget to avoid putting anything on credit. The benefit of this method is twofold. You'll avoid costly interest payments, and the time it takes to save lets you shop for the best bargains. When you buy on credit, it's tempting to buy the first thing that strikes your fancy.
The bigger your goal, the more time you'll need to save for it. Start making budget adjustments now, and you'll reach that goal sooner. Turn down the thermostat, cut out unnecessary spending, and hold off on buying that new car. Any areas of your budget where you can trim off the fat will beef up your eventual renovation.
Your home is probably the biggest investment you've got, and you owe it to yourself to make improvements that will increase its value as well as your enjoyment. Take your time. Instead of opening a new credit card account at your local big box store, squirrel away money and make smart purchases.
Mint.com can help you reach your home-improvement goals. With budget software that lets you track spending as well as savings, you can redirect money to where it has the biggest effect.
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