Setting a Budget for your Home Remodeling Project

Welcome to the next installment of my blog series on home remodeling. Today’s article is on setting a budget for your home remodeling project when working with a general contractor. Yesterday we looked at how to determine how much you can afford to spend on a home remodeling project. Today we’re going to look at determining how much you should actually spend.

Why You Need a Budget:

21 Day Personal Finance ChallengeIf you’re working with a general contractor to perform a home renovation, the contractor will most likely ask you upfront what your budget is for the project. This is a tricky question to answer because you don’t want to “tip your hand” to the contractor out of fear that he may milk as much money out of you as possible. On the other hand, the contractor needs to make sure you have a realistic expectation of how much the project may end up costing so that he doesn’t end up wasting his time (and yours) as he puts together a bid for the job.

If you tell the contractor upfront that you can’t spend any more than $10,000 on the remodeling project and he knows it will cost at least double that in materials alone, he can save both of you a lot of trouble from the beginning.

Looking at the Big Picture:

As I mentioned in yesterday’s home remodeling article, you need to take an honest look at how much value the home remodeling project will add to your life. Don’t worry about resale values and “getting your money back” when you sell your home. Sit down with your spouse and ask yourselves how much you’d be willing to spend on the project to have it done the way you want.

When approaching a general contractor, don’t think of it as an opportunity for them to determine how much money he can make off you, rather, think of it as an opportunity for the contractor to show you how much value and quality he/she can bring to the project and keep the costs within your budget.

Looking at the budgeting process this way will help ensure you have a much healthier relationship with your general contractor throughout the duration of the renovation project.

Do Your Research:

But don’t just randomly throw out numbers when determining a budget for your home improvement projects. There are a variety of great resources that can help you determine the cost of various home remodeling projects in your area. Ask family and friends who’ve recently completed home remodeling projects. Ask them what they would have done differently if they had the opportunity to start the job over. If you’re close to them, ask them how much they paid and whether or not they thought the work was worth it.

During the planning process, it is generally understood by the contractor that the budget is fluid and there may be changes along the way. The most important thing is to communicate with the general contractor throughout the entire process so he/she knows exactly where you stand in regards to costs and the quality you expect.

Too Much Debt?  Download our free Trees Full of Money Debt Snowball Calculator and see how quickly you can pay off your debt.

sign up today for our
free personal finance newsletter

Subscribe to our mailing list and receive FREE daily updates from Trees Full of Money, the best personal finance blog nobody has heard of.