This is a question I receive a lot. I’m going to preface this by saying: budgeting is hard, and it’s an imprecise science, but after some experience you start to get closer to the mark on what a project costs.
I’m a big spreadsheet geek. Like for instance, for my very first Manhattan apartment I input all the IKEA products I needed for my bedroom into a spreadsheet and then cross-referenced the tax rates at each of the closest IKEAs to NYC – Long Island, New Jersey, and Brooklyn – to determine the lowest price factoring in the cost to distance and product availability at each location. Yeah, so, now that we’ve all come to the same conclusion that I’m a huge dork, let’s dig in.
Step 1: Break down a project into its components
I start by listing off all the items that go into the to-be-renovated space in separate lines in a Google sheet and classify them by category. So, for instance, I’d say in the fixture category we need a faucet, a shower head, a tub-fill, a toilet, sink, tub, and a tub drain. And then I’d go down the room by category listing off everything I need to complete the space, for instance, all the flooring materials (including grout, thinset, Hardiboard).
Step 2: Assign everything a ball-park price
At this stage, I’m doing a quick Google search for roughly how much each component costs at the size I need and then I input it into the spreadsheet. I’m also ensuring I know approximately how much square footage I need of every material, and I’m throwing in ballpark placeholder numbers for any labour that I need to hire out. If there is something specific that I already know needs to be in the space, then I include that exact item (e.g. a specific brand and style of tub).
Step 3: Add it all up
This point is where you sum up all the approximations in your spreadsheet, and if the number plus 20% feels doable, it’s time to move forward and start sourcing the actual items for the space. If the number is terrifying and way exceeds your expectations, then I go back over the figures and see if there are any big unknowns that need to be defined better (e.g. plumbing costs), if not, I think about areas I can cut back. If no such areas exist, then I put the project on hold and start saving pennies.
A lot of the projects that are more intensive (e.g. a bathroom or kitchen), can’t be done piecemeal, so you really need to have all the funds up front for the project. But, if you’re dealing with a living room or more furnished space, you have some leeway to set a plan upfront and buy as your budget permits.
Step 4: Evaluate the budget at a high level
Once I’ve narrowed down the budget to a target, then I’m taking that amount and evaluating it in the context of our house. If I spend that much, do I expect to at least break even on it when we sell it? Is the level of finishes that I want to use consistent with what houses in my area, when renovated, include? If you don’t care about overinvesting in your home, or the renovation serves to improve the quality of your life and you’re committing to the house long-term, then don’t worry about this. But, I always like to do a gut check to ensure I’m not putting too much (or too little!) into the project financially.
If I feel like I might be overspending for the return, I might take one more look at the budget and see if anything could be cut back. Personally, I love financial restraints because I think they yield a more interesting and creative finished product, but I know you can only do so much cutting down of the budget before the finished product is sacrificed. For instance, to offset the cost of the marble in our master bathroom, we bought our vanity used off Craigslist and with some wood-fill, primer, a gallon of high-quality paint and a spray gun it was completely reinvented for about half the price we were quoted for a custom vanity. However, if it got to the point where we were using lower grade finishes across the board because that’s all we could afford at the time, I would have paused on starting the project and waited until I could afford the items that I thought were important in my master bathroom and in-line with what future buyers might expect.
What are your best tricks for budgeting?
One thought on “Budgeting for Renovations & Big Projects”
I love budgeting ! I think it can be helpful to do a budget for the rest of your monthly finances too, so you can easily and really feel that every latte and target run = that Reno project. We ended up staying with cash envelopes after saving for our master bathroom because it helped us save so much $$$$ when mamma doesn’t have a debit card to take with her to target 😬😬😬😬