While setting a budget for your kitchen renovation appears relatively simple, creating the budget and sticking to it can be incredibly difficult. Here are some tips on how to budget a kitchen reno.
1. Choose your budget.
First decide how much you can actually afford to spend. Next determine approximately how long you intend to live in your home. If you intend to sell your home within five years, view your kitchen renovation as a return on investment. In this case budget to make sure you spend less than what you will get back on the house. If you intend to live in the house for five years or more, do a remodel that you are happy and comfortable with without worrying about your return on investment.
2. Understand cost breakdown.
Understanding how the budget will break down will give you a better idea as to what types of materials to choose to fit your budget. Generally, labor will be anywhere between 20 – 35% of the project cost. Cabinets are also usually a large portion of the budget.
Here’s an example of a typical breakdown:
35% – cabinets
25% – labour
22% – appliances
6% – fixtures
5% – fittings
7% – other
3. Budget for the unexpected.
Often unexpected expenses come up when remodeling a kitchen, especially in older homes. Once walls and flooring is ripped up, there can be out-of-date electrical wiring, mold or mildew, etc. When creating your budget, set aside some room for these unexpected expenses, just in case.
Prioritize your must-haves list and your wish-list. Decide which items are the most important, that way if something comes up and needs to be cut, you can give up a few items rather than increasing your budget.
5. Decide how to pay.
Decide how you will be paying for your new kitchen. Will you pay cash? Take out a home equity loan? Make sure you know your financing options, and analyze every aspect. For example, if you have the cash to pay for it, borrowing money at a low interest rate may be wiser than taking the money out of an investment account that may be getting a higher interest rate. Also, if you are taking out a loan, make sure you budget for interest and any fees you may incur.
6. Decide where to live in the meantime.
Will you be staying at a friend’s house, a hotel, or will you be living in the home while the work is being done? Either way factor in the costs of a hotel, pitching in for groceries, and/or eating out when budgeting.
7. Budget with a spreadsheet.
Make sure you write everything in a spreadsheet and check it often to ensure your budget is on track. This way you can make adjustments as needed, without worrying about going over budget.
For more information on renovating your kitchen, or to get a FREE estimate, contact us today at 604-968-2076.