Budgeting for home improvements
Is there a home improvement project on your to-do list? Here are some quick tips for budgeting for home costs.
Is there a home improvement project on your “to-do” list this year? You’re not alone. Most homeowners need to spend 1% to 2% of the purchase price of their home every year for routine maintenance projects.* Depending on the size of your home, that could be a pricey endeavor. Here are a few tips to help you budget for your next home improvement project.
- Define the project.
Make a list of the projects you want to tackle, then arrange them in order from most important to least important. “Needs”, such as a failing water heater or leaky roof should take priority over “wants”.
- Get an estimate or price it out.
If you are a do-it-yourself person, visit some home improvement stores and price out everything you’ll need. If you’re going to hire a professional, hire someone who is well-recommended to give you an estimate
- Consider what you can afford and what you can finance.
Don’t stretch yourself too thin by emptying your savings account. The same holds true for financing – don’t take out a loan unless you’re sure you can handle the monthly payments.
- Budget for the unexpected.
An electrical project can reveal bad wiring. A new water heater may require new plumbing. Be sure to allow an extra 10% to 25% for “surprises”.
- Keep good record.
Start a notebook and record the repairs that you make, the equipment you purchase and when the work was done. This can be very helpful if you resell your home or when planning for future purchases.
*“Opening Doors to Housing Success,”
University of Illinois, Building Research Council: