By Eric Hutchinson, Vice President, Goldman Sachs Personal Financial Management
The prospect of upgrading or renovating your home can be very exciting. The fresh new look, additional space, and modern appliances can all help to increase the comfort (and value) of your home.
On the flip side, major renovation projects can feel daunting and come with unexpected challenges, like delays or cost overruns. Both can be frustrating when all you want is to get the project done, so you can settle in.
Going over budget is a common concern when planning a remodel. It’s not unusual to hear of projects costing more than expected, delays that disrupt day-to-day life, and other not-so-pleasant outcomes.
So how can you have the remodel that you want at a price you can be comfortable with?
Over the years, I have overseen and managed a number of remodeling projects, working with architects, builders and engineers. Here are some tips and insights gleaned from my personal experience.
Before you start hammering away, I recommend putting together a budget. Doing so at the start can help save you from a lot of hand-wringing down the road.
It can be difficult to get the numbers exactly right because, as with any big project, you’ll likely run into unexpected costs along the way. To help set a realistic target, it’s a good idea to plan on the project costing more than your initial budget. Consider adding a 20% cushion up front. This way, you can roll with any extra costs that you may run into during the project.
Knocked down the wrong wall? Broke a pipe? Once the initial panic subsides, that cushion will come in handy for repairs.
Setting a budget is a good first step, but it’s also important to commit to it. As your project gets underway, it can be all too easy to say, “Yes, let’s add this while we’re at it.” Tacking on little extras here and there might not seem like much in the moment, but that’s how many projects can go over budget. From my experience, I’ve learned a rather universal truth about home improvements: Every little thing adds up.
Sticking to your budget requires discipline. And this can mean resisting the temptation to pay for upgrades that were not part of the original plan.
An important consideration before starting a remodel project is to determine if it’s more cost-efficient to demolish and start from scratch. It can be worth crunching the numbers to see your options.
Also, if you decide to pay for a contractor, I highly recommend checking references. Don’t be shy about asking for examples of their work and an estimate. You’ll want to see what you’re paying for. If the references, work quality, and price are in order, you’re probably off to a strong start!
That said, let’s look at some cost-cutting moves for you to consider.
Renovating a home can be daunting but rewarding as well. It can really add to your home’s wow factor, increasing its value and impressing your friends, family, and guests alike.
While remodeling can be costly, it’s possible to update your home without breaking the bank. Creating a realistic budget up front, having the discipline to stick to it, and using some of these cost-saving tips are just some of the ways to help ensure a successful renovation.
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