Decide the amount you want to spend, and make sure to stick with it.
It sounds so obvious and simple, but it’s harder than you think trying to stick to a budget. Research the various costs of remodeling your kitchen. The average cost of an upscale kitchen remodel is more than $75,000, but there are factors that will determine whether you want to spend that much. First, how much you can afford to spend? Take a look at your finances to determine the amount you can spend. Next, think about how long you plan to stay in your house. If you are planning on selling the home within five years, then your kitchen renovation should be viewed as an improvement on a real estate investment. Only spend what you think you will get back when you sell the house. If you plan on living in your home longer than five years, you should do a remodel that will make you and your family the most comfortable. Finally, factor in your neighborhood. Don’t over improve by putting in a ruling class kitchen in a middle-class neighborhood.
Set aside some of your budget to handle the unexpected.
You’re going to encounter surprises in your kitchen remodel, especially if you live in an older residence. There are all sorts of surprises that may be hiding behind the walls or under the floor. For example, you tear down the walls and discover your electrical wiring is out of date. Another example is you pull out your dishwasher and discover the floor beneath it is rotten all due to a water leak you had no idea about. Leave some wiggle room in your budget to cover these surprises.
Make sure to make a list of your renovation priorities.
What’s most important to you for your new kitchen? Is it new appliances? Or maybe new cabinets? Make a list of your priorities so if unexpected costs hit your budget, you’ll still get the top things on your list done. When setting your priorities, think about how important the little goodies like crown molding and a super-luxurious faucet are to the kitchen. These little things can add up big. There may be a cost-saving alternative, or you may be able to do without the item entirely.
How will you be paying for your project?
There are many ways to pay for a kitchen remodel. Home equity loans seem to be the most popular because they’re tax deductible. Other payment options can include refinancing, taking out a personal loan or taking a loan against a retirement plan.
Even if you have cash in hand, sometimes borrowing money at a low interest rate may be smarter than pulling your money from an investment account getting a higher return.
If you’re getting a loan, factor in costs like interest and loan origination fees. Also, find out when you’ll get the funding from your loan. You’ll need to make deposits with your contractors, and you’ll need to pay for materials up front.
The cost of eating out will need to be factored in.
You will be eating a lot of meals in restaurants or bringing home take-out food while your kitchen is torn up. Fit this expense into your budget at the outset. You could also set up a temporary kitchen in an adjacent room, and you should add in the cost of doing this.
Create a spreadsheet or use a program for your budget and check it often.
Put your budget and how much you’re actually spending on spreadsheets so you can keep tabs on how much you are actually spending. You can stop it, if you see a cost overrun starting to happen.
If you’re handy, do some of the small work yourself to lower your cost.
You don’t have to pay someone else to do all the work. Demolition – taking out the old cabinets, appliances and flooring – is actually pretty easy to do.
Avoid Extras.
Don’t be tempted to deviate from your budget in the middle of the project. If you catch yourself saying “It would be so great if we added (insert fabulous kitchen feature here),” stop yourself. This is how budgets get blown. Go look at that remodeling budget you made before the start of your project and repeat the number like a mantra. You can live without the little extras even though you may feel you can’t.