While home renovation comes with its challenges—like navigating permissions, regulations, and making countless decisions—it presents an opportunity to bring your creative vision to life. Making a plan that balances cost-efficiency and design gives you peace of mind and allows you to make thoughtful choices about where to invest and where to save. At the end, you’ll be one step closer to your dream home!'
Follow along to learn how to create a basic budget for home renovations with our handy home improvement planner.
Setting a realistic home renovation budget
The key to making the most of your renovations budget is making sure that you set a realistic budget in the first place. It helps to understand the typical costs of the renovation you’re looking to do. Here’s a breakdown of some popular projects and their typical price ranges:
- Kitchen Remodel: Expect to spend between $13,000 and $37,000 depending on the size and finishes you choose.
- Bathroom Renovation: This usually costs between $6,000 and $15,000, with luxury options potentially hitting $30,000.
- Deck Addition: Building a new deck can range from $2,000 to $10,000, based on size and materials.
- Basement Finishing: This can set you back $20,000 to $50,000, depending on the complexity of the project.
How to allocate your home renovation budget
Now that you’ve got a ballpark of what a renovation should cost, it’s time to think through the costs that are specific to your project. Specifically consider your materials costs, labor costs, permits costs, and some extra as a contingency fund.
Why this allocation matters:
- Materials (50%): Good materials are usually worth the cost. Investing in quality materials ensures that your renovations look good and will stand the test of time. Look for ways to save here by shopping sales or considering alternative materials.
- Labor (30%): Depending on your skill level and the complexity of the project, labor costs can take a big bite out of your home renovation budget. Seek home help from professionals for the more complex tasks, but also weigh which tasks you can tackle on your own to save some cash.
- Permits (10%): Permits can range from a few hundred to several thousand dollars depending on where you live. Always check local regulations and include this cost in your initial budget to avoid any surprises down the road.
- Contingency Fund (10%): Life is unpredictable, and renovations are no different! Setting aside a contingency fund makes sure that you’re prepared for any unexpected costs that arise, whether it’s structural issues or price hikes in materials.
Take a second to use this renovation budget template to make your own calls about allocation to help yourself stay on track and avoid financial pitfalls during your renovation journey.
Cost-effective renovation ideas
If you’re looking to make a change without breaking the bank, consider a low-lift, low-cost renovation that makes your space feel new. These projects can breathe new life into your home without draining your wallet:
- Fresh Paint: Repainting the walls is a great way to utterly transform the feel of any room. On average, painting a 1,500 square feet home can cost around $2,000.
- Update Fixtures and Hardware: Swapping out outdated light fixtures, cabinet handles, and faucets can give your space an instant facelift. This project can often be done for under $1,000.
- Tiling a Backsplash: Adding a new backsplash in the kitchen is a stylish way to elevate your cooking space without a complete remodel. Expect to spend around $1,500 for materials and installation, depending on the cost of materials and size of space.
- Landscaping: Upgrading your yard is a great way to boost your home’s appeal and can be achieved for about $4,500. Simple upgrades like planting flowers, adding mulch, or installing a decorative border make a big difference.
- Updating a Fireplace: Refreshing your fireplace can be a game-changer in your living room. Whether you choose to paint the mantel, add new tile or stone facing, or replace the insert, you can complete this project for around $2,500.
- Bathroom Refresh: Rather than doing a full renovation, refresh your bathroom by replacing the vanity, mirror, and light fixtures. You can achieve a new look for around $3,000 without the hassle of a complete overhaul.
- Energy-Efficient Upgrades: Installing energy-efficient windows or upgrading insulation can have a higher upfront cost but may lead to savings on your energy bills.
DIY vs Hiring Help
Deciding whether to do it yourself or to call in the Pros is one of the most difficult parts of a home renovation project. Although our Home Matters blog has lots of guides to tackling big fixes by yourself, from disguising old radiators to building an at-home office, don’t be afraid to turn to a professional if you feel like you’re in over your head. Sometimes, the cost prevents bigger expenses down the line!
Maximizing your ROI
Besides the logical considerations, consider whether a home renovation will yield you a good return on investment (ROI). You want to make sure that all that money you’re putting into your home ends up translating into increased value when you look to sell later down the line. Take a closer look at which renovations tend to yield the best returns:
Kitchen Remodel: It’s undebatable that a kitchen remodel is one of the best investments you can make. On average, homeowners recoup about 70-80% of their costs when selling. High-impact upgrades include new countertops, energy-efficient appliances, and updated cabinets.
- Bathroom Renovation: A mid-range bathroom remodel typically offers a return of about 60-70%. This project doesn’t always mean a full gut. Even minor upgrades, like replacing fixtures and adding new tiles, can significantly increase appeal.
- Curb Appeal Improvements: Simple changes to your home’s exterior can yield impressive returns. Projects like replacing the front door or adding new siding can bring a return of up to 75%. Landscaping improvements can also enhance curb appeal, often resulting in a 100% return on investment.
- Adding Living Space: Whether it’s a finished basement, attic conversion, or deck addition, expanding your home’s livable space can provide substantial returns. Expect around 70-80% ROI, particularly if you create functional areas that enhance daily living.
- Energy-Efficient Upgrades: Many buyers are increasingly interested in eco-friendly homes. Install green improvements into your home to increase ROI by roughly 80% when you sell.
Shop smarter for materials
One of the biggest expenses in any renovation project is materials. Luckily, with a little strategy, you can shop smart and save big. Use these tips to help you make the most of your home renovation budget when purchasing materials:
- Compare Prices: Don’t settle for the first price you see. Take the time to compare prices at local hardware stores and big-box retailers. Websites like Home Depot and Lowe's often have online sales, and you can also find competitive prices on Amazon for various materials.
- Shop Sales and Clearances: Keep an eye out for seasonal sales, especially during major holidays. Many retailers offer discounts on flooring, appliances, and other materials during these times. Check for clearance items or discontinued lines, which can often be significantly reduced.
- Consider Alternative Materials: Sometimes, the cost of traditional materials can be prohibitive. Explore alternatives like laminate or vinyl flooring instead of hardwood, or quartz countertops instead of granite. These options can provide a similar look and feel at a fraction of the cost.
- Buy in Bulk: If you’re taking on a large project, consider purchasing materials in bulk. Many suppliers offer discounts for larger orders.
- Use Reclaimed or Upcycled Materials: Shopping at salvage yards, thrift stores, or online marketplaces like Craigslist or Facebook Marketplace can yield unique finds at lower prices. Reclaimed wood, vintage fixtures, and other second-hand materials can add character to your renovation while saving you money.
Home renovation made easy with American Home Shield
As your renovation gets underway, it’s time to turn your attention to the next step: protecting the investment you’ve made. You may have breathed new life into your space, but major home system and appliance breakdowns still happen.
Keep your home covered with an American Home Shield® home warranty plan. From your HVAC to your plumbing and electrical systems, American Home Shield covers more than 23 of your home’s major systems and appliances, giving you peace of mind long after your renovation is complete.
AHS assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.
