By the time we were 6 months into owning our first home, I honestly thought I’d be perfectly fine if I never set foot into another Home Depot store again. Becoming a homeowner has always been a big dream of mine, and home improvement projects always looked so cool on HGTV.
In real life, this isn’t the case. Home improvement projects can be so tedious and also expensive. When we first moved, I budgeted for home repairs and improvements so we had some money to work with. We replaced the flooring, got rid of some trees, added a backsplash to the kitchen, and purchased a lot of furniture.
As the story goes for most homeowners, there are always more projects to do. So how do you budget for home improvement projects to make your space more inviting but also add value to your property? Here are some tips that can help.
Don’t Be Afraid to Get Quotes
I’ll let you in on a secret. About 80% of the projects we’ve done for our home probably wouldn’t have gotten completed has I not requested a quote. I honestly didn’t think we could afford to do certain things around the house. Like most people, there are so many other costs that I have to keep up with – not to mention the mortgage payment.
But here’s the thing. If you tell yourself that you can’t afford a home improvement project right off the bat, you’ll ruin any chances you may have had to get it done. Instead, you can take the initiative to get a realistic quote. Most contractors or stores will give you free quotes.
Getting a quote should be your first step so you can get a realistic idea of how much your home improvement project will actually cost. That way, you don’t psyche yourself out.
One of my next home projects may be replacing our bathtub. It sounds expensive, so my initial thought was just to remove the idea from my head since we wouldn’t be able to afford it. Or would we? It turns out after going to the store and gathering quotes, this project may be more affordable than I thought.
Create a Budget Category
Create a specific expense category to budget for home repairs so you can have some money to work with for repairs and upgrades. Gathering quotes will help you narrow down an ideal amount to set aside each month in a savings account.
A general rule of thumb is to budget 1% to 3% of your home’s value on annual repairs and upgrades. However, only you know which specific home improvement projects you want to work on so keep this in mind when creating a realistic budget category.
Automate your savings so you’re transferring a fixed amount of money each month to build your budget for home improvement projects.
Cut an Existing Expense Category
Most of my trips got canceled this year due to Covid-19. As a result, I’ve been able to complete almost every home improvement project we’ve had. Now, I’m not telling you to give up travel completely so you can work on your home.
I definitely want to do some traveling next year but it’s important to see how you can lower other expenses. Get clear on your values and find out where you can lower your spending or stop spending money completely on things that don’t bring you joy or contribute to your goals.
Both travel and improving my home bring me joy but I could only safely do one over the other this year. Other times, we do things like dine out less or workout at home to save money that can be redirected toward home improvements.
You don’t have to save up thousands of dollars before starting a home project. It may be easier to budget for home improvement projects if you start small like with a painting project.
Painting an interior room won’t cost much and you can probably even cash flow the costs if you have any wiggle room in your budget that month.
Start by tackling some of the smaller things that may have been bothering you around the house whether it’s changing doorknobs, installing a new smoke detector, or replacing the garage door opener.
Lower Your Mortgage
This involves doing some thinking outside of the box but it could be a great way to free up more money. See if you could get a roommate or rent out a room on Airbnb. This is commonly known as house-hacking. There are also sites that may let you rent out your garage or shed for storage space, or you could consider refinancing your mortgage to save money.
If you’ve reached 20% equity in your home, request to drop PMI if you haven’t already. When you lower your mortgage payment, the difference can go directly toward home improvement projects.
If you’re going to budget for home improvement projects on a consistent basis, be intentional and prioritize this goal. See if you can earn some extra money to soften the blow of an expensive project or do research to see what you can DIY.
If you come across any windfalls, consider putting that money directly toward your home improvement budget. What I’ve found that works best is that we do something to improve our home each month. I’m interested in projects and upgrades that will increase the value of our house since I don’t plan on living here forever.
Sometimes we do smaller projects when our budget is smaller and during higher income months, we take on bigger projects. When we can DIY or get a discount, we do that. At the end of the day, consistency is the key.