How to budget effectively for home improvements

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If you’re thinking about freshening up the place, you’re not alone. Home improvements don’t come cheap – the Office of National Statistics found we spend nearly £30 billion a year in the UK on renovating and refreshing our houses – that’s £43 million a week.

If we’re talking about redecorating the spare bedroom, it might be a few hundred quid, but if you’re looking to extend your kitchen or add a new bathroom, you could run into five figures. So how do you make sure your budget keeps pace with your grand designs?

1. Start with quotes and advice

Not all of us have the time, the skills or the patience for DIY. So, any time you're looking to hire the professionals, you'll need to put some work into researching costs upfront.

To make sure you're getting the best deal, you need to go and get a range of quotes. No matter how reasonable it may seem, don’t rely on one quote alone – it could be overpriced and if you have more than one quote available, you may be able to barter down the cost too.

The good thing about hiring professionals to help you is they will be specialists in the area and help you plan for associated costs outside the work they're doing for you, eg. things like planning permission.

2. It's not just about setting a budget and sticking to it

Good projects start with good budgets, but the key to their success is continually monitoring how your budget is looking as the project progresses. You need to keep track of what you’re spending throughout and make sure you’ve set aside emergency funds too. If unforeseen costs mean it’s raining in the kitchen mid-project, you’ll need those rainy day funds in a hurry.

Try online budget planners and apps to help you stay on track.

3. Recovery plan

Delays, unavailability of materials, and tradespeople who don’t show up when you expect them can all add time and money to your project. Sometimes the plans you have in place need to be modified because of structural considerations that weren’t spotted upfront. Not only do you need to cater for an emergency fund in your budget, but you'll need a cost-effective recovery plan if things go off-track. Try to plan for the potential risks in the project and devise a strategy for how you can minimise the costs if it happens.

4. Think about where the money’s coming from

This one’s a golden rule. If you've ever watching a DIY show on TV, you'll have seen people embark on home improvement projects that start eating their money at a rate they can't cope with.

If at all possible, the money should come from savings, rather than borrowing. Saving before you start is better than paying for it long after you finish. If you do need to borrow to pay for it, then shop around for the cheapest way of doing it.

Don’t just look at APR, look at fees and other hidden costs too – the overall cost of borrowing.

5. Find the ‘goldilocks zone’

What’s the ‘goldilocks zone’? Astronomers use it to describe potentially habitable planets – not too cold, not too hot, but just right.

Apply similar thinking to your home improvement projects. Don’t deny yourself the things you really want, otherwise you’ll take the fun right out of it. But by the same token, don’t allow yourself to rack up the cost until suddenly you don’t recognise either the project or the budget.

You shouldn’t cut corners, for safety’s sake and for your own satisfaction. But think about cheaper alternatives that may look just as good. If it absolutely has to be Italian marble or tropical hardwood, be prepared to do some digging and get creative about sources. Reclamation yards are the thrift shops of home improvements and they can be a great way to find the materials you want at a price that won't blow your budget.


What now?

Have a look at the government’s planningportal.co.uk, mygov.scot/planning-permission if you’re in Scotland or planningni.gov.uk for Northern Ireland. Even if you’re certain you can do what you’re planning to do without permission, it’s best to check.

These days you can post a job online and let tradespeople compete for your business. www.ratedpeople.com is one, but there are others. Have a look in your app store. You’ll find lots of handy tools to help you keep track of costs.