How to Plan, Budget & Save for Renovations
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Let’s face it, renovations are not cheap. And while there are many opportunities to use your home equity to re-invest into renovations, our preference is to pay cash for our projects. And while it is hard to be patient when you want to renovate a space NOW, it is important to us to not go into debt just to renovate our home. Over the last 8 years we have renovated multiple spaces – a bathroom, kitchen, laundry room, and backyard. For all of these renovations we have planned and saved diligently. I often get asked how we do it and while some of this seems like common sense I’m going to break down the process that we have used to plan, budget, and save for renovations.
Create a Prioritized List
When we bought our home we knew that EVERY room needed to be renovated. Obviously, renovating everything at once was not in our budget. So we had to plan for our renovations well in advance. We made a list of every room we wanted to renovate and prioritized them. But how do you prioritize the renovations? There are so many factors to consider!
How to Prioritize Renovations
Things to keep in mind when prioritizing renovations:
- Are there any spaces that are unsafe? ex. mould in the bathroom
- What renovation would make the biggest impact on our day to day life?
- How will the renovation impact home value? (this is more important if you plan on selling in the short term)
- Which is the most expensive and least expensive?
Since none of our spaces were necessarily un-safe, we didn’t need to consider that in our prioritization. We knew the kitchen and bathroom would be our most impactful renovations in terms of function for our family as well as for ROI (although we have no plans of leaving anytime soon). So at that point it came down to the budget. Even though we wanted to renovate the kitchen the MOST, the bathroom was a less expensive renovation and we would be able to save for it quicker. So the bathroom came first. And then we both started making a bit more money and could save more every month. A couple years later we were able to complete the kitchen. But I’m getting ahead of myself!
Create a Renovation Plan
In order to determine the budget for your project, you need to come up with the “grand plan” for the space. Are you doing a cosmetic update? Are you gutting the room down to the studs? Do you need to move any plumbing, electrical, gas, etc. that may require you to hire a trade? Are you making any structural changes that could require engineering?
Once you know what the grand plan for the space is, you can start figuring out approximately how much it will cost. If you plan on hiring anything out, you could get a quote at this stage. However, be aware that quotes typically aren’t valid for longer than a few months and the quote may increase by the time you are ready to break ground.
Create a Renovation Budget
The next step is determining the budget for your renovation. Some people may think creating a detailed budget at this point is more work than it’s worth. However, I think it is important to understand the true cost of a project from the get go. Otherwise, you may assume you can complete your project for $10,000, save up $10,000 and start tearing out walls, only to be shocked to find out everything costs double and you’re way over budget!
I suggest starting a budget in Excel or Google Sheets. Write out everything that you can think of and the quantities. I find it easiest to think of the finishes first (these are easily looked up online) and then add in the estimates for the construction costs. I start by finding some finishes/materials I like and plug those numbers into the budget. If I’m noticing my total getting higher than I hoped, I will go back and look for cheaper finishes. None of this is set in stone, we are just trying to figure out how much a renovation of this scale will cost!
Here is an example of a budget for a bathroom renovation. Let’s assume this bathroom is 10’x10′ with a single large vanity and a built in bathtub. The current drywall is in good shape and we are keeping the layout the same which means no major plumbing work. We are going to do all of the work ourselves. I put together a little moodboard for this scenario! The vanity is a bit of a splurge so I kept the other finishes more budget friendly.
SHOP the MOODBOARD
Example Bathroom Budget
| Item | Quantity | Cost Per | Estimated Cost |
| Vanity 60″ | 1 | $4060 | $4060.00 |
| Sconce | 2 | $130 | $260.00 |
| Mirrors | 1 | $70 | $70.00 |
| Sink Faucet | 1 | $176 | $176.00 |
| Bath tub | 1 | $279 | $279.00 |
| Shower/Tub Faucet | 1 | $205 | $205.56 |
| Shower Curtain 80″w x 90″L | 1 | $175 | $175.00 |
| Shower Curtain Rod | 1 | $50 | $50.00 |
| Toilet | 1 | $264 | $264.00 |
| Misc. Plumbing | $200 | $200.00 | |
| Misc. Electrical | $200 | $200.00 | |
| Waterproofing materials | 60sqft | $2.76/sqft | $165.60 |
| Floor Tile | 100sqft | $6.00/sqft | $600.00 |
| Wall Tile | 60sqft | $8.00/sqft | $480.00 |
| Thinset, Grout & Supplies | $200 | $200.00 | |
| TOTAL | $7385.16 | ||
| Tax (varies by state/province) | 13% | $960.07 | |
| Grand Total | $8345.23 |
Now we have a number. Is it more or less than you would have thought? If you are hiring a contractor to do the work for you, you can multiply this number by 40-50% to account for labour. You may also like to add a contingency fund of 5-10% in case you come across anything unexpected. Let’s move forward with an estimate of $8500 to make the math simple.
Create a Renovation Timeline & Start Saving
Now that you have a plan and a savings goal, there are two ways you can go about the next step. One is to figure out when you want to renovate. For example if you want to renovate this space in 12 months, you need to figure out how much you need to save every month to come up with $8500.
$8500/12 months = $708.33/month
If this number sounds doable for you then that is amazing. However, it usually makes more sense financially to complete your monthly budget and figure out how much extra money you have leftover every month (after fixed and variable expenses, retirement savings etc.) to save for a renovation.
Say you are left with $500 every month. $8500/$500 = 17 months. This is how we plan our renovations. If we know our next renovation is going to cost approximately $30,000 and we can save $1500 a month towards it – we will plan to start our renovation in 20 months. While waiting can be frustrating, it also gives us lots of time to perfect our plans, shop for sales, and set realistic expectations.
Extra Tips for Saving for a Renovation
After saving for and renovating many spaces in our home here are some other tips for saving for a renovation that we have found really helpful.
- Figure out a budgeting tool that works for you. We have been using YNAB (You Need a Budget) for over a year now and it has been a game changer. The premise is that you assign every dollar in your budget a job. If you have money leftover after all of your monthly expenses, savings etc., you can assign the extra money a task – like a bathroom renovation!
- Get a raise? A tax return? Win $100 on a scratch ticket? Put it into your renovation fund. Any “bonus” money we get, goes into our renovation fund to help us reach our goals faster.
- Look into credit cards with good point systems. We use our credit cards for everything and wrack up points pretty quickly, especially when renovating. Some credit cards will let you use your points towards gift cards to Home Depot or similar hardware stores. This is so helpful when renovating. Just be sure to pay off your credit cards in full every month because paying interest defeats the whole purpose of saving cash for your renovation!
- Always be on the look out for sales. We usually plan our renovations in the fall/winter when life slows down a bit. This also lets us take full advantage of Black Friday sales.
- Do it yourself. At least as much as possible. Don’t feel comfortable doing the plumbing or electrical? Then do the demo yourself! Don’t feel like tackling the tiling? Then make sure you do the painting. But all that being said, YOU CAN DO IT YOURSELF. There are so many amazing resources online. We have learned so much from Youtube videos and trial and error.
- Ask for help! If you’re not comfortable with doing it all yourself but you don’t want to hire everything out, ask for help. I’m sure you know someone that knows something about renovating! We are so lucky that both of our dads are very handy and willing to pitch in or brainstorm the best way to do things.
Do you have any other tips for how to plan, budget, and save for renovations? I would love to hear them!
