Home renovation projects have increased during the COVID-19 pandemic. Homeowners are able to find the time and energy to take care of those projects that they put off for years.

The problem that many encounter isn’t the time to complete the renovation, it’s the project budget.

One recent survey found that about a third of all home renovation projects go over budget. Only 3% of projects came in under budget.

How do you set a project budget? How do you stay within that budget? Don’t worry because we have you covered. Get the answers to these questions and much more by reading this article.

1. Set Your Budget

Your budget needs to be as accurate as possible. You need to think through each step of the home renovation process and determine the cost for each step.

You should have a couple of professionals take a look at your preliminary budget and see if that’s realistic or not. You might want to consider using the BRRRR method to create your project budget, especially if you have an investment property.

One other thing you should consider adding to your budget is project insurance. Yes, your contractors should have insurance, but you can use the additional protection.

Let’s say that you decided to do demolition work and went a little overboard. Your homeowner’s policy won’t cover you, and it’s not the contractor’s fault. This is where a builder’s insurance policy will save you from going over budget early into the project.

2. Add a Contingency

You might be familiar with the formulaic home shows on TV. Couple buys a fixer-upper. They are excited about the remodel. Uh-oh, something comes up and it’s gonna cost a lot more money than they thought.

While this is part of the drama that makes for good television, you could find yourself in a similar situation during your remodel.

The most important part of your budget is the contingency line. This line item accounts for all of the things that could go wrong on the job. Most guidelines suggest a 10%-15% contingency amount to make sure you’re covered.

3. Be Clear About Your Design Ideas

One reason why projects go over budget is that people aren’t clear about what they want. They may think they know and tell a designer and contractor.

The designer and contractor proceed accordingly. Halfway into the project, the homeowner realizes that’s not what they want, and changes need to be made. That’s a very expensive and time-consuming mistake.

You can keep that from happening by having clarity. Before you start working with designers and contractors, look through magazines for design inspiration. Pinterest is another source of inspiration.

Cut or print out images that you are in love with and see how you can bring them into your home. Get as creative as you want.

4. Get Proposals From Contractors and Designers

Now that you have clarity, you need to get your team together. At this point, you’re the project manager. You should have a file folder to keep your information in one place.

Contact designers, architects, and contractors and get project bids from them. They’re likely to meet you at your home, look at the space and your design ideas.

They’ll ask you questions about your likes and dislikes, then they’ll come up with a proposal. You should have at least three proposals to look at.

Read through them and compare the similarities and differences. Did your contractor give you a line item for everything or is it a package estimate? Are you clear as to what the budget includes and doesn’t include?

You should follow up with each bid with additional questions to make sure you understand the complete terms of the project.

5. Look at What You Can Do Yourself

You may be able to cut down on costs by doing some of the work yourself. Have that conversation with your contractor because they don’t want to undo your mistakes because you wanted to save a few dollars.

There are likely to be some tasks that you can do that won’t get in the way.

6. Set a Realistic Schedule

How long do you think it takes to complete a home renovation project? Whatever number popped into your head, add more time to that.

You need to make sure that you have a schedule that’s realistic for the contractors to meet. You should also account for other issues.

For example, custom cabinets that come in a half-inch off can set your project back by weeks. Know that something this can and probably will happen.

7. Keep Track of Everything

There’s going to be a lot happening in the home that you might not expect or be ready for. A project logbook will help you keep track of all of the minor details of the project.

You can review the logbook periodically to make sure the contractors are doing their work and every item in your contract is fulfilled.

8. Know Your Project Priorities

There may be a point during the project where you need to make an unexpected decision. A contractor may have come across an issue that will cost more money to fix.

You could dip into your contingency budget, but if that’s exhausted, you may need to make other concessions. You should know ahead of time what aspects of the projects are absolute priorities and which ones you can make compromises on.

Stay Within Your Home Renovation Project Budget

Home renovation projects can do so much for the overall enjoyment of your home. You can entertain, enjoy the space in peace, or create your dream home that functions well.

The hardest part is making your vision come to life while staying under the project budget. You don’t want to go through the project way over budget. Use these tips to help you manage your money while you’re renovating.

Head over to the Home Advice section of this site for more great home tips.