How to Set Financial Goals for Home Renovations

Home Builder

Part of the reason buying a house is so attractive is that homeowners can craft it into their idealized vision of “home.” However, home renovations can be a long and expensive process. Homeowners should have a plan to prioritize their goals so they can enjoy their homes while managing their money wisely. 

Here are four tips on setting financial goals for home renovations:

1. Create a Prioritized List

Many homeowners have a long list of improvement ideas. Some can be knocked out in a weekend, like a fresh coat of paint. Others, such as basement renovations, can feel harder to achieve given the increased price tag and project timeline. Lay it all out on a prioritized list to plan out what will need some time to prepare for and what you can achieve earlier.

You can prioritize your home improvements based on any criteria you like. Some good points to consider:

  • What needs a remodel most badly? A kitchen or bathroom in disrepair will need to be at the top of your list.
  • Which will give you the most personal value? If you love to entertain outdoors, there’s no reason to put off a backyard renovation for years.
  • How much will it cost? Look up average price expectations for your remodeling goals. Those that cost several thousand dollars will likely need to wait while you gather the funds.

2. Put Extra Money Towards Your Goals

Now that you have your priorities, it’s time to take action on saving for them. Just like any other financial goal, it’s a good idea to put money towards your savings fund while balancing your other needs — like your mortgage, bills and debt payments. 

Try calculating a percentage of income to put into a savings account each month. This can guarantee consistent growth without feeling like a significant sacrifice. If you have a lofty timeline in mind, accelerate your savings plans by trying a 30-day spending challenge — limit some of your luxury spending and put that towards your home instead.

How you save money is a personal decision. Whatever you do, make sure you’re taking care of your financial obligations and building up an emergency fund first. You never know when your home will need an urgent repair that throws a wrench in your planning.

3. Find a Reliable Contractor

Once you’re ready to actually move on a project, hiring the right person to help you is crucial. Incompetent contractors can strain your budget with unexpected delays or mistakes. While few renovations go through without a hitch, you can increase the odds of a smooth project by carefully selecting a home contractor.

Ask your community for recommendations first. Word of mouth is a great way to hear firsthand reviews and get to know who has a great local reputation. You can also search social media platforms and contractor listing sites to get more information. Finally, spend time asking potential contractors questions and getting promises in writing. If you form a good relationship with a reliable professional, your home renovation goals will become so much easier.

4. Pay Attention to Home Value

Houses are investments. Ultimately, you want to make sure the improvements you make have the potential to pay off when you sell the home. Remodeling spaces like the kitchen and landscaping tends to have a strong return on investment, while other renovation goals might have more personal than financial value.

There’s no need to customize your entire home for future profit. This will matter more for some homeowners than others. If you want to balance these needs, however, rank home improvements that can benefit you in the future highly — then move forward on the ones you’re most excited about first.

Achieve Your Home Renovation Goals With Financial Planning

Home remodeling can feel daunting when you first step foot in a house. Fortunately, a little organization can help you plan out your future. Set priorities based on your wants or needs, keep track of your savings and rely on professional expertise. Your home will become what you need it to be in no time.

Comments (1)

Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Very good points James White to make sure you enjoy the home and also increase the value when it is time to sell. If selling in the future make sure the upgrades will appease the masses and not too individualized.

Jan 28, 2021 12:36 PM