How to Determine a Kitchen Remodeling Budget
1. Determine A Budget And Stick To It.
Setting a budget for your kitchen remodel and sticking with it sounds obvious, but it often times harder than you think.
The average cost of a standard kitchen remodel is somewhere around than $35,000. To help you figure out how to determine a kitchen remodeling budget, consider these two factors. First, how much you can afford to spend? Take a look at your finances to determine this number. Second, how long you plan to stay in your home? If you plan to leave your home within five years, then your kitchen renovation should be viewed as an improvement to increase sell-ability and appeal. Only spend what you think you will get back when you sell the house. If you plan on living in your home for more than five years, consider a remodel that fits your lifestyle and answers the needs of your family and makes you most comfortable.
2. Know the cost breakdown.
Here is a breakdown of average costs. These can of course range, but the below provides a good starting point for you to consider when determining the budget for your kitchen remodeling budget.
Fixtures & Fittings: 5%
3. Set aside a portion of your budget for the unexpected.
We suggest to budget somewhere around 20 percent for unexpected expenses. In our breakdown of costs (above), unexpected expenses falls under “Other/Contingency”. You will undoubtedly encounter surprises and expenses you didn’t account for in your kitchen remodel, so include this in your initial budget - especially in an older residence. There are all kinds of budget-busters hiding behind the walls and under floors. You could discover that electrical wiring is out of date and not up to code, there is rotting due to a leak you weren’t aware existed, and the list goes on. Leave enough room in your budget to cover these surprises. If it isn’t needed, that is a bonus! You now have more to spend elsewhere or may end up coming in under budget.
4. Make a list of your kitchen remodel priorities.
Determine what is most important to you. What is a must have and what is a nicety? Consider everything - new appliances, new cabinets, refinished cabinets, new counter tops, new fixtures and more. Write down your priorities so if unexpected costs do hit your budget that can’t be covered by the original budget set aside, you are sure to still get the top things on your list done.
When setting your priorities, think about looks and aesthetics versus function. Remember, the little things add up. There may be a cost-saving alternative, or you may be able to do without the item entirely.
5. Know how you will pay for your kitchen remodel.
There are many options to pay for a kitchen remodel, but home equity loans are the most popular because they are tax-deductible. Other options include refinancing, taking out a personal loan or taking a loan against a retirement plan.
Even if you have cash in hand, borrowing money at a low interest rate may be a better option than pulling your money from an investment account getting a higher return.
If you are getting a loan, factor in costs like interest and loan origination fees. Also, find out when you'll get the funding from your loan and have cash in hand. This is important because you will need to make deposits and may need to pay for materials up front.
6. Decide where you will stay while renovations are taking place.
Finding an alternative place to stay while the work will help decrease stress that can take its toll when remodeling. Remodeling presents mess, stress and the inability to function normally on a day-to-day basis. If staying elsewhere is the option you choose, take this cost into account as well.
If you decide to stay in your home, take into consideration the hurdles and stress that will accompany your choice.
7. Factor in the cost of eating out while your kitchen is out of commission.
While your kitchen is under construction, you will be eating out and bring food home - often. Find somewhere to factor this into your budget as well or at the very least have this in mind. Understanding how long your kitchen will be out of commission can help you determine how much this will cost you.
8. Create a budget spreadsheet and check it often.
Keep your initial budget versus how much you are spending on a spreadsheet so you can keep tabs on where you are with your budget. Also, if something unexpected comes up, you should refer to this sheet to see where you stand – what you have paid for, what you have left to do, etc. Keeping tabs on spending will help you identify your potential for running over budget and can help you avoid doing so.
9. Get your hands dirty to lower your costs.
To help reduce your costs, get your hands dirty! You don’t have to pay someone else to do all the work but consider the risks of doing so and additional costs you may create if you don’t know what you are doing.