The Ultimate Guide to Budgeting for your New House or Remodel Project — Part 1
There are no promises that this will be as fun as shopping for new appliances or as alluring as choosing sexy flooring for your master bathroom, but defining a reasonable budget for your new home or remodel is the first step toward delivering a successful project.
Your budget will be a valuable road map for charting your project direction and will guide your decisions in a variety of ways — from choosing appliances and flooring, to properly scaling the size and scope of your project.
Frosting The Cake
Defining and managing a construction budget can be complex and we’ve found that analogies are a good way to break down and understand these problems.
We often talk with our clients about their budget as if it were a bowl of frosting, and their house the cake. Now, if you’ve got enough frosting in the bowl to cover the whole cake, then great, your cake has the fullest potential to successfully reach completion.
However, if you only have enough frosting for half the cake, then you’ve got some decisions to make. Primarily, do you find a way to buy more frosting, or do you find a way to shrink the cake? Both can be viable solutions, but you’ve just got to first evaluate which of the two options is more feasible for your particular situation.
I think it’s safe to say that nobody is impressed with a half-frosted cake, and surely nobody likes a half-finished house. If the situation is that you can’t have the latter, then it’s vitally important to define your budget accurately and make sure your “bowl of frosting” is enough to get your house finished!
Red or White? (More Analogies!)
Budgets help us establish targets. They help us understand what questions to ask, and where to look for the answers.
To help get focussed on the right target, we often talk with our clients about how defining a budget is similar to ordering a bottle of wine at a restaurant. There’s usually a very large list, with many good selections to choose from, but, to find the right bottle, you’ve got to start narrowing the focus and begin a selection process.
First, are we having red or white wine? Let’s say red.
Now, are we having pinot or cabernet? Let’s say cabernet.
Next, are we looking at the $60 bottle or the $600 bottle? And so on, and so forth.
Just like ordering a bottle of wine, you have to know your target when you embark on your next home build or remodel. You have to ask yourself: What kind of house do I want, what kind of materials will this house be made of, what time frame do I expect the house to be completed within, who do I want to work with, and most importantly, what can I afford?