How to Prioritize the Budget for Your Home Renovation

How many renovations do you think it would take to turn your house into your dream home? Would you be satisfied with tearing up the carpet, or would you need to tear down a few walls? No matter how many renovations you think your home needs, you still have to figure out which improvements to prioritize—which means making the kinds of decisions that will affect not only your bottom line, but also your day-to-day life.

That’s why we reached out to Kelsey MacDermaid, cofounder of The Sorry Girls and a renovation expert who recently partnered with American Standard Heating & Air Conditioning to teach homeowners about DIY design and repairs. We wanted to know how homeowners can prioritize their renovation projects. When you can only afford to do so much, what should you do first?

Functionality first!

If you’re debating over whether to renovate the kitchen vs. building a better home office, start by asking yourself which room is causing the most problems in your day-to-day life.

"It’s generally a good idea to prioritize the areas that will have the greatest impact on the home’s functionality," MacDermaid explains. "If you’re not in love with the aesthetics of your kitchen, but you can’t get any work done in your home office because of lack of organization, limited desk space and noise from neighbors, we would start with getting the office to function properly before a full kitchen renovation."

Prioritizing functionality over aesthetics will help you make the kind of renovation plan that allows you to use as much of your home as possible—and could give you the motivation to continue to budget for future projects. "You can always gather kitchen renovation inspiration while you wait!" says MacDermaid.

Finish what you start

When tackling a renovation project that includes major upgrades to a room’s electricity, flooring or plumbing, some homeowners may ask themselves whether it’s better to update the entire house at once. Is it worth it, for example, to replace the floors in the kitchen and the bathroom simultaneously?

The answer may depend on your previous renovation experience. "If there are elements that need to be renovated throughout multiple spaces, such as new flooring or new plumbing, it can make sense to do this all at once," MacDermaid told us, "if you are confident in the design of the space."

The answer may also determine on whether you are renovating your home yourself, or hiring builders and contractors. "If you’re doing it yourself, it may be easier to focus on one room at a time," MacDermaid advises. "If you want to do multiple projects at once, working with tradespeople can help you get the job done in a timely manner."

Giving professionals a multi-room project may cost more in the short term, but could save you money in the long term—as long as you can afford the project in the first place. "Ask yourself what your budget allows at this moment," says MacDermaid. "Perhaps getting one room done is more important to you than saving up to accomplish multiple spaces at once. On the other hand, it can be easier to bring on tradespeople if you have multiple projects for them to work on."

How can you stay on budget?

Nearly all home renovations begin with a budget—but they rarely end there. We asked MacDermaid how homeowners can stick to their renovation budget, and her first suggestion was something we weren’t expecting.

"Be realistic about what you’re interested in," she told us, "and update your budget." Many homeowners assume they’ll be satisfied with the cheapest options, only to change their minds once they start comparing finishes and fixtures. "What are you going to do if you budgeted $8 per square foot for tile, for example, but your top choice is $12?" We already know that you’re going to pick the tile you like best—especially if you view your home renovation as a one-time opportunity to design your dream house while building equity—so be realistic about how much it will cost you, and set aside a little extra cash to get the job done.

 MacDermaid also offered some tried-and-true advice. "Take your budget and add a 10 to 20 percent contingency. This way, when you go over budget—and it’s when, not if—the extra costs will be accounted for."

Her last piece of advice was also a bit counterintuitive, especially if you’re a homeowner who is trying to complete your renovations as quickly as possible. "We prefer slow design," MacDermaid explains, "which includes taking the time to find the right pieces for your space and not rushing to purchase or finish decorating."

Renovating slowly could be the best way to keep your project from going over budget—and keep yourself from going into debt—but how can you furnish and decorate your space while you’re waiting to put together your dream home? "We love using second-hand decor and furniture," says MacDermaid. "Try thrifting temporary pieces so that you can take your time—weeks, months or even years—to find the exact right piece for your space."

If you take anything away from MacDermaid’s advice, it’s that some home renovations take weeks, some take months and some take years. By understanding the scope of your project before you begin—and accepting that it may take time to turn your home into the space you’re imagining—you’ll be more likely to make realistic, affordable choices about furnishings, fixtures, flooring and more.

You’ll also have a better idea of what to prioritize—and a better chance of success.

Tools and resources

If you want to learn more about renovating your home, start with Dwell’s Home Guides. You’ll find articles on everything from how to replace your kitchen cabinets to how to bring sustainable design into your home.

You may also want to use tools like American Standard’s Homeowning 101 Program to learn how to make easy repairs and low-cost aesthetic upgrades. "We teach guided lessons on how to tackle relevant DIY projects to take the headache out of home renovations," MacDermaid explains.

If you are interested in borrowing money to help you complete your project, the U.S. Department of Housing and Urban Development offers tips on how to apply for FHA Title 1 loans—and your bank may have loan opportunities as well. You might even be able to use a HELOC or home equity loan to fund your project. That said, we recommend avoiding debt whenever possible, and using these tools and resources to create both a realistic project and a realistic budget.

Top photo by Aleksandar Nakic /Getty

Related Reading:

How to Overcome the Obstacles to First-Time Homeownership

5 Vital Tips for Sticking to Your Renovation Budget

Experts Reveal the Top 10 Things to Consider Before Investing in a Fixer-Upper