How To: Build A Project Budget

First, let me just say that I am not a financial professional. And some of the things I’m going to share here may just seem like common sense tips. Disclaimers aside, my goal today is to collect the advice I’ve learned tackling projects, from a financial perspective, during my 10+ years of home ownership.

Pick your project

Step one is to pick the project you want to tackle! This is the fun part, but it can also be stressful if you know it will require a lot of money, or an amount that you don’t have set aside already. Eek!

Do you have a budget number in mind already? If so, what is that number based on?

If you’ve done the research, you probably don’t need my tips.

If it’s just a guess, a number you feel comfortable with, or a number you like the sound of (I will admit that’s my approach sometimes, lol), it’s time to dig a little deeper and build an accurate project budget so you know what to expect, and know if you can afford it now or will need more time to save for it. I don’t suggest using credit cards unless you have the money saved to pay the purchases off in full each billing cycle (this is my approach to credit cards for any and all purchases).

Okay, so let’s evaluate what is required in terms of resources (aka $$$). Start by answering these questions:

Is my project a large, renovation-type undertaking?
Will my project include coordinating a lot of purchases, and/or require hiring one or more tradespeople?

If the answer is yes to either of the first two questions, ask yourself this:

Should I hire a general contractor, or do I want to do all that coordinating myself?

Note: I have never done a big enough renovation-type project to require a contractor or multiple tradespeople. Even though I do not have personal experience, this is an important consideration when figuring out a budget based on the scope of your project. There is no one right answer here.

If the answers were no to the first two questions, ask yourself:

Is my project more of a do-it-yourself endeavor?
Or is it something I want/need to outsource, but it’s something I can coordinate myself?
Does it really only require making a single purchase…?

Sourcing

Once you have answered these questions and know what will be required to call your project complete, it’s time to start estimating the costs of the elements involved.

Source product options and pricing for any furniture or decor pieces, or the supplies needed to complete maintenance projects or something similar, like cosmetic improvements to structure or minor fixes.
Get multiple estimates for outside services, if necessary.

With products and services alike, it’s a good idea to price at least three options. If you have a trusted service professional that you’ve worked with before, you can bypass the multiple estimates if you feel comfortable doing so.

If money is tight, you may be tempted to go with the least expensive options, but it’s important to look at reviews, and take recommendations and referrals into account. There’s almost nothing worse than spending money on getting something redone because the cheapest source ended up letting you down. And check return policies for any products you’re considering purchasing too!

Once you’ve compiled a comprehensive list of options, tally it up and and see if the total makes you want to cry. Kidding! Kinda…

Contingency

Figure that something is going to go afoul or cost more than originally planned. Factor in at least 10% over your tally for these hiccups that will probably pop up along the way. And if they don’t, hooray! You can put that money toward your next home project!

Make a plan

If you already have enough money set aside, congrats! Time to roll up your (literal or figurative) sleeves and get started with your project! If you’re short on the required funds, create a plan for saving— figuring out how much money you can afford to set aside each month, and how many months it will take to reach your budgeted amount. Then you can schedule your project once you’ve hit your savings goal, or you know when you will.