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As many know, the key to successful investing falls back to managing your finances. Here are some top tips on how to budget correctly.
New research from Houzz shows that one of the biggest challenges home owners face is budgeting, with this particularly evident in the renovation process. In fact, the research found that while most home owners set an initial budget, 39 per cent end up going over it.
To ensure you avoid costly mistakes, Houzz has collected ideas from professionals in their community to create a budget checklist to help investors stay on track:
1. Do your research
“The first (and likely the most important) step in a renovation project is research. The more you know, the more control you are going to have over your budget. Get quotes for all of the materials and installation fees you’ll need, as well as quotes from professionals that are going to help bring the renovation to life,” Houzz said.
“If you’re not at the quoting stage yet, start getting ideas about the kind of renovation you might want to do.”
2. Break it all down
“Using your research and quotes, work out roughly how much everything is going to cost and decide what you can afford with your budget,” Houzz said.
“Be honest with yourself! Don’t round down any of the costs or your total estimation will be inaccurate.”
3. Hire a pro
“Remember that hiring a professional that understands your vision will mean that you avoid trial and error, which could lead to unnecessary costs.
“Moreover, professionals have a wealth of knowledge when it comes to pricing, including costs of labour, building permits and any materials or finishes you want in your renovation. Some professionals even have access to supplier discounts if they use them a lot,” Houzz said.
4. Have a contingency budget
“Professionals on Houzz have said that they recommend a 10 per cent contingency budget to their clients, and for good reason.
“Although a home owner can do everything by the book to stay on budget, sometimes there are situations that cannot be foreseen.
“According to the 2020 Houzz & Home survey, the main reasons for going overbudget are products costing more than expected, deciding to buy more expensive products and deciding to change the project scope or design.”
Budget is defined as the estimation of expenses made over a specified time for the purchase of goods or services.