Can You Afford that Home Renovation Project?

can you afford that home renovation project

All that time at home over the past year has made a lot of us eager for a change of scenery, which has resulted in many, many home renovation projects.

By now, I think we’re all familiar with the allure of a fresh coat of paint or a new countertop after being stuck in the same place for so long. But before you buy supplies or look up contractors, don’t forget to consider your budget and financial goals.

Home Renovation: Is it in the budget?

It’s understandable if some of your good spending and budgeting habits have slipped over the past year. But if you’ve drifted from your budget, it might be time to reign things in and get back on track.

Even if you feel like you have a good grasp on your spending, your income, work role and expenses might have fluctuated quite a bit, so it’s a good idea to revisit your budget and make sure it still suits your situation.

Is it worth the investment?

It is true that some home renovations are an investment. For example, if you plan to sell and have a truly scary 1970s bathroom, it could scare off potential buyers. Other purchases, like new windows or a more efficient air conditioner, could help reduce the cost of your energy bills.

That being said, it’s still important to approach a home improvement project with some objectivity. Yes, adding a pool to your backyard could be fun, but the installation and upkeep isn’t cheap. 

Building a new deck might give you the backyard hangout you’ve been wanting, but the cost of lumber and other building supplies is still very steep right now. In that case, waiting a bit could save you a ton of money.

That’s not to say that every home upgrade you want has to be an investment. It’s fine to do a project just because it’ll make you happier in your home. The key is to be intentional. Know the difference between your home wants and needs, and prioritize what’s most important. 

Does it align with your goals?

Even if you have the money to do it, ask yourself if this project fits in with your financial goals. 

Looking back over the past year, did you put more money into your house than you planned to? Is there another area, like your emergency savings or retirement fund, that needs to be added to first?

Home improvement projects can be exciting, but they can often end up costing more than you originally planned. Make sure other areas of your financial plan for the year are taken care of so you can avoid any guilt or anxiety about spending money on house upgrades.

More homeownership posts:

Should You Buy Investment Real Estate Right Now?

Should You Refinance Your Mortgage?

What to Consider Before You Upsize Your Home

About Your Richest Life

At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.



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