Renovating your home is an important activity in your life because your home is your safe space where you get to rest. However, the cost of renovating your home can mount up rapidly if you don't have a workable budget or a backup plan to account for unforeseen expenses.

For this reason, you should plan your renovation budget with your home renovation contractor. You can also use a pricing tool that gives you industry-standard pricing based on the home design details you input. So, to create a home renovation budget that can assist you in keeping spending under control, follow these steps.

Prioritize renovation needs

To begin with, you should have a clear home renovation budget and plan. Make a list of everything you want to build and divide it into needs and wants. It will be simpler and more economical to prioritize projects by room and create a budget around the expense of each particular job when choosing what to tackle first.

Unexpected costs can sometimes arise—and most likely will—especially when renovating an older home. Your chances of staying within your initial budget will increase if you take on one project at a time. If you are renovating three or more rooms, use a renovation cost tool to estimate industry standard pricing. Renovation cost estimator tools also give you the updated cost of materials you use for renovation, individual contractor fees, renovation builder fees and other costs.

Consider the value of your home.

First, consider the entire value of your house to get a rough sense of how much you should budget. It is generally advised that you limit the amount of money you spend on any one room (or project) to no more than 10% to 15% of the total worth of your house. You run the risk of limiting your return on investment if you spend more than 15% because the value of your renovations could not increase your home's value proportionately.

High-end renovations are something you should carefully examine if you live in a small property because a potential buyer probably won't consider them to be a "must-have." You can stick to the spending limit suggested by your home renovation builder by selecting less expensive finishes.

Create a detailed plan with cost estimates.

Make a thorough plan with all anticipated expenses after defining your renovation's goals. Everything from appliances to fixtures and finishes, materials, and installation or delivery costs should be included in your design. One of the most critical things you'll need to do to keep your renovation within budget is to create a thorough strategy with a timeframe and adhere to it as much as possible.

Request bids from multiple contractors

Obtain at least three estimates for each service if you choose home renovators and independent contractors instead of general contractors to properly compare costs. Get a detailed bid for your project from reputable local home renovators after doing some research. An elaborate proposal increases the likelihood that the estimate will be under budget, minimizing unforeseen expenses.

Also, remember to use a renovation cost calculator tool to compare your renovator’s price with industry standard pricing. These tools are the best way to compare renovation builders and select one who can build your renovation project within your budget.

Determine financing before finalizing your budget.

You must decide how you will finance your project from beginning to end before you can set the ultimate budget. The renovation budget must not exceed the maximum amount of money you have available, whether you are paying with cash, getting a loan, or applying for credit.

It's a good idea to set aside 10% of your available income for unforeseen expenses once you've determined how much you can afford to spend. Some experts advise allocating a portion of your budget upfront for your renovation, so you have money put up for unforeseen expenses. This way, you can avoid living in an unfinished mess or accruing debt on your credit cards. 

Final thoughts

You should use a renovation cost tool if you want the best budget plan. These tools estimate the cost based on your design and the materials you plan to use. You can even adjust your design on the tool to see if your dream home plan fits into your budget.