Starting to plan for a new kitchen really begins with the first big question – How much is this going to cost? Before getting into the fun stuff like picking out your new cabinets & counters, you have to begin with the painful part, which is creating your budget. We unfortunately see clients from time to time who arrive at our showroom with great big plans and ideas, but who leave a little crestfallen once they’ve discovered that what they want and what they can afford are very far apart. So while it may not be the most fun part, sitting down and putting together a realistic and workable budget for your reno is absolutely essential. Here are some tips to help you get started with that.
- Determine your Global Budget
Figuring out your Global Budget is step 1. This figure is basically the all-in, total amount you are going to spend on your reno, right down to the last nuts & bolts. You can look at this as if it were a single cheque that you are going to write – what would that amount be? What are you comfortable with? There are many factors that go into determining this number, but ultimately you need to get comfortable with this figure, as it significantly affects all your other financial decisions. Here is a handy calculator to help you get an idea of what is a realistic budget for your project: Renovation Cost Calculator
- Take away taxes
The next step is to pay the government! Taxes are of course a fact of life, so first thing to do is take away 13% from that figure to get to working numbers. Most companies and trades will provide a quote that includes taxes, but when dealing with individual items, usually the numbers are discussed without taxes being factored in. Make sure that whatever quotes you are getting include taxes, or to add that amount in.
- Set up your reserve fund
Much like the idea of paying yourself first by putting away savings, setting aside your reserve or emergency fund up front makes sure that you are starting your process on the right track. Believe me, you’ll be dipping into this fund soon enough! Don’t make the mistake of planning without ensuring you have this critical element of your budget included. A typical approach is 10% of your global budget, but can be 15% or even 20%, depending on the nature of the project and your home. Older homes are often full of surprises!
- Divide things up
We typically take that Global Budget, and break it into 3 main components:
- Cabinets, Countertops & Installation
- Appliances & Fixtures
- Renovation & Construction
As you can appreciate, there are huge variables in all 3 categories, and once you have a good understanding of what each part entails you can properly allocate your global budget funds.
- Tell your contractor & designer your budget
People like to hold their cards close to their chests when dealing with money talk, and it can sometimes be a difficult or uncomfortable thing to discuss, but the reality is that without a clear direction from you, your designer and contractor can’t properly discuss options for your project. There’s no sense in designing a grand, elaborate kitchen with $40,000 in cabinetry when your Global Budget is only $50,000! Making sure the budget is clear and in the open helps avoid problems down the road.