Financially Planning For Home Improvements

With being a homeowner comes the responsibility of handling home upgrades and repairs, especially if you moved into a fixer-upper or have been in your home for several years. Having a financial plan for when these situations arise is crucial. There are a lot of moving parts when it comes to home improvements, and one of those vital components is your finances. When financially preparing for home improvements, consider developing a plan, evaluating your financial standing, researching financing options, and setting up a savings account specifically for improvements and repairs.

Whether you are a first-time homebuyer or have moved several times, and no matter what you are planning to improve about your home, it’s always important to stay organized throughout the process. Consider these tips to financially prepare for home improvements to limit stress and gain more structure:  14 Best Home Improvement Ideas Guaranteed to Make You Money

Prepare a Plan

From a wish list to receiving quotes from professionals to set a spending limit, there are several steps you’ll want to prioritize while planning a home improvement. You can start by making an initial list on your phone, computer, or a notepad of your plans. Jot down what home improvements you are looking to make, along with estimates from contractors, retailers, interior designers, or construction companies. Compare and contrast pricing and services to ensure you are choosing the best one for you and your house’s needs. With these estimates, you’ll be able to have an idea of a price range and spending limit for each project. It’ll also allow you to prioritize a course of action and see what projects you should take on first. This is a great way to keep yourself on track. 

Evaluate Current Financial Standing

Once you have an idea of the project(s) you want to prioritize, it’s smart to analyze your current financial standing and how these home improvement expenses will fit into your budget, and how much they’ll ultimately affect it. Take a step back and look at your household’s monthly income along with the current balance in your bank accounts. Next, factor in your monthly mortgage payments, utility bills, Wi-Fi costs, grocery spending, car payments, credit card bills, and any student loan payments or additional debt you may have. There’s a lot to keep track of here, so a great way to organize your finances is by using a budgeting app or a spreadsheet. 

The other important step in evaluating your finances is taking a look at the amount of money you have in your savings account and how your savings will factor into your home improvement project. Some may finance the whole project with the money in their savings, while others may choose to mix and match different financial options. Taking stock here will help you decide if you need to save more before you start your project or if you are ready to explore borrowing options. 

Figure Out Financial Options 

After defining how much of your money you can — and want to — put toward your home improvement project, it’s time to figure out the avenues you can pursue to help finance it, if that is part of your plan. Depending on the size and scope of the home improvements, different financing options might make more sense for you. For more extensive improvements, for instance, a HELOC or home equity loan might be the right choice. If you are planning minor home improvements, you may want to compare a personal line of credit and a credit card

If you are planning on using money from your savings, consider a plan to replenish the money you are using or provide a cushion for extra, unforeseen expenses. Having a savings account devoted specifically to home expenses is a great way to ensure you feel financially confident and prepared when tackling those upgrades around your home. 

No matter what financing source you decide on, making the conscious effort to plan and save for future home upgrades and repairs is a smart move. 

Let the Projects Begin!

Being a homeowner (new or experienced) can be stressful, especially if your home needs a little TLC. Remember, as long as you have a plan in place, understand where you’re at financially, and have financial options figured out, you should have a sense of comfort knowing you’re ready to take on any home improvements that may come your way. 



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