Renovations are becoming all-too-common during the pandemic. People are finding ways to get the best out of their homes. They’re building more space, having more extensions, and creating more room. However, not many people have the necessary funds for a considerable renovation. If you have plans to renovate, you’ll need to shore up enough finances for it.
American households spend $13,000 on average for home renovations. That’s about 20% of the median salary of a household. That’s a decent chunk of your yearly expenses going into a renovation. Most families can’t afford to lose that kind amount of money, especially during a pandemic.
Saving up is one way you can have enough money for a renovation in the future. There are many ways you can do this, but one of the most effective and efficient ways is the one-percent rule.
The One-Percent Rule
The one-percent rule is a common practice among business people who own multiple properties. Essentially, they save at least one percent of the overall cost or mortgage of the property and dedicate it to its annual maintenance. The same principle can be applied to your renovation.
If your home price is around $300,000, then you’ll have to save at least $3,000 every year if you’re planning to follow this principle. If you’re desired renovation is after five years, you’ll have more than enough money for it by then. However, you shouldn’t be limited to just one percent.
Many experts believe that three percent is a better limit for those planning to renovate their homes. It can give you access to more funds in case you need it.
Square Footage Rule
If you think that the one-percent rule is not for you, your next option is to make the square footage rule instead. This rule is pretty similar to that of the one-percent rule. However, the stark difference is that instead of saving money using your overall home price, you’re using the size of your home as your benchmark instead.
For example, if you’re planning to save $1 for every square foot of your home, then a 2,000 square foot home will require you to save $2,000 annually for maintenance costs or renovations. It’s as simple as that.
Plan it Out
If you want to get the best out of the principles we’ve indicated above, then you’re going to need to plan out your home renovation beforehand. This will help you visualize what kind of renovation you can have with a given amount of budget.
Like what we have stated earlier, you should save at least $3,000 if you own a $300,000 home. If you plan to have your renovation after five years, you would have saved at least $15,000 for it. That’s your budget, and that’s how much you should plan for your home renovation.
A perfect home renovation without the need for a home loan requires a bit of foresight, and these two principles will get you most of the way there when shoring up enough finances for a home renovation.
If you want to be more meticulous with your savings, you’ll also have to consider the materials used in the renovation.
Materials-Used
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Cheaper Materials
When it comes to materials for your renovation, their quality and quantity are entirely up to you. If you’ve saved a high-enough budget that can help you afford more expensive materials, then go for it. However, if your goal is to save as much money, cheaper materials are a better choice.
You’ll have to be searching for cheaper materials months before your intended renovation. You’ll have to go shopping and compare various materials together. Do your research as well. This is one way you can look for alternatives.
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Building Kits
Sometimes it might be better to purchase something you can build instead of hiring a contractor. One typical cheap building kits people buy nowadays are oak framed buildings. These kits can come in various forms, from garages to pergolas. If you have a bit of experience in construction or can read manuals pretty well, this might be the cheaper option for you.
The best part about some of these building kits is that they are made of high-quality materials. This means you can end up saving more money because of how long they can last.
Handling finances can be challenging, especially if it’s your first time or you don’t know what you’re doing. However, with the combination of the one-percent rule and planning out your renovation beforehand, you should be able to determine your costs for renovation. This transparency should help you save enough money for it in the future.