Renovation planning — what you must know

If you are a long-time homeowner, you might be considering a renovation. It may be because you have a bigger family, need to rent out a room for extra income, or simply need to fix a home feature that has been bugging you.  

A common problem with home renovation is that there are simply too many things that can be improved. As someone with limited funds, how do you even begin to start?

Step One: What you NEED VS. What you WANT

Broadly speaking, home renovation can fall under one of these categories: Necessary and would-be-nice. Obviously, the former is more urgent and should be prioritised over the latter.

Necessary home renovations are things you need to work on anyway in order to live in a comfortable, functioning home, as well as to avoid potential hazards. Some examples of necessary home renovations includes (but not limited to):

  • Repairing your faulty electrical circuits, leaked plumbing and broken roof (if you have one)
  • Updating your security alarm update (if there is a frequency in break-ins in your area), fire alarm (if you had a fire scare), enlisting pest control services (if you have an infestation), doing re-painting work (if your walls are chipped/destroyed by your toddler), and lawn work (if it is full of weeds and needs major help from someone more green-fingered)
  • Upgrading/adding a room for your child(ren), or parents(-in-law)

Would-be-nice home renovations are everything else, like a game room for your husband, a glittery chandelier for your living room, or perhaps your personal walk-in closet (a girl can dream!). 

Some would-be-nice home renovations can also be practical in nature and can improve the value of your home, like new wooden flooring and a kitchen upgrade -- so be honest with your evaluations. Rank each feature based on their priorities.

Step Two: Paying for Home Renovation

Once you decided what is necessary and what would-be-nice, get the quotations –- preferably from at least three sources. This makes comparison easier, and you might even get savings on bulk work. Then, crank open your finances to see if you can afford to pay for them

Your first source of funding should come from your own savings, ideally without touching your emergency funds. However, we argue that some necessary home renovations CAN qualify for a (temporary) dip in the emergency fund –- that’s what it was created for.

If you have enough savings left over for would-be-nice home renovations, why not? (But don’t go too crazy!)

Step 3: Raising Money for Home Renovation

If you don’t have the funding for even the necessary home renovations, you decide whether:

  • Necessary home improvements can wait until you saved up for it

One can save money by 1) reducing spending and 2) increasing income; apply your preferred methodologies here.

  • Work out a plan with the contractor

If your contractor is willing, you can try to work out some sort of payment plan that can work for both of you.

  • Find other sources of funding

If you can manage to borrow without interest, either from a friend or a family member, you should follow that route. Make sure you make a concrete plan to pay him/her back as soon as you are able to –- no one likes the person who ‘forgot’ they owe money.

If you can’t, you might have to take a personal loan or a credit card advance. Proceed with extreme caution and only for the most urgent of home renovations. You will likely incur a debt with high-interest rate, so you need to do an action plan to pay it off as soon as you can. Never use this method for would-be-nice home renovations –- that is just poor decision-making.

(Bonus) Should You DIY Your Home Renovation?

The more frugal of you out there might be tempted with another option: the DIY route. There are many tutorials out there, which are doable if you have the time, tools, and basic skills for it. For example, you can probably paint a room in a day.

Other home renovations are flat-out near impossible without an expert’s help. Never try to install a new toilet if you have no idea which pipe goes where –- if you do a poor job, you might end up with a bigger bill for an expert to fix it. Likewise, never touch the electrical circuits if you don’t know what you are doing!

So if you are confident enough you can do a good job, and have the experience to back up that confidence, go for it. Otherwise, leave it to the experts. There is a reason why they are expensive – it’s actually hard to do their work!

Written by Anna V. Haotanto for The New Savvy, a lifestyle and finance website for women.