If you are planning on building your own home, one of the most important first steps is to make a budget for construction. If you can put together a preliminary budget it will help you to allocate your funds so that you can estimate the cost of your project.
When you know what your spending limits are before you begin, this will help you to stay out of financial trouble. Making a budget when building a home includes determining how much you can spend, establishing the cost per square foot and estimating the total cost of the complete construction – including extras and upgrades.
In order to help you stay on track with your budget, here are some important tips to keep in mind:
Start Collecting Estimates Early
Before you get too far into the process of planning your home build, you should start collecting estimates. These very early quotes will help you to make the major decisions when deciding how to plan your building project. Once you are aware of what the likely costs will be, you will be able to modify your plans to better suit your budget.
Break the Project into Pieces
In order to have a better idea of your project budget, it is important to identify all of the pieces. Break down the big project into smaller categories such as construction costs, legal fees, decorating, land costs, architectural fees, landscaping, financing costs, permit costs and any other expenses. Identify all of the potential costs and put them together in a spreadsheet, assigning a value for each one. This will help you to ensure that you don’t finish the entire house without leaving extra money for furniture or landscaping.
Look for Ways You Can Save
Be on the lookout for any ways that you can make the most of your money and save when you are building your home. For example, check out HomeStart for ideas when it comes to financing. They offer a First Home Owner Grant of up to $10,000 and if you qualify for this it can really make a big difference in your budget.
Allow For Setbacks
When you are tackling a large scale project such as building a house, there is always a chance that something will go wrong. If you only allow “just enough” for everything to go right, when you run into trouble along the way your entire budget will be shot. It is important to budget a little bit extra, for the inevitable hiccups that will happen along the way.
Where to Scrimp and Save
There might be some areas of your home that you don’t mind being frugal on, so that you can spend more money on the parts that you want to invest in. For example, you might be willing to take the time to paint the rooms yourself so that you can spend that money on nicer kitchen appliances. Determine what is most important to you and allocate your money appropriately.
Watch Out for Scope Creep
One of the things that can happen when you are building a home is scope creep, which is when you end up saying, “Well, while we are at it we might as well…” and adding more and more projects onto your list. Each project might only add on a few more hundred dollars, but if you keep adding them on they will really add up! In order to keep your budget realistic, make a plan and stick to it!
These are just a few important tips to keep in mind when you are making a budget to build your home.