Planning a renovation budget can be tricky. While you might go in with a firm idea of what you have to spend, renovation surprises and unexpected changes can wreak havoc with a budget if you’re not careful. Fortunately, with the right planning, budget disasters can be avoided.

The Reno Budget Plan

Before making a budget you need to consider the following factors:

Wish List

The first part of any renovation is making a wish list for the space. Is it a simple update or an extensive rebuild? Remember that any home improvement project will be driven by the quality of the finishes, so be realistic about the result you hope to achieve. 

The Size

Pricing is often done by square foot, so you’ll need to have a good idea of the space being renovated in order to get a fair estimate.

The Condition of the Home

Keep in mind that an older home that’s had few updates runs the risk of further problems hiding behind the walls. Be prepared for renovation surprises!

The Value of the Home

Part of deciding how much to spend on a renovation should depend on the value of your home and the comps in the area. If you want to get the best return on your investment you need to spend enough to make the right upgrades, but not spend so much that you price yourself out of the neighbourhood.


It’s easy to look at the above factors and know what you want to spend — but can you afford it? Take a close look at your savings and your monthly expenses to help figure out what you can afford.


If you have enough money saved to finance your renovation — great, you’re good to go. If however, you’re one of the many people who can’t afford to pay for everything up front, you still have a number of options. If you’re planning to finance your renovation you’ll find there are some great products available that are appropriate for home renovations, and because your home is an asset, most institutions have a series of options available. You may want to look at financing the renovation with a secured line of credit or perhaps roll it into your mortgage to ensure you get the lowest interest rate on the funds. 

The key here is affordable financing. Instead of putting things on a high-interest credit card, you can use a home renovation line of credit that has a much lower interest rate. But whatever you choose, you must remember that the total of what you’re going to spend must include the interest you will pay over the course of the loan. When you don’t factor in the cost of borrowing it can throw the total cost of your renovation off by quite a bit. I highly recommend speaking to someone at your financial institution about what options are available before you make a decision.

The Budget

Before you start, create a budget spreadsheet with the item/project, estimated cost, and actual cost. Before the project gets underway it will help you to figure out how your money will be distributed, and during the process it will help you to make sure you’re still on track budget-wise. If you find you’re not on track you can make adjustments as you work your way through the process.

The other thing to consider is setting up a separate bank account for your renovation. That way it won’t get mixed up with your other finances. You can even set up alerts for the account that will notify you if you’ve gone, or are about to go, over budget.


The last thing that comes with planning a renovation budget is a contingency plan. Renovation surprises can and will happen, it’s a guarantee. The only thing you don’t know is how severe they will be. This is why having a contingency plan, or emergency fund, is so important. Some people suggest 10% of the total budget, but I highly recommend 20% or more if you can swing it. If you’re lucky you’ll never have to use it, but if you discover something like knob and tube wiring, or foundation issues, you’ll be glad you planned for it.

A renovation can be a great way to add value to your home and even improve your quality of life. The key to making it successful is all in the planning. Remember, if you fail to plan, you plan to fail!