How to balance vision and budget during a renovation or home build
One of the hardest things about managing a renovation or home construction project is the frustration and disappointment that often comes with realizing how much everything costs. You go into your project armed with dog-eared magazines, overflowing Pinterest boards, and a ton of excitement… only to discover that beautiful vision you have is completely out of reach financially.
I’ve had countless conversations with homeowner clients who were wrestling with the dreams they have for their home and the realities of how far their budget will get them. And there’s always good news and bad news.
The bad news is that construction projects pretty much always cost more and take longer than you think.
The good news is, you can get ahead of it! Balancing your vision with your budget can be done… if you’re willing to be flexible, plan well, and manage your expectations along the way.
Ultimately, you will be much better served — and enjoy the process more — if you learn to work with your budget instead of feeling like it’s just in the way of achieving your dreams for your home.
That’s what this article is about. We’ll look at how to figure out what things really cost, how to set priorities, where to find wiggle room in your budget, and how to set yourself up for success.
1. Set priorities: Know your must-haves vs. nice-to-haves
There will be many points throughout your project where you need to make a decision about where to put your budget. Unless you have an unlimited budget, there will always be something that has to give. Knowing from the start what is truly important versus what is nice but not actually necessary is a huge help when those decisions come up.
Here’s an exercise to help you brainstorm. Some of these questions might feel challenging to answer, but it’s much easier to make these decisions thoughtfully now than under pressure in the middle of your project!
Step 1: Assess your space’s needs
As you think about your project, brainstorm your answers to these questions. Try to be as practical and detailed as possible.
What space in your home will this project cover? Kitchen? Bedroom? A new addition? The whole house?
What is the function of that space? What happens there? What do you need from that space to make it work for its intended purpose? What frustrates you about how it works now?
Who will use the space? How will they use it? What will they need?
What will make it beautiful? How do you want it to look? How do you want it to make you feel?
How does this space need to transform over time? What does this space need to be over the long term? How will it change? (A couple examples of this: a child’s room evolving as they grow, or a bathroom that needs to accommodate aging in place.)
How big of a change do you want to make? Are you just refreshing what’s there? Or do you want to make it new?
Step 2: Narrow down what’s most important
As you look at your notes from step 1, ask yourself:
What features in this space are absolutely essential to making it work like we need it to?
Which elements will you interact with daily that would frustrate you if they weren't right?
What can’t be easily changed later vs. what can be upgraded or changed out down the road?
If your budget forced you to cut 50% of your vision, what would you absolutely protect?
Step 3: Create your priority lists
Based on your answers, create two simple lists:
Must-Haves: The dealbreakers that would make you reconsider the project if they couldn't be included. Make this list as short as possible — I’d suggest no more than 3-5 items.
Nice-to-Haves: Everything else that would be wonderful but you could live without if necessary.
Once you know your priorities, it’s time to figure out what they cost. As you build your budget, figure out what your must-haves cost first — then build around that.
Which brings us to…
2. Know what your vision will cost
Figuring out a realistic budget is the most important part of any renovation project. But construction budgets aren’t simple. There are lots of things you might not think of — for example, waste disposal or buying floor protection. And there are lots of unknowns that are very hard to anticipate and plan for.
I’ve written in depth about figuring out a realistic budget here, so I encourage you to go read that. But in general, the person most qualified to guide you through this process will be a qualified contractor or builder.
Contractors and builders have the boots on the ground experience of what any given project or build should cost, and they should be able to give you the framework to work within to achieve your objectives. I’ve had clients start the process with interior designers and architects, but in my experience they tend to focus more on the visual outcome and don’t always have a clear sense of what things will cost in the end.
Ultimately, the builder is the single most important relationship you’ll create in this entire process, and it’s best to start with them and then bring in other professionals if and when needed.
Not sure how to find a good contractor or what to look for?
I wrote an article on exactly that topic, including a free checklist you can download and follow.
But what if I’m doing a smaller project and don’t plan to hire a builder?
In that case, you’re responsible for coming up with the budget on your own. Start with this article, and consider also downloading our Home Building Checklist for more guidance on how to plan for a successful project.
3. Decide in advance where you're willing to compromise
If you’re willing to get creative and be flexible, there are lots of ways you can adjust your budget to bring costs down while still maintaining the functionality and aesthetic you’re going for. Here are a few to consider:
Materials and finishes
This is probably the biggest area of low-hanging fruit when it comes to bringing your costs down, although it can take some honesty and willingness to compromise.
A few smart trade-offs that can save you thousands include:
Countertops: High-quality laminate instead of natural stone or engineered quartz
Flooring: Engineered hardwood or luxury vinyl instead of hardwood
Backsplashes: Ceramic tile instead of full-height stone this is correct
Fixtures: Mid-range alternatives to designer/high-end options
Appliances: Slide-in appliances instead of built-in (eg. panelled fridges); mid-range alternatives to high-end options
Structural vs. decorative elements
Focus your budget on the structural “bones” of the house versus the decorative components. Quality framing, electrical systems, plumbing, insulation, windows, and doors might not be the most beautiful part of your project, but they’re incredibly important to how your home functions and very costly to repair or upgrade later. Decor pieces like paint, lighting, cabinet hardware, and trim work can be more easily updated down the road.
Another tip: Anything you build into the room will be more expensive than a free-standing alternative. You can swap in free-standing bookcases, vanities, and other furniture for a fraction of the cost and still achieve a beautiful result.
Complexity
As a general rule of thumb, the smaller your project, the easier it is to control your costs. (More on that in this article on the 3 types of renovation.)
But complexity doesn’t stop with the size of your project. Complicated design features are expensive to build. For example:
Curved walls and arched doorways require specialized framing, drywalling, and often millwork
Vaulted or coffered ceilings involve complex structural work and extra finishing
Floor-to-ceiling windows need custom ordering, installation, and sometimes structural reinforcement
Even seemingly minor design choices like waterfall countertop edges or inset cabinet doors (versus overlay) can significantly impact your budget. Asking your contractor about the cost implications of specific design features early in the process can help you decide whether a simplified approach is more affordable.
Style
Unfortunately, contemporary or modern design often comes with a higher price tag than traditional styles. Those clean, minimal looks typically require higher precision in construction, premium materials, and custom solutions that get expensive fast. Traditional designs tend to be more forgiving and use standardized elements that are more readily available.
If you love modern aesthetics but need to control your costs, consider letting it shine through statement furniture and decorative elements rather than expensive structural design.
Timing
A final way to manage your costs is to consider timing and breaking your project down into phases. Do you have to do everything at once? For example, you might finish the main living space before tackling bedrooms, renovate the master bathroom now but update guest bathrooms later, or focus on basic landscaping for now while holding off on a custom deck for the time being.
4. Keep an eye on scope creep
Scope creep is an industry term that refers to out-of-budget additions to your project.
When you’re halfway through the project and start saying “Well, now that we’re here, what if we just…” — that’s scope creep. And it’s the easiest and fastest way to blow your budget once the project is underway.
Sometimes scope creep happens because of surprise issues that come up (mostly during renovations). But they can also happen when the homeowner decides to add or change things at the last minute.
I talk more about how to avoid scope creep here, but the most important thing is to think through the domino effect of your project and decide in advance where you’ll STOP.
For example, swapping carpet for hardwood means:
→ Baseboards might need replacing (carpet is thicker than hardwood and you’ll have a gap)
→ → Removing baseboards might mean walls might need patching and painting
→ → → Connected rooms might need new flooring too, or clever transitions
One "simple" flooring change can trigger a cascade of extra work and costs. The best way to avoid them is to plan early and thoroughly… and stick to it.
5. Give yourself a safety net
There’s an old military saying: “No plan survives first contact with the enemy.” This is just as true in construction. These projects are big and complex with a lot of moving parts. No matter how good your planning is, you will need to adjust and recalibrate as you go.
BUT there are two things you can do to mitigate those changes and come through construction with your project intact: set a contingency fund, and schedule regular budget reviews.
Set a contingency fund
A contingency fund is an envelope of cash you set aside during the budgeting process to cover cost overruns or changes in scope, materials, or finish. It’s your “break glass in case of emergency” slush fund and should live outside of your actual construction budget. When something unexpected happens or costs start to run high, you can draw on your contingency rather than having to look elsewhere in a panic.
I talk more about setting contingency funds here, but my general rule of thumb is 15% for new builds and 30% for renovations, because with renos there’s a greater chance of unknowns. The smaller your project, or the newer your home, the more you can slide to the lower end of that scale.
Schedule regular budget reviews
As much as we bang the “plan early and budget exhaustively” drum, the truth is that budgeting is never a one and done. You will find that as things progress, you’re making constant small course corrections. The more often you review your budget and check in on where things are at, the easier it will be to keep track of where the money is going and where you need to adjust.
As you think about your renovation project and how much time it will take, be sure to give yourself time for these reviews — with your contractor, if you have one, or on your own.
Key takeaways
Set priorities before you start. Get clear about what the most important outcomes of this project are, and be honest with yourself about what you truly need versus what you simply want.
Know what your vision actually costs. Do your research to build a realistic budget. Don’t rely on estimates from designers or architects here. Ask a contractor or builder instead as they’re more familiar with what it costs to build.
Decide where you're willing to compromise. There are lots of ways to bring costs down while preserving the core functionality you need — but you may need to be flexible and adjust your expectations.
Watch for scope creep. Decide in advance where your project will stop. Then, avoid making changes or additions to the project once you’ve begun!
Give yourself some breathing room. Set a solid contingency fund (15-30% depending on project type) and schedule regular budget reviews to stay on track.
