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Building a Home

8 Easy Ways to Stay on Budget when Building a House

Published on:

8/07/19

written by:

Carrie Barker

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Budget is one of the top concerns (if not number one) I hear from readers going through the building process.  I imagine you’ve heard people say, ‘I went SO over budget; it’s impossible to stay on budget.’ Guess what?! This doesn’t have to be your story too! There actually ARE ways to stay on budget when building a house!

Below I share 8 easy ways to keep your home build budget in check! My husband and I *barely* went over budget when building our house, and I know our methods can help you stick to your budget too!

8 ways to stay on budget when building a house

1. IF YOUR BUDGET IS TIGHT, LET YOUR TOP PRIORITY BE YOUR GUIDE

If your budget is tight, go with the elements of your future home that are most important to you! This is exactly how I handled the battle of taste vs. budget! I wanted a finished basement (like RIGHT AWAY) but I had to wait a couple of years to finish it because having custom trim work on the main level was MORE important to me!

Some other examples …

If you have a large family and need more square footage, focus your budget on the size of your home rather than the level of finishes. That is, opt for stock cabinets, laminate counters, inexpensive carpet, low-end appliances, etc. You can always upgrade finishes in the future … but it is much harder and more costly to add square footage after your build.

If you are more interested in custom details in your home (e.g. window seats, crown molding, high-end appliances, custom cabinets, etc.), then focus your budget on the finishes rather than square footage.

Tip: Want some help staying on budget? Grab my free guided worksheetHow to Balance Style vs. Budget when Building, Renovating, or Decorating your Home! 

2.  IF YOU GO OVER BUDGET IN ONE AREA, GO UNDER IN ANOTHER AREA

Here’s a truth bomb … it’s difficult to stay on budget because your allowances (e.g. appliances) will be ridiculously low. I mean, RIDICULOUSLY low! I don’t remember exact numbers, but our appliance allowance was enough to cover maybe two appliances. Ugh! Needless to say, we went over budget in this area!

However, we were able to offset going over our appliance budget by doing more basic (yet still custom) drawers in our kids’ bathrooms. I would have loved fancy five-panel drawers, but we needed to save money so we went with basic flat drawers in the secondary bathrooms.

3. BE REALISTIC ABOUT (ALL) COSTS YOU WILL INCUR

Be realistic about all costs you will incur throughout the building (and moving in) process.

Obviously, you have construction costs, land purchase, and builder/architect fees … but there are so many other expenses you need to factor in.

These expenses include legal fees, permit and financing costs, moving fees, and the fun stuff … window coverings, furniture/décor, and landscaping. It’s important to keep ALL of this in mind when creating a REALISTIC budget!

4. BE HONEST (with yourself AND your builder) ABOUT THE FINISHES YOU WANT

Everyone says YOU’LL GO OVER BUDGET [when building a home] … and I agree to some extent. HOWEVER, I was able to stay VERY close to budget because I was extremely clear with my builder about the caliber of finishes I wanted BEFORE he priced our custom home.

If you are 100% honest and upfront with your builder about EXACTLY what you want BEFORE he or she prices the house, then he/she can give you an accurate quote.

You just need to be very clear about the level of finishes you want (e.g. custom trim work throughout your home). If high-end Subzero appliances are important to you, make sure your builder adds a realistic (and high!) appliance allowance to your bid!

The people who say ‘I was 50% over budget’ likely had many change orders and ‘upgraded’ their home WHILE they were building (as opposed to knowing how nice of a home they wanted before they started).

Recommended Post: Building or Renovating: 12 Unexpected Budget-Friendly Home Upgrades!

5. CHOOSE AS MANY FINISHES AS POSSIBLE BEFORE CONSTRUCTION STARTS

It is best to have design choices decided BEFORE construction starts. Prepare a plan and stick to it! This is important because you purchase the building materials at the price quoted at the BEGINNING of construction.

During my home build, we paid the price we were quoted for materials regardless of any price increases during the build. We paid more than our quoted price ONLY IF we had a change order and chose a different (more expensive) product. Does that make sense? 

Some builders will have you (the consumer) absorb any material price increases during construction. Example … if you are quoted $5 per square foot for a particular wood flooring product and the product cost jumps to $7 per square foot, some builders will have you pay the increase. Boom … you just went over budget! So choose (and order) your finishes BEFORE there are any price increases!

6. AVOID THE ‘IT’S ONLY $200 SO WE MIGHT AS WELL UPGRADE’ TRAP

We all do this! It’s only $200 more to upgrade this or that … so we might as well upgrade. Believe me … these small upgrade costs ADD UP quickly when you do this multiple times!

7. ALLOW SOME ‘WIGGLE ROOM’ IN THE BUDGET FOR AN UNFORESEEN SPLURGE

Allow some wiggle room in the budget for a splurge that you don’t even know you’ll want until you are building! You will learn about SO many gorgeous products when you are building your home. There will be an area where you find something so beautiful that you just have to splurge (e.g. a fancy imported tile for your backsplash). Allow room for this!

Do keep in mind that you can shift your budget around a bit (see #2 above). Example … if you choose a ‘splurge’ wood flooring product, then counteract this with inexpensive carpet in the kids’ bedrooms (they’ll never know the difference).

8. DO YOUR RESEARCH WHEN IT COMES TO SELECTING A BUILDER

Do your research on builders in your area! Pay attention to which builders consistently have clients go over budget.

I received two bids for my home build … both with the exact same specs (extensive trim work, etc). One bid came in higher than the other. Guess which builder I went with … the one that was higher! Surprised?! I did this because I knew his figures and costs were REALISTIC.

Of course, it would have been great to go with the lower bid if it was accurate, but I would have gone over budget once we got into the construction process because the quoted prices were NOT realistic!

CONCLUSION

Budget is a top concern I hear from people going through the home build process. No matter what else a person finds overwhelming (e.g. choosing finishes), they almost always include the budget as one struggle.

I’m here to tell you that it IS possible to stay close to budget (maybe even ON budget)! You CAN build your dream home … you just need to be willing to save some wants for the future! 

I hope this list of ways to stay on budget when building a house helps YOU! If you enjoyed this post, you’ll love my free guided worksheet, How to Balance Style vs. Budget when Building, Renovating, or Decorating your Home! 

8 ways to stay on budget when buildiing a house

  1. I like that you talked about being honest with what features and finishes you want and explain that to your builder before you start planning the home. My wife and I want to move to a new state next fall and we are thinking about building a home so we can get exactly what we want. We will move forward with our plan based on the information in this article.

  2. […] Related Post: 8 SAVVY WAYS TO STAY ON BUDGET WHEN BUILDING A HOUSE […]

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  6. […] of the game for any decisions pertaining to home improvement or construction. You need to plan and budget for the construction work and materials, and keep a little on the side for those unpredictable needs or additions. Most […]

  7. […] RECOMMENDED READING: 8 EASY WAYS TO STAY ON BUDGET WHEN BUILDING A HOUSE […]

  8. I’ve been wanting to have my own rustic style home constructed, that’s why I’m glad I’ve stumbled upon the article. I guess you’re right; since we have four kids, I think we should focus on the size of our house rather than the level of finishes. That’s why I’m hoping to find a custom home builder service that will be able to execute our plan perfectly without us spending too much.

  9. […] Recommended Post: 8 SAVVY WAYS TO STAY ON BUDGET WHEN BUILDING A HOME […]

  10. […] A production builder has easy access to the finish selections and is sometimes even able to buy them in bulk (which can help you stay on budget). […]

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  12. Toby Ryan says:

    I appreciate that you mentioned the importance of adding some extra money to your budget in case you want to splurge on a product you didn’t initially think you wanted. My wife and I are interested in having a home with a spacious kitchen built since we enjoy hosting dinner parties on weekends, but we want to make sure that we have enough money in our budget to give the room a contemporary style. We’ll consider preparing our budget ahead of time before our home is built.

  13. Susan Thoms says:

    How did you determine the higher contractor bid was closer to cost?

    • Hi Susan! I didn’t know for sure that the higher bid was closer to cost, but when I received a much lower bid, I had a gut feeling that the low bid wasn’t accurate and would get me into trouble later (i.e. going over budget). – Carrie

  14. […] your budget, there’s a lot that needs to be considered. You’ve got a lot of elements to the construction […]

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