Hitting the Nail on a Successful Budget
It’s hard to believe that this winter would ever end, but it’s finally starting to look, and feel like spring, and summertime is right around the corner. And, if you’re anything like me, you’re starting to think about the home improvement projects you want to tackle this summer. Planning ahead and creating a budget is the key to keeping the DIY season affordable.
Breaking down a budget:
When I am preparing to make a significant investment in something like a home repair or improvement project, I start by making a list of priorities. I determine what I want out of the project and why I think the project needs to be done. I take time to consider if this is a need or a want, and by doing so I can start to determine how much of an investment I want to make, and what parts of the project will be negotiable. The cost of a project can be surprising, so nailing down your priorities and deciding whether this is a need or a want can be an important step in the decision making process. To get a clearer picture of how to prepare for the financial portion of a project, I begin by breaking down the cost into main categories, then filling in more specific details. For example, when considering a budget for a home improvement project, I not only prepare for the cost of materials, but also the labor, the tools and equipment, the permits, clean up and unexpected costs. Once I’ve done that, I can fill in the details and adjust my budget to the specific items I want.
By being detailed and specific with your budget, you will be able to decide beforehand where to cut back, if needed, instead of making on the spot purchasing decisions. The earlier you start the budget planning process, the more time you will have to shop around and compare prices.
Planning for the cost:
I usually look at my household budget to try to find where I can cut back and save more when I’m preparing to pay for a larger project. Even if you already have money put away in preparation for a home improvement or repair project, an easy way to quickly save a little more is to set up automatic transfers from your paycheck. For example: If you automatically transfer $200 from each paycheck twice a month for four months, you can save $1,600 in a short amount of time.
You can also consider using the equity in your car or home for a low interest rate loan or a revolving line-of-credit to help you handle the cost of your project. A credit card can offer flexibility during and after your project, and may help with some of the smaller purchases, while traditional closed-end loans provide a little more structure in setting a time frame to pay for your renovation, and can offer reasonable payments for a larger-scale project.
My final advice:
By planning ahead, you can feel financially prepared for this DIY season. While it’s exciting to start projects, it’s even more exciting to look back after it’s done knowing that you saved money by sticking to your plan.
Tags: budget, DIY, Financial Facts, msu federal credit union
Sarah Bohan is the Vice President Corporate Relations at MSU Federal Credit Union. MSUFCU's headquarters are at 3777 West Road East Lansing, MI 48823. Contact Sarah at email@example.com or (517) 333-2208.