Five ways having a strict budget helps you save money
Budgeting Is Key
Having a budget for your building and remodeling projects is key to your project's success and personal satisfaction.
I know it's sometimes tough to have and adhere to one, but here are five key ways having a budget helps you save money.
1. You will know what a good price is, and what it isn't: When it comes to building your house, you will be working with numerous subs, and you will be getting quotes and bids from every direction. If you don't know the price of work, how do you know if you are getting a deal or getting ripped off? You don't! This goes for construction as well as everything else in life. Knowing what prices should be will save you money. By creating a budget you give yourself an idea of what you should be spending on each item. Then, when a sub or supplier gives you a bid, you know if that is a reasonable price, or an exorbitant price. You won't be able to keep every price straight in your head if this is your first time building, so rather than run the risk of forgetting what is an acceptable price, consult your budget! This will help you save a lot of money. It will also give you some leverage when it comes to negotiating prices with subs. Saying, "that doesn't fit my budget," is a great way to get better prices.
2. You will be more conscious of how much you pay: Without a budget think of yourself as the person who spends "it is only a dollar or two" here and there, and never has any money. If that person actually created a budget, and recorded how many "just a dollar" dollars they spent, they might be less willing to pay the prices for items they could get far cheaper. When you create a budget you outline where 100% of your money is going to be going. Thus, when you spend $9,000 on siding, (when your budget is $8,500) you recognize that not just as some random number to add to the other numbers you are spending, but you see it as 5% or 7%, or whatever percent of your budget it is. You will start to see how much of your budget can be eaten up if you overspend on an item. Thus, you will become much more conscious of the dollar here, dollar there attitude, and make a great effort to stick to the estimated numbers you came up with.
3. You will look for better bargains on your big ticket items: Some items, like your framing lumber, rough lumber, and kitchen cabinets, drywall etc. are going to be big portions percent wise of your budget. If you create a budget, and see how large some of these numbers are in comparison to other items you need, you will probably spend a few more hours or days trying to get the best price you can. Those larger expense items can mean really big savings, or huge overruns of budget if you are not a careful shopper. Creating a budget will help you know what you can and can't spend, and help motivate you to look into all of your options, check out seconds, negotiate harder, barter some, or just plain look longer.
4. It allows you to see your savings: Seeing your savings is so huge. If you create an actual budget you will have a feeling of accomplishment and pride when you save yourself thousands of dollars. There is probably no better motivator for finding savings then seeing the "Equity" line on your spreadsheet budget get larger rather than smaller with each purchase.
5. It will motivate you to "shop" your budget harder: By creating a budget, you become conscious of your budget, and in turn want to tighten it up. You will find that spending those few extra weeks looking for the best subs, best bids, best suppliers, all with the best prices will be worth it. You will look a little harder for those bargains that are out there waiting to be found. You may even look for other owner builders and consult with them about where they found bargains, and try to put together a list of sources for savings.
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Tags: budget budgeting saving money
