Monday, November 18, 2013

New Kitchen Supplemental Post Part 3: Budgeting Tips

This is probably the last entry I'll be posting in my 'new kitchen' series, I'm 99% sure.
I wanted to share some of my budgeting tips because with every week that passed during this renovation, I had a little less money in the bank and it was sad, but I didn't go broke so I do have some tricks up my sleeve. Now that my kitchen is finally complete, including all the little chores we had to finish up here and there, I'm ready to share some money management suggestions.

In general, I'm pretty good about budgeting my money. I'm not over-the-top OCD about managing my finances but I am v. responsible. I'm hyper aware of how much money I have coming in and how much money I have going out and I check my bank statement once a week (usually the day that my direct deposit salary gets posted to my account) just to make sure thing are still in shipshape. However, for this kitchen renovation, I was an insane record-keeping freak and it definitely helped me stay on track with my budget.
If money is no object, then by all means, go nuts with your expenses but if you're like me and you have to adhere to a v. strict budget, then the following suggestions may be helpful to you.

TIP 1: Keep all of your receipts (and contractor quotes and other expenses) organized.
I kept my all paper receipts in a folder (the same Ikea folder that was given to me when I ordered my kitchen). Any online purchases I made were marked with a 'new kitchen' label in Gmail (for easy searching) as well as printed and placed in the above mentioned folder. Keeping everything organized will help you keep track of all of your purchases (see Step 2) and looking at all of the dollar amounts on the receipts will hopefully put you in a frugal mindset. Plus, if you need to return something (let's say you find a better deal on something elsewhere) or you want to exchange something (maybe you discover a defect after you leave the store) you can easily locate your receipt.

TIP 2: Keep track of your expenses and budget in a spreadsheet.
Bless you Google Docs. I set up a spreadsheet in Google Docs to keep track of my finances. You could just use Numbers or Excel but Google Docs is free (so if your computer isn't equipped with any spreadsheet programs, it's great) and you can access it from anywhere (assuming you have a computer/tablet/phone and internet).

I organized my spreadsheet into little groups (Ikea purchases, appliances, lighting, tiles, etc.) and then threw in a few formulas to add up the dollar amounts in each category. I also added a column for notes for anything I wanted to jot down and links to the products online so I could periodically check if prices changed. I wrote in what discounts I received and what coupons I was able to use, etc. It was great to see how much I was spending in each category, total up what I was spending overall, and to make sure I wasn't going above budget. It's nice to have a cell that subtracts the amount you've spent from your initial budget so that you know how much more you're allowed to spend (or if you've gone over).

Be diligent about using the spreadsheet. Every time you make a purchase, force yourself to add your costs to the sheet so that you know you're still on track.
On a side note, I also used the spreadsheet to keep track of our schedule. This helped us to plan ahead, scheduling the busiest tasks for weekends, to make sure that tasks were being accomplished in a timely manner, and that we were performing tasks in a logical order so we could finish whatever steps needed to be completed before we could move onto the next task (for example, we had to make sure all of the perimeter cabinets were installed before the floor refinishing guys could come in and we had to make sure the floors were refinished before we installed the island). This doesn't have as much to do with budgeting except time really is money. The longer it takes you to finish your kitchen, the more money you'll spend on takeout, right?

TIP 3: Stick firmly to your budget.
Do what it takes to get what you need for the cheapest price by looking for coupons, comparison shopping, and haggling. If you like a certain style of cabinet hardware and you have the product code, google it to find all of the sellers and look for the cheapest price. If you need to buy paint and primer, consider a paint+primer-in-one if it's a product that will work for your walls. Get quotes from multiple contractors, let each one know you're shopping around, and get them to give you competitive pricing.

Don't get sidetracked. If you've already made a decision to buy x and then one day, you're out shopping and you see y, and y is 10 times more expensive than x, unless it's a crucial decision (like a matter of safety), don't convince yourself you need to buy y. Stick with x and stay on budget. This is more of a philosophy to apply to large-scale purchases (like a $500 range vs. a $5,000 range) but is also relevant to smaller purchases that add up (like cabinet knobs, e.g. 10 knobs at $3 each is $30; 10 knobs at $5 is $50 - the $2 difference between the unit prices doesn't seem like much but it adds up quickly). If, in the future, you have the money to upgrade, you can do so. But, if you are like me and you really must stick to your budget, go with the smart, frugal option you chose to begin with or plan on sacrificing elsewhere in your budget. I mean, what's the point of having a budget if you're not going to stick to it, right?

If you're not great at managing your money or you tend to go a little crazy with your credit card, use cash. Withdraw just enough cash for what you plan on buying to prevent yourself from overspending. Using cash will help you see how much money is leaving your wallet in a tangible way. Using a credit card can be dangerous, especially if you're not a math person, because it's harder to see the expenses adding up. If using cash is not your thing, or you want to earn credit card reward points, download your CC's affiliated app on your phone and keep track electronically. And of course, keep all of your receipts so you can follow Tip 1.

TIP 4: Include a little bit of contingency money in your budget.
Make sure to include a little bit of money in your budget for things you might not consider initially, like takeout and mistakes. When you don't have a kitchen to work with, you're likely to dine out much more often and that will definitely put a small but noticeable dent in your wallet. Having pizza every night will get old really quickly and soon your snobby stomach will start craving sushi and foie gras on the daily.

Also consider that it's possible that halfway through your renovation, if you happen to discover a random pipe that needs to be relocated or you ordered the wrong size cabinet, it will make it a little easier to deal with if you have a safety net, even if the safety net is small.

Lastly, you'll want to consider adding gas money to the budget, because I guarantee you will need to make multiple trips to your hardware store.

You never know what might happen so it's good to have a bit of flexibility.

TIP 5: Be resourceful.
Not everyone is equipped with a tool belt and a shed full of machinery. Hopefully, you have the bare minimum: a Phillips head screwdriver, flat head screwdriver, hammer, measuring tape, and level. But if there's something you need, ask friends and neighbors for specialty tools before you go out and buy one. Make friends with your contractor (if you're employing one) and I'm sure he or she would be glad to loan you a few items for anything you're DIY-ing. After all, how many times do you plan on using a wet tile saw in your life? Sometimes, tool rental rates are only slightly cheaper than buying the tool itself so if you can't borrow one, you might be better off buying the tool and selling it after you've finished using it.

If you can, try to sell any of your old appliances on Craigslist or if you have a lot of junk to get rid of, hold a garage sale and make a little extra seed money. Donate items to Goodwill or the Salvation Army or another local charity of your choice and you can get a tax write-off. It might not seem like much but the little bit of money you earn from these sales might help you upgrade from the cheap-o plastic knobs at Home Depot to the pretty ceramic ones you saw at Anthropologie.

Good Luck.
If you are planning on renovating or even just doing a little bit of work here and there, I wish you the best of luck. If you're rich and you don't need to worry about financing your construction, then I wish I were you! Either way, I only want good things for everyone and if I could magically give everyone their dream kitchens in their dream homes in their dream cities in their dream worlds, I would.

Thanks for reading.

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