Hi Reader,
Renovation budgeting would be so much easier with x-ray vision.
You’d be able to look at a wall and see exactly what’s hiding behind it:
- Old wiring that hasn't been touched since the '60s
- Copper pipes that are wearing a little thin
- Newspapers that make a great time capsule but awful insulation
- Black mold or water damage that might as well have a “💸💸💸” sign beside them
And while a good contractor can make an educated guess on what to expect based on clues like the era of your home, at the end of the day it’s still just a guessing game.
This is why renovations are always risky: because you're building out a budget on a project you can't fully see yet.
No matter how experienced your contractor is or how detailed your estimates, there will be things you didn't account for.
That’s where contingency funds come in.
A contingency fund is a separate pot of cash that lives outside your construction budget. It's not money you plan to spend — it's money you plan to have available in case, like a "break glass in case of emergency" backup.
What constitutes an emergency? Cost overruns, unexpected behind-the-wall discoveries, changes in scope or materials. And sometimes it's the sneaky 'while we're at it' moments — those mid-project additions that each feel small until they aren't.
So how much should your contingency fund include?
I suggest setting a contingency in the range of 15-30% of your total budget — 15% for new builds and 30% for renos, 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.
More than any one number, though, my advice is to set aside as much of a buffer as you possibly can.
It’s hard to set that much money aside during the planning stage — but you’re doing your mid-reno, stressed-out future self a huge favour in advance.
And I promise in the end, you’ll be glad you did.
Till next time,
Gerald
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