The Ultimate Guide to Budgeting For A Chicago Home Remodel

home remodeling

Embarking on a home remodel is an exciting journey that promises to breathe new life into your living space; however, without proper budgeting, what starts as an exciting project can quickly turn into a financial nightmare. Whether you’re a homeowner ready to refresh your space or an interior design enthusiast looking to transform a client’s home, mastering the art of budgeting is crucial. Here’s everything you need to know to budget effectively for a home remodel in Chicago.

Why Budgeting is Crucial for a Home Remodel

Before diving into the details, it’s essential to understand why meticulous budgeting is critical for a home remodel:

  • Avoid Financial Strain: A well-planned and thought-through budget helps prevent overspending and financial stress. It’s important to always plan for a contingency buffer. A contractor can only estimate and plan for what they can see. There are a lot of “what ifs” and unexpected finds and expenses that could pop up once walls are opened and the demo is completed.
  • Ensure Project Completion: Proper budgeting ensures that you have enough funds to see the project through to completion without cutting corners or compromising on your must-haves.
  • Allocate Resources Efficiently: Knowing where your money is going allows you to make informed decisions and prioritize accordingly.

Step-by-Step Budgeting for Your Home Remodel

1. Set Clear Goals

Start by defining what you want to achieve with your remodel. Are you looking to increase the functionality of your kitchen? Do you want to add a new room or simply update the aesthetics? Are you looking to undergo a remodel with the intent of listing your home for sale or to spend several years loving and living in the space? Clear goals will guide your budgeting process and help you focus on what’s most important.


  • Make a list of “must-haves” and “nice-to-haves.” This list should also include the issues and pain points with the way the space is currently.
  • Consider both short-term needs and long-term plans. Partner with a contractor and designer who will help guide you in where you should spend the bulk of your money based on your short and long-term goals. If you plan on selling within 1-3 years but would like to do a whole home remodel, it may make more sense to focus on the kitchen and bathrooms or certain small upgrades that give a huge punch for potential buyers.

2. Research and Gather Estimates

Once you have clear goals, it’s time to research and gather estimates. This includes partnering with a designer who can walk you through material options and generate mood boards and an ideal layout based on your likes, dislikes, and design style. Once you have a design and layout in hand, work with a general contractor to determine labor and rough material costs based on your design drawings and material selections. Always budget for unexpected additional expenses that may arise.


  • Working with a design-build firm can lower costs and allow for streamlined communication between your design and construction teams. Opting for a design-build firm will also have the benefit of your designer and project manager working on the same team.
  • Create a Pinterest board with design inspiration. This will be extremely helpful in guiding your design team into creating the layout and space of your dreams.
  • Stay away from online cost calculators and home improvement DIY channels. Online cost calculators do not take into account a specific market, inflation, labor costs and shortages, and other nuances that may occur within the region where you live. Home improvement and DIY channels do not offer the reality of construction. Viewers are not privy to work and material that is being gifted and not accounted for in the overall cost. The majority of home remodeling shows have labor and demolition costs gifted to the client free of charge and not shown in the overall pricing that is shared with viewers.
  • Take into account ROI. Review Qualified Remodeler’s annual cost vs value report for your region to get a better idea of what projects and price points are bringing in the highest ROI.

3. Compare Costs and Value

Buying a home is the highest cost purchase a person is likely to buy during their lifetime. Undergoing a remodel on your most expensive asset is not to be taken lightly. Once you have obtained 2-3 estimates, create a detailed side-by-side budget comparison to ensure you are reviewing apples to apples. Create an extra column where you can list out the pros and cons of each company that doesn’t necessarily have a price tag attached to it – the company’s perceived value and offerings.

Once you have the values listed, rank them based on your personal priorities and preferences.

Does the general contractor have an in-house design team?

Do you have to project manage your own remodel?

Who sources, orders, and stores material until it is ready at the job site?

Who files the permits?

What is the warranty period for labor and materials?

What do online Google reviews say about the company?

Did you connect with prior clients for a firsthand referral?

Did you visit active job sites?


  • Allocate around 5-10% of your budget for unexpected costs.
  • Be realistic about your financial capacity.
  • It is just as important for the project cost to fall within your budget as it is for you to mesh well with the team and company that will be completing the work. The lowest cost may be appealing, but if the company doesn’t stand behind their work or show up when they say they will, in the long run, the project will cost you more money, time, and resources.

entry storage

4. Secure Financing

If your budget exceeds your available funds, consider various financing options. These may include personal savings, home equity loans, unsecured loans, or lines of credit tailored for home improvement.


  • Consult with a financial advisor to understand your options. Some design-build firms and general contractors may also have a preferred lender they work with and can offer suggestions.
  • Compare interest rates and terms from different lenders.
  • Negotiate contract terms and payment draws. Most contractors have a standard payment plan of payment draws that are to be made over the course of the project; however, the payment schedule may be negotiable to lessen the burden of paying out large sums over a very short amount of time. Work with your contractor to review your options.

5. Track Expenses

Once your project is underway, keep a close eye on your spending. Regularly compare your actual expenses to your budget to ensure you’re staying on track.


  • Use budgeting apps or spreadsheets to track expenses.
  • Work with a general contractor who can provide an online portal to their project management software for easy budget and financial tracking. Our team uses Coconstruct to allow the client to log into a portal and view all information from signed contracts, permits, project photos, financials, and team communication all viewable in one place.

Common Budgeting Mistakes to Avoid

1. Underestimating Costs or Not Including Contingencies

One of the most common mistakes is underestimating the actual costs involved. Prices for materials and labor can fluctuate, so it’s essential to have a 5-10% contingency built into what you plan to spend on your home remodel.

2. Ignoring Small Details

Small details such as fixtures, finishes, and accessories can add up quickly. Ensure these are included in your initial budget.

3. Overlooking Permits and Regulations

Depending on the scope of your remodel, you may need permits or stamped architectural drawings. Failing to account for these can result in fines, delays, or even stop work orders from your local government agencies. Working with a trusted design-build firm that knows what restrictions and processes must be followed will allow you to focus on other aspects that are a more efficient use of your time. Let your contractor handle the heavy lifting of navigating approvals and permitting.

Budgeting for a Chicago home remodel may seem daunting, but with careful planning, diligent tracking, and the right design-build partner guiding the way, it’s entirely manageable. By setting clear goals, researching thoroughly, comparing costs and value, securing the right financing, and tracking your expenses, you can transform your living space without breaking the bank. Remember, successful remodeling is not just about having a beautiful end result; it’s also about enjoying the process and maintaining financial peace of mind.

Contact Our Chicago Home Remodelers At Arete’

Ready to start your home remodel journey? The Chicago home remodeling team at Areté Renovators is ready to talk to you about your remodel goals and get started today. Call the Areté design and build team at 773.683.3033 to schedule a complimentary phone consultation to review your project ahead of meeting for an in-home consultation. Our in-house design team at Areté The Art of Design looks forward to working with you on creating an ideal layout that maximizes your space and delivers on your authentic design aesthetic.