Thami Cele, Absa’s Head of Savings and Investments, talks savings strategies for home improvements, and how to reduce overall spending to create your ultimate abode.
If you own a home, chances are you’ve got a long list of renovations and upgrades you’d like to get done. Maybe you’re thinking about making some changes that would make your home easier to sell, or perhaps you’re ready to take the plunge and turn your current house into your dream home.
“You may be ready to knock down walls, but is your budget ready?” asks Cele. Home renovations and improvements are a costly goal, which often take a while to reach, but if planned for properly, using savings as a tool, it can be done.
Here are Cele’s top seven tips on how to save for your home improvements:
1. Set up a designated savings account. A dedicated account will help you keep better track of your savings goals and progress, and will eliminate the temptation to dip into your savings for other expenses. While Absa does not have bespoke savings accounts for home renovations, there are plans that will help you reach your goal and keep you on track to making your dream home a reality.
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2. Formulate a savings strategy. You can go about this in different ways, but a standard savings strategy would be to start by estimating the total cost of your home improvements, then divide that amount into realistic monthly savings over a set period of time. If for example, the total cost of your home improvements comes to R50 000, you can save R4 166 of your monthly earnings over a period of 12 months, to put towards your saving goal. That, or a basic saving of 10%, or a smaller portion of your salary monthly can go far in realising your dreams. Before you know it you’ll be building up a nice nest egg and can start picking out fixtures.
3. Stash the cash and avoid the temptation to splurge. Commit your bonuses or monetary gifts straight to your home improvement account. You’ll reach your goal much faster.
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4. Trim the fat. Cutting unnecessary monthly expenses, is a great place to start, and has proven to work for many consumers who have managed to turn their dreams into reality. Cut back on your home’s energy usage, save money on utility bills, check with your paid for TV channels, mobile, internet and insurance service providers to see if there are lower-cost plans you can switch to, and deposit the difference in your home improvement account.
5. Don’t over capitalise. Anyone undertaking renovations needs to have a budget in place and stick to it. Unfortunately, one can get carried away and pay far more than originally planned. It’s frighteningly easy to overspend on home improvements and many people don’t realise this mistake until the time comes to sell their property, and they’re unable to recoup all the money they’ve put into a property.
6. Don’t underestimate costs involved. Cele stresses that one of the biggest mistakes homeowners make when renovating their homes is underestimating the costs involved in the project. Everything, including professional fees for architects, the cost of drawing up new plans, contractor costs as well as the actual cost of any new fixtures and materials needs to be factored into the price of the improvement.
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7. Do-It-Yourself (DIY). Finally, while you’re saving for your home improvement project, take time to learn some DIY skills that you can develop to help save money on contractors. For example, you could do the painting instead of hiring a professional painter for your project, or you could learn to install tiles. Choose something that interests you, and you might just find a new hobby, in addition to saving.
With the increased VAT in 2018, as well as the overall increase in modern day living expenses, the need for consumers to save is at an all-time high. “That said, we still want to live our best lives, improve our homes, travel, eat out, and enjoy the basic pleasures of day to day living. Saving for the big-ticket items like home improvements is a key way of ensuring you don’t go into debt to achieve the kind of lifestyle you want,” concludes Cele.
