How Much to Spend on Your Patio?
It’s easy to daydream about the kind of outdoor living space you want for you and your family. In your daydream you can spend as much money as you want with the best professionals and materials. But then, daydreaming ends and reality hits. And the challenge begins when you have to consider your budget. How much to spend and where to dedicate what money you’ve got is going to depend on what you want to create and how you want to accomplish the work. You need a patio budgeting guide.
The Best Time is Now
If you see yourself staying in a home long-term, now is the time to build your outdoor space. To get started, check out our blog post Why Invest in Your Patio. Some people may delay investing in major outdoor upgrades for 10 or 15 years without considering they’ll have less time to enjoy their investment. Plus, waiting years to make improvements means you’ll ultimately spend more money to get the work done. And the timing of your outdoor project matters — prices for labor and materials historically increase over time, so the cost of improvements are not likely to get any cheaper next year or the year after.
Create a Budget
Once you have read these two blog posts: Why Invest in Your Patio and Outdoor Living Space: Six Ways to Plan and Start, then it’ll be time to figure out your budget. One key factor to remember is to not over improve your outdoor space in relation to the value of your home. Our research showed there were three steps to determine your budget:
- Create a budget that is 10-20% of your home’s current value.
- How you will access the necessary funds.
- List and prioritize each outdoor project you want before you research and solicit estimates.
We have developed the Worksheet – Patio Development Budget and Project Guide to assist you in determining your budget. Get the Worksheet here.
There are some additional things to consider to get to a final budget number, priority list, and project plan, which we identify later in this post.
Home Value Calculation
Here is a home value calculation method that is easy to use if you have access to the Internet. Simply log onto real estate websites such as Zillow.com or realtor.com to find out what your home’s value is and multiply that value by the percentage you wish to spend, which can be 10%, 20% or any number in between — but never more that 20%. This amount becomes your TOTAL budget. Difficulties can arise if the home values listed on the websites are widely different or if your wish list or plan contains many costly items. There are ways to make adjustments so your budget and expectations are realistic — click the link here to see our free handy worksheet.
Finding the Money
There are a variety of ways to fund your patio development. A few ideas are outlined below including the option we chose to accomplish building our top three priorities in creating our outdoor living space, all within our budgeted funds.
Cash Reserve
You may be fortunate to have savings that can help fund your patio improvement budget. The personal savings rate reached its highest level in 2020, when it amounted to 16.3 percent of U.S. households. Otherwise, there are other options you may want to consider.
Home Equity
In the first quarter of 2022, 44.9 percent of the homes in the United States were considered “equity-rich,” meaning the balance of the loan on the home was 50 percent or less of the estimated market value, according to a new report from Attom, a real estate data analytics firm. This is a nice option in areas that have seen home prices increase substantially. A homeowner can get a home equity loan, cash-out refinance, or a home equity line of credit (HELOC) which is a good option if you’re not sure how much you need or if you want cash as needed over an extended period.
Personal Loan or Credit Card Advance
If you have a decent income or credit rating, you’ve probably already received solicitations for borrowing funds. One vendor we have used is Lightstream Loans, an online consumer lender which is part of Truist Bank that offers unsecured, low-interest fixed-rate loans from $5,000 to $100,000 for practically any purpose to good-credit customers. We had a great experience getting a loan from LightStream. If you choose to finance your outdoor improvements through Lightstream, use this link: Refer-a-Friend program and we’ll both get a $50 Amazon gift card when your loan funds.
401(k) Loans
A 401(k) loan is borrowing money from your retirement savings account. Depending on what your employer’s plan allows, you could take out as much as 50% of your savings, up to a maximum of $50,000, within a 12-month period. Usually you will pay that borrowed money back, plus interest, within 5 years of taking your loan. It depends on the rules of your 401(k). What’s GREAT is you don’t have to pay taxes and penalties when you take a 401(k) loan. Plus, the interest you pay on the loan goes back into your own retirement plan account! And if you miss a payment or default on your loan from a 401(k), it won’t impact your credit score because defaulted loans are not reported to credit bureaus.
As with anything involving your finances, please check with your personal financial advisor before you make any decisions.
Project List and Priority
This next step is also pretty straightforward: make a list of the outdoor projects you want and assign a percentage of your budget or an amount you have or are willing to spend for it. It’s best to list your projects in order of importance to you. How do you know which project should take priority? Identify the ONE project that will fix your biggest issue. Then, identify your next biggest issue – you get the idea. Consider which features will get the most use or provide the most enjoyment to you. Once you have your list, you can decide how many projects you want to tackle at any given time. Given our experience, we would recommend no more than three major projects at a time. Our patio budgeting guide will help you to make these important decisions and prioritize.
The worksheet Getting Started — Research, Prep and Design is a great tool to help you in your decision making and prioritization process.
Start Your Research
So, now is the time to take your top three projects and begin your research for providers, suppliers and get their estimates. Part of your research is to get recommendations from family, friends and neighbors about the same or similar projects they have undertaken, the issues or problems that arose, and most importantly, how those were resolved. Go to the websites of any professionals you are considering and see if you can find examples of the kind of work you want done. You also will want to explore websites that provide independent reviews and recommendations of these professionals such as Google, Yelp or Angi’s List. This step WILL take time but it will help you spend less money and avoid irritation, frustration and disappointment.
Factors That Influence Cost
It will be important to consider whether this is a project you can DIY or will need a professional to do the work.
The materials used also can make a difference – a fence can be made of wood, plastic or chain link. A patio can be concrete, brick, flagstone, pavers, even crushed shell or sand. You will need to identify what you are trying to achieve and where you might comprise. For example, do you need a fence to keep the kids and dog in your yard or offer you some privacy from your neighbors? Again, there are many ways to make adjustments to make your budget and expectations realistic.
Patience is Your Best Friend!
Taking the time to think through all of the elements of your outdoor space project before you start will make your project so much more fun. It will also help what you want as a finished product come to fruition with limited stress and issues. Proceeding with a well thought-out plan will bring your project to a satisfying, completed patio area in which you will make great memories for years to come. Our patio budgeting guide will help you smooth this process so you get what you want without breaking the bank.
Always remember, every day is Friday in the patio!
Please Leave a Comment: Patio Budgeting Guide
In the comment section below, please tell us if this blog post was of value to you and/or tell us what you plan to do — or have already done — for your outdoor living project. Did you use our patio budgeting guide? Post a photo of your patio in the comment section.
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