I am back with part three of the renovation tips! Please see here and here for the first two parts.

This time we're gonna talk about budgeting.

[Image source: http://budgetsense.ca/wp-content/uploads/2011/09/school-budgeting1.jpg]


While researching about the things you hope you can get for your new home, it's time to set some budgets.

The most important tip we can give to others is:

Plan your budget according to your savings, don't plan it with your future money (i.e. credit cards). 

I know we should spend where necessary to ensure the things we get for our home can last for years. Yes. However, spending where necessary, to get good quality stuff, may not necessarily mean we have to spend loads of money on them. I also know credit cards are definitely useful for expensive items that can be paid off in a 0% 12 or 24-month instalment plan (e.g. air-con). So we are not against using credit card, as long as it is used carefully.

Let me sidetrack a little before we go on to the main topic.

How do you define what are the basic requirements for the necessary items?

Here are my opinions on what are the basic requirements, and when it actually becomes rather "unnecessary".

Necessary item #1: Fridge

What you really need is a reliable, good brand, with a good amount of space and functions you need and will actually use. Oh and good energy saving rating as well.

Unnecessary is when you think you need a two-door fridge (with ice-making function on the door, and other whats not, that you'll not use after the novelty wears off in a month or two... laziness to refill or clean the ice-making part of the machine is another reason too) for a small 4-room HDB flat, with a family of 2 or 3-4 in the future, and when you know you will rarely cook. Therefore you don't actually need that huge space to store groceries. 

Necessary item #2: Washing Machine

What you need is a machine with a good amount of capacity to wash the amount of clothes you predict you'll accumulate over the week or half a week (work out the amount of clothes both of you will wear over a normal week). You also need, useful functions (a machine with 10 functions may only have 2-3 useful ones in the end), good motor, good energy / water saving rating, good reputation and a long warranty. 
Unnecessary is when you buy a washing machine, with a million functions, which can wash a load of 10kg or more, but there won't be so many clothes to be washed on a regular basis. 

Necessary item #3:  TV

What you need is a reasonably-sized TV, with good resolution and whatever HD-nonsense, and the digital ready thingy just so you can occasionally enjoy a movie or two during the weekends or at night. Good energy-saving rating too. 

Unnecessary is when you buy a 50-over inch TV, with all sorts of 3D functions and whats not, when you'll barely spend time at home watching TV shows or 3D movies on it.

Necessary item #4: Water heaters

What you need is a reputable and reliable brand of water heater, which will heat your water when you shower, period. 

Unnecessary is when you buy the most high-end one out of the range, but there is actually not so much of a technological difference between the low-end one and that.

So, in conclusion, if we actually don't crave for more than we need, we don't need to spend more than we should. Simple as that.

Don't let the excitement of owning your own home make you so giddy with joy you forget about practicality. We need to be practical at times to make good decisions we won't regret in the near future. Everything is a trial and error, and we learn from our mistakes, but we need to try not to make expensive errors unnecessarily if possible.

Ok, so back to budgeting.

I created a basic format of the budget planning on an Excel sheet. And the hubby improved on that and made it really clear and detailed for us to refer to.

We categorised separate sheets into:




And in each sheet, there are sub-categories: Living Room, Bedroom, Kitchen, Toilets, Service Yard, Dining Area and/or General.

Under each sub-category, we then wrote the basic items we will definitely have to buy. For example, under "Furniture":

Living Room
1. Sofa
2. TV Console
3. Coffee Table
Bedroom 
1. Bedframe
2. Wardrobe
3. Drawers
4. Full-length mirror 
Dining Area
1. Dining table set

Just an idea. What you need for each room may differ from ours.

Anyway, with the amount of savings the both of you have, give an estimated budget for each main category. Just an agarration. [One thing to note though, do remember to minus off the minimum sum of 1K in your savings bank account when you do your budgeting. So for example, if you have two bank accounts with 10K each, minus 1K from each account (the usual minimum sum now), so you actually only have 18K to spend. Unless you don't mind getting money deducted from your account or something.]

For example, we wanted our total expenditure on furniture to cost about or under 10K, so we put that amount down under estimated Budget at the top of the "Furniture" sheet.




Then we put in estimated costs for each of the items (bed frame, dining table set, etc) under each subcategories (living room, bed room, etc).

For example, we estimated a bed frame to maybe cost us 900 dollars. Poor guess or not, it doesn't matter.

Just put an estimated cost for each item.

Then we put in the formula in the actual Expenditure (under the Budget) cell, to add up all the costs of the items under the subcategories.

In your first estimation, you may exceed the budgeted amount of 10K. No worries.

Then you must work your way around to ensure it goes under 10K when you go shop for the items.

Get it?

Once you're done with the estimations for all the items (always estimate higher rather than lower), and once you're done researching on all the reliable shops/brands/product models/contractors you need on the forums and FB pages and etc, it's time to go shopping with all the information you have with you.

Let's say when you shop for a bed frame at the shops you found to have good reviews online, maybe there will be a range of bed frames that you may fancy, work your way around to ensure it doesn't go past each item's estimated cost if it is not necessary.

Go to at least a few shops before you decide. Don't be lazy for the bigger and more costly items, which needs good quality and to be in a reasonable price range.

Slowly, as you decide on the items you are going to buy, you can gradually adjust the estimated cost for each item accordingly.

So maybe, for example, we found a bed frame that we like that actually cost only about $700, we put that amount in to replace the original agarration of 900. Gradually, if you have the willpower and had researched well, the actual expenditure will drop as you decide on the items one by one.

Honestly, it was a difficult process as we shopped as sometimes we see certain items we really liked, but are way out of our budget. We will then take a step back and think about it. Sometimes if we managed to "save" on a few other items, we will then spend a little more on the item(s) we really like.

That's part of how we managed to keep everything within our budget of about 30K for our new home.

We sacrificed holidays and shopping to save up. :P So we wanted to put our savings to good use, and not end up overspending or become in debt. We wanted to have some money left to restart our savings for the future too. Those were two strong motivation factors for us, apart from the fact that we are also quite ngiao. ;P

Our method may not work well for all, but we hope it may help some in one way or another.

We know how lost one can feel when facing such a major milestone in your life with no clue on what to do and where to start.

We hope this can provide some sort of a direction for some people. :)

Next post will be on finding cheaper options for appliances. ;)

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Blogger Teh Athira shared on 23 Jun 2014, 11:13:00  

Hello MisterandMissUsko,

I would like to propose to collaboration project to you. Your blog has been everything that readers would want - informative and easy to understand.

However, I couldn't get your contact info anywhere. Do drop me line through teh.athira@asiaventuregroup.com so we could discuss further.

Thank you.

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