Step 3: Think Long Term
As you crunch numbers, consider your home's value, your neighborhood's future, how long you plan to live there, and the importance resale has to you. A popular rule of thumb says that the budget for a new kitchen should be approximately 15 percent of the assessed value of your home. However, if you plan to move from a $200,000 home in a few years, it may not make sense to invest $30,000 in kitchen renovations. But if you plan to stay in that same home for many years, you may feel comfortable spending twice that.
Step 4: Slice the Pie
Cabinetry, appliances, and labor/installation costs usually gobble up the biggest pieces of the budget pie. Cabinetry alone may eat 40-60 percent. But it depends on what's most important to you. If professional-grade appliances are a must, then you may spend more on those. If you are adding on or moving walls -- and your home is older and holds unpleasant surprises behind its walls -- labor and installation could become your budget's biggest line item.
Continued on page 3: Kitchen Budget Planning Steps 5-6