How To Set And Allocate Your Interior Design Budget

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So you’ve found the perfect home. All the purchase work is done. You’ve picked up the keys. Now all you have to do is move in and make it really yours. If you’ve moved before, you’ll know that this is often a challenge but can be a lot of fun. The key to keeping it fun is to set a realistic budget and stick to it. Here are some tips to help.

Start with an overall budget
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A good rule of thumb is to allow 10% of your home’s purchase price for interior design. Then try to stay within 7% of the purchase price. That will allow you a bit of breathing space if you misjudge and/or if your plans have to change.

For clarity, your interior design budget is separate from the budget needed for any essential work on the house. For example, if your new home needs replacement windows then it’s advisable to budget for those separately. The main reason for this is that you don’t really have a choice about these tasks whereas you do with your interior design options.

A reasonable approach would be to add the cost of these to the purchase price of your home (since they are essential updates). Then allocate 10% of the cost of the update to your interior design budget.

Setting a budget of 10% may sound high. If you think about it, however, it is intended to cover all materials and labor for your whole new home with room to spare. If you already have furniture, you may be able to nudge down the budget by reusing what you have. Even if you don’t, you may choose to update your home in stages to make the costs more manageable.

Allocating your budget
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Once you’ve set your budget, your next step is to allocate it. Generally, this is best done in two stages. Firstly, you’ll set a broad allocation. Secondly, you’ll finesse this broad allocation to suit your particular needs and wants. There are a couple of ways you can set a broad allocation. The first is by category and the second is by room.

If you’re setting a budget by category, then a good guideline to follow is:

Furniture 40%
Floorcoverings 15%
Wallcoverings 15%
Lighting 10%
Window treatments 10%
Accessories 10%

The reason wallcoverings and floorcoverings get a relatively high allocation is that you will often need professionals to install them for you. Even if you’re handy at DIY, the convenience and quality of work you get from professionals are often well worth the money. Remember, your time and energy both have a value.

Setting a budget by room can be a lot more challenging because there are so many variables. There are, however, two guidelines you may find helpful. The first is to think about the practicalities of the room (including its size). The second is to think about how much you will use the room.

These considerations should help to guide you to what percentage of your budget you should allocate to each room. You could then subdivide your budget into purchase categories based on your needs in that room. For example, a “living room” could also function as a dining room and office. This could justify it having a relatively large share of the budget.

Realistically, a lot of the time, you will probably need to use a combination of these two approaches. For example, you might have floorcovering and wallcovering budgets for the whole home but assign your budget for the other categories per room.

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Prioritizing your budget
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Prioritizing your budget is also best done in two, if not three, stages. Your first stage is to work out how much commitment each purchase involves. For example, you generally want to pick your furniture first because this typically has the biggest impact on a room’s functionality. Once you’ve picked your furniture, you can make all further design decisions with it in mind.

Your next priority should generally be your floorcoverings. Ideally, you’ll choose them immediately after you’ve chosen your furniture (or at least the main pieces). This is because floorcoverings can be disruptive to install. Even if you’re sticking with your existing floorcoverings and just adding rugs, it’s preferable to put down large area rugs before you add furniture.

After this, your priorities are essentially your preference. As guidance, however, a practical order would be lighting, window treatments, wallcoverings, and accessories. This essentially reflects both how much impact each category tends to have in a room and also how easy it tends to be to make changes.

As before, once you have a basic plan in place, you can then fine-tune this to suit your own situation. Essentially, you should be guided by the principle of allocating your budget according to where it makes the most difference. For example, if you don’t have a guest room, you might choose to pare back on accessories so you can afford a really high-quality sleeper sofa.

Splurging and saving
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Unless you’re lucky enough to have an unlimited (or at least very high) budget, you’re going to need to get to grips with the concept of splurging and saving. The lower your budget is, the more important this concept will become.

As a rule of thumb, if you lie, sit or stand on it, you should splurge on it. You can save anywhere else. Saving can mean either going without (if only temporarily) or buying affordable pieces as “placeholders” until you can afford something better.

Paying close attention to this principle can lead you to unexpected but effective buying decisions. For example, if you need a new bed, then you generally want to spend your money on the mattress rather than the frame. Even though the frame is a lot more visible, it’s less important to the overall functionality of the room (and your comfort).

By contrast, you might want to spend extra money on furniture such as poufs. These are typically used either as footrests or for seating. Either way, investing in quality will give you a more comfortable experience. This in turn will create more flexibility. For example, you might even be able to use your poufs as backup dining chairs.