What Is Contingency Budget?
A contingency budget is money set aside beyond the quoted project cost — typically 10-20% — to cover unexpected issues discovered once work begins, such as hidden water damage or outdated wiring.
Example
On a $40,000 renovation, a 15% contingency budget sets aside an additional $6,000 for surprises.
Why it matters
Older homes in particular often reveal hidden issues once walls or flooring are opened up — budgeting for this in advance avoids a mid-project financial scramble.
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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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