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 a new kitchen. 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.