The wall around a shower has to stand up to some of the toughest conditions of any household surface because of the daily presence of water. There are lots of ways of keeping that moisture out of the wall, some easier and cheaper than others. As with most things in life, the cheaper it is, the cheaper it usually looks--but not always. Whatever kind of surround you choose, hang it over moisture-resistant wetrock or cement board and make sure all edges and seams are well-caulked.
Using a prefab shower (or tub) surround isn't going to make your bathroom into a showcase of design creativity, but for ease of installation, water resistance and price effectiveness, there's no better way. Take the dimensions of your shower area to your home-improvement store. You can get a fully enclosed shower stall or a shower-bath combination kit that has three fiberglass pieces you adhere to your walls, cutting to size. If you go this route, have fun with it and get a colorful, eye-popping surround kit instead of something that's trying (unsuccessfully) to look like tile or marble.
Bargain Ceramic Tiles
Tiling can be done in a wide range of expense levels, depending on the tile. The tile is the only real expense. Everything else you need--cement board, tile adhesive, grout, even most of the tools--are relatively cheap. So if you get a bargain on the tile, you have a bargain shower done in the most popular shower material available. Start looking diligently for tile sales online and locally. Look especially for cut rates on discontinued lines of tile (making sure you can get enough to do the shower and leave some extra for future repairs).
This section is not a reference to glass tiles (those can be pretty expensive), but actual sheet glass, as in a window. You can buy 1/4-inch glass sheets cut to size at your local hardware store for a cheaper price than you may think and use them as your surround. Paint the backside of the glass in a good oil paint of any color you want, then hang the glass with plenty of tile advesive over wet rock or cement board, with the painted side facing the wall. You'll see the color (instead of the glue), and your surface will be smooth, reflective, easy-to-clean glass. Caulk all the edges in clear silicone caulk. To deal with the shower head and handles, either see if your hardware store can cut a hole in the glass for it or do that part of the wall in tile or another material.
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