The time is quickly approaching—if it hasn’t arrived already—for your HOA Board to finalize this year’s budget. Hopefully, this is something you’ve been hard at work on, in collaboration with your property management company. For those still fine-tuning things, or those who have yet to begin at all, allow us to make a few recommendations.
First and foremost: You need to begin creating your HOA budget at least 3 to 6 months in advance! If you haven’t done one, don’t fret that it’s too late, or assume that you can get by without one. Every HOA Community needs to make a budget; should you make it halfway through the year and realize you’re out of money, the results would be grim, your HOA Management team can assist you with this!
As you make your budget, review the budgets and financial histories from the last couple of years. How much did you budget, and how much did you actually spend? Where are the problem spending areas for your Association? Use this data as a reference point for this year.
Don’t forget, though, that last year’s costs may not be this year’s costs. Utilities almost invariably increase from one year to the next. Your vendors may go up on their fees, as well, unless you’ve got them locked into a contract not to. Make sure you get with your vendors and inquire about this.
As you budget, you may have to prioritize. There are likely many projects you’d like to get done, but what’s critical is getting them all fully funded. You may have to choose your battles and leave some projects for next year.
Finally, don’t forget to budget for the reserves. Think of it almost like the money you save from your personal paycheck for retirement, or for life insurance. Take the necessary precaution of actually planning to save for your Community Association’s future.
That’s really what budgeting is all about: It’s about planning and preparing, and laying the foundation for the future of your community and this done with the help of well established HOA Management Company.