While you may excel at managing your personal budget, planning for an entire HOA community can be more challenging. The expenses are greater, and there are more factors to take into consideration. If the board finds that, come the end of the year (or even mid-year), its actual costs have exceeded anticipated or budgeted costs, something needs to change. Not every expense can be planned for down to the penny, but the HOA should be fairly close with its estimates.

It’s not too early to start preparing for next year’s budget and figuring out ways to cut costs. Here are some things to consider:

Gather data. Pull financial records from the past few years and categorize everything. How much does the HOA spend on water, electric, landscaping, pool maintenance, and other services or utilities? Dig down to the details and look at everything money is being spent on. Create a comprehensive list to have a better idea of where to start making changes.

Analyze expenses. How much did the water bill increase or decrease from one year to the next? What may have contributed to these changes? Were there unexpected expenses that took a toll on the budget? Have costs for neighborhood events or office supplies started creeping up? Are certain vendors charging more?

Come up with a plan. Once the board has gathered pertinent information, it’s time to take a closer look at where money can be saved. This can be achieved in a variety of ways:

  • Transitioning to more energy-efficient options such as motion sensors or photocells on lights so they only come on (and stay on) as long as necessary. If HVAC systems or community appliances are older, replacing them with newer models that operate more efficiently can be a worthwhile investment and save money in the long run.
  • Review vendor contracts to negotiate better deals and eliminate or reduce services that are not needed. Compare options to see what company can offer the best price for necessary services – keeping in mind to check exactly what is included in the agreement, because not all businesses may offer the same package.
  • Go digital with more documents and services to cut down on paper use, printing costs, and postage.
  • Find free or low-cost alternatives. If HOA meetings are currently held at the Rec Center and they charge a fee for the room, see if there is adequate space available at the library or another organization that offers these spaces for free or for a lower cost.

Allowing ample time for planning can help the HOA develop a more thoughtful and well-researched budget. Money can be more efficiently allotted to different expenses, and negotiations can take place to rework contracts or implement cost-saving measures. If your HOA is struggling to get a handle on its finances or make sense of everything that should go into the planning process, contact a skilled property management team like Kuester to help. We’ll work with your HOA to get the process running more smoothly and effectively so you know exactly where your association’s finances stand.

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