It’s HOA budget season. Everyone talks about needing a budget, but very few people like budgeting. While it takes time, attention to detail, and intense practicality, a detailed budget is essential for any HOA that plans to operate with the funds necessary to for reasonable service and maintenance. Follow these steps to help your HOA establish the right kind of budget for your community!

  • Review. The first step is to start by reviewing last year’s budget. One of the best ways to see where money is to pay attention to last year’s expenses. Sometimes things end up costing more than expected, so it’s important to review expected vs. actual costs when planning the next year’s budget.
  • Forecast. Do a walk-through to identify what kinds of projects your community will face in the upcoming year(s). For example, does the community pergola need painting, streets need to be repaved or maybe your common-area grass need extensive work/replacement? All communities have projects that will impact their bottom line. Proactively planning projects is a vital part of budget preparation and is one part of fulfilling your obligation as board members.
  • Shop Around. Talk to existing vendors about pricing, and if you feel you’re overpaying don’t hesitate to shop around. Also make sure the cost of a vendor’s services is agreed to in advance, and that any additional work/costs will be approved by the board first. We always recommend balancing quality and cost, the lowest bid isn’t always the best.
  • Evaluate Your Utilities! Sometimes simple changes like moving to LED lights or adding a rain override sensors to the sprinkler system can save hundreds or even thousands of dollars over the course of the year.
  • Focus on Preventative Maintenance. Instead of waiting for things to break down, focus on keeping them in good condition. If you take good care of fences, pools, pergolas, etc. they last longer and cost less money than if you wait for serious repairs or replacements to be necessary.
  • Expected the Unexpected! While never fun, you’re community will always face surprises and preparing will ease the hurt. The best way to do this is by regularly contributing to your associations reserve account and to make sure the account is fully funded in accordance with a reserve study.

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    With these steps and good common sense, your community will benefit a lot from a well-planned budget. Always keep clear records and pay attention to where the money is going. Becoming complacent and just letting money come and go without discipline or planning is one of the main reasons HOAs have budgeting problems.

    For many larger associations, even those that are doing their best, managing financials and preparing budgets can be an overwhelming task. If you are in this boat, contact Spectrum for our complimentary budget review, we are happy to perform a review and offer suggestions at no cost to the association.