Someone who has been a member of an HOA board is aware of the board’s struggles to prepare a perfect annual budget. To determine which expenses to include, calculate future costs, analyze the previous year’s data, and how much money to reserve for emergency needs can be challenging.
Handling finances can be a daunting task, but with the help of Gilbert HOA management companies, you can rest assured that your HOA budget planning is being done by the right people. Management teams consist of trained professionals who can give you quality assistance on how to prepare a budget.
Tips For Planning HOA Annual Budget
Review previous years annual budget
Before starting with the new year’s budget, go through the previous year’s budget. Note down the mistakes and faults, if any, so that you can avoid repeating them in the new plan.
Gather a group of people suitable for the job
Budget planning is not an ordinary job. Only the board members don’t need to come together to plan the budget. People who are good at budgeting or have a relevant degree in finance can be of great help. Make sure that the people designing the budget are qualified for the job to avoid wrong decisions.
Decide your community goals.
Before sitting down to plan the budget, make a list of your community’s goals and priorities. Think about what you want to establish in your HOA in the coming 2-3 years. For example, if you’re going to build a new swimming pool, it would require a good amount of money. However, you cannot increase HOA monthly fees all of a sudden. Therefore, it is more beneficial to begin saving early to get the job done the following year.
Prioritize replacements and repairs
One of the essentials on the annual budget should be replacing and repairing the amenities and other properties of the HOA. To maintain the quality of life in your HOA, you cannot neglect to improve common facilities. Homeowners pay monthly dues to the board. Therefore, keeping them satisfied should be the board’s priority.
Review contracts with vendors
If the board plans to establish new facilities in the HOA or has other big expenses, these projects will be requiring a hefty amount of money. To balance the budget, you can review vendor contracts and make a few changes and adjustments. If they are unwilling to negotiate, you can look for other vendors who will provide the same service for a lesser price.
Reserve funds are essential for costly and sudden expenses. Therefore, there should always be an adequate amount of reserve funds in the HOA. To determine how much funds should be put in the reserve fund, conduct a reserve study.