Simplify Your Condo Budget: A 5-Step Preparation Guide

The end of summer marks the beginning of a critical task for those involved in condo boards- preparation for the upcoming budget. Of all board activities, budgeting is undoubtedly the trickiest and complicated, but it is key to keeping your building up and running while earning the trust of your owners.

 Here’s a step-by-step guide to give you the confidence to master budget season, whether you self-manage a board or work with a property management partner.

1. Review Current Financials and Reserve Funds

Scan your year-to-date financial statements to assess whether your operating budget is still on track or your reserves have gone down. It’s crucial to understand where your current expenditure stands with respect to projected expenses so that you can effectively plan for the next year.

Review your most recent reserve study and ask yourself if any major capital repairs, such as roof replacement or elevator modernization, are underway. Advance planning can avoid expensive surprises and facilitate trouble-free implementation.

The Community Associations Institute can offer you additional budgeting guidance and tools specifically designed for condos and HOA boards.

2. Differentiate between Recurring and Non-recurring Expenses

Split your overall expenses into separate categories. For example, you could handle your ongoing operational costs, such as cleaning services, landscaping, and insurance, separately from someone handling one-time or seasonal expenses like having your window cleaned, snow removal equipment, and AC repair. This can determine the exact focus of your cost-cutting efforts or when preparing for a raise.

3. Collaborate with a Reliable Property Management Team

The expertise of a property management company extends to multiple domains like gathering vendor quotes, analyzing service contracts, and anticipating fluctuations in utility rates. It can also come in handy in formulating a realistic draft budget that perfectly fits your goals.

At Connected Management, we specialize in proactive and sustained support to boards by equipping them with year-end planning tools, transparent financial reports, and historical data for optimal decisions.

4. Engage with Homeowners Early on

Owners are likely to feel betrayed if they are kept in the dark about any Budget changes, especially a rise in dues. A smart way is to communicate early and clearly the rationale behind your budget decisions. Share what your key priorities are and expected adjustments through newsletters, annual meeting previews, or digital announcements. Stay open to feedback where appropriate.

5. Account for Inflation and Future Growth

We live in times of great financial uncertainty where no item is spared from the vicious effects of inflation, whether it's insurance premiums or routine maintenance. It’s prudent to factor in some extra budget, not only to cover inflation but also to accommodate any upgrades or enhancements owners might request down the line.

A conservative approach to budgeting always works in your favor as opposed to rash or reckless decisions.

Final Thoughts

Budget season doesn’t necessarily have to be stressful. Backed up by a strategic plan, tools, and support, your condo association can herald the fiscal year without any confusion or usual worries. Charting out a financial roadmap ensures everyone’s on the same page.

Need to simplify your association's financial planning? Our team at Connected Management will guide your board every step of the way to financial success. Learn how we support small to mid-sized associations in keeping their budget in check and cash flowing.