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5 Tips for Budgeting

5 Tips for Budgeting

July has come  which means that most of our Associations are fast approaching “budget season.” Below are some of the tips that can assist Associations when completing their budgets:

  • Contracts-Review your contacts that you currently have in place. It is always good to check with your vendors to make sure there will be no increase in costs in the coming fiscal year.
  • Insurance-Review your insurance policies and consult with your insurance professionals to see if there are any predicted changes to the policies. Often, in our coastal communities, the Association insurance policies can be effected by previous year’s storms. Also, always be on the lookout for potential changes in flood maps, as this can affect your flood premium rates.
  • Historical trend-Often, looking at the historical trends of certain line items, such as utilities, can help you set a budget number, especially for items such as pine straw, water and sewer, electric, etc. Historically, this items will often be similar, unless you have added increased service areas. It is always important to check to see if your utilities rates will increase.
  • Reserves- Analyze the Associations capital assets and determine its useful life and estimate replacement cost and make sure you are funding the reserve fund properly. It is often useful to get a professional reserve study completed so you can assure you are properly funding the reserve portion of your budget.
  • Set goals- The budget process is the time when you are planning for the next year. Sit down as a board and decide what improvements and projects you would like to complete. If your Association utilizes committees, ask them for a “wish list” of projects they would like to complete and incorporate the funds into the budget.

Overall, to complete a good budget one must properly prepare for the upcoming fiscal year. Doing the above steps will help assist in preparing a proper budget.