A budget for an Association is just an estimate on how much the Association anticipates will be spent on particular items for the year ahead.
There are many factors to consider when putting together a budget as amounts fluctuate and there is not always a contracted amount. So, it is best to look at historical data when working on an Association budget. You should keep in mind the Board’s “wish list” and incorporate any as you are able to. You should definitely add past unbudgeted items (ie, graffiti removal) and separate repair items from maintenance items that were not factored before (ie., gutter repair versus gutter cleaning).
1. Create your income line items. These should include only guaranteed income such as:
We do not recommend budgeting late fees and interest to Associations as that is not guaranteed income. You never want to rely on paying the bills with a questionable income source.
2. Create your expense line items. These should include the things like:
Of course, you can never tell exactly what could come up the next year, so we always advise to budget a small contingency amount. Make sure you work closely with your Diversified Association Management manager to prepare the draft budget and review all necessary documents regarding budget notification timelines. Careful consideration of Assessment increases should be given; make sure it falls in line with the requirements or that you are prepared to go to the owners for a vote.
In the end, you should have a balanced budget with no profit or loss. This year, we are presenting all of our budgets to include the YTD figures, projected end of year amount and a comparison evaluation from the prior year budget to the proposed budget for next year. We feel this will allow our Board’s to better understand the budget and assist them in making more knowledgeable decisions when approving the budget.
No matter what your budgeting needs are, Diversified Association Management can help