Considering Your Budget In Summer
Updated: Apr 13
Considering Your Budget in Summer. Seriously?
Between the accounting, meetings and receiving community approval, just the thought of preparing an annual budget for your homeowners association may be enough to make you cringe. If given plenty of time to draft and review, your association can successfully create a budget that benefits the community. Establish homeowner buy-in and less conflict with these three steps: Initiate, Involve, and Inform.
I. Initiate in Advance
Quality takes time. Because the budgeting process involves numerous inputs, it is essential to allow ample time for each person to effectively contribute. Don’t let holiday stress later in the year compound with association responsibilities. Give your Board time to gather financial reports, previous budgets, vendor proposals for upcoming projects, reserve reports, etc.
II. Involve Other Residents
Consider appointing a budget committee. This doesn’t have to be a group of financial experts. Seek candidates who know the association, such as former board members or long-time residents with an understanding of community priorities. Though accounting skills are important, a demonstration of neighborly sentiment will go a long way.
III. Inform the Community
Budgets create opportunity for community orientation to the HOA’s priorities and define what resources are available to meet the common expenses. Often an association’s financial related tension results from owners feeling uninformed about the pressing needs and priorities of the HOA. Participating in a “glass house” style of governance encourages trust in the Board. According to this property management company there are several effective ways to keep your HOA members informed:
a. Ask the community—Polling your residents allows them to feel heard and gives them a chance to offer input before drafting an initial budget. (ex. Ask, “Should we keep the pool open into October? If yes, it will result in additional heating expense.” Show your residents that the Board desires to prioritize what matters to homeowners.)
b. Invite homeowners to your review meeting—After the first draft is created, encourage homeowners to attend your Board’s review meeting where they can ask questions and offer comments.
c. Distribute the approved budget—Once the budget is approved, distribute copies to each homeowner with line item notes and a specific explanation for any assessment changes.
There’s no way to fully avoid stress in developing a budget but starting the process far in advance will help manage it. Encouraging community involvement gives homeowners peace of mind by creating a suitable budget for the group. A budget is an important tool for your association—let the planning and budgeting process aid you in building a stronger community. If budgeting and other association duties are daunting to your Board, consider hiring a reputable management firm. Wise Property Solutions, AAMC® is an accredited HOA management firm that provides management plans, practical expertise, and professional guidance to East Tennessee communities in the Knoxville and the Tri-Cities.