Board basics · 5 min read
How to prepare your association’s annual budget
The annual budget is the most important financial decision a board makes each year. It sets every owner’s assessment, funds day-to-day operations and decides how much goes into savings for major repairs. A clear process makes it far less stressful.
1. Start three to four months early
Most governing documents require the budget to be adopted, and owners notified, before the new fiscal year begins. Working backwards from that deadline gives you time for vendor quotes, board discussion and any required owner meeting.
2. Review last year’s actual spending
Compare what you budgeted with what you actually spent, line by line. Look for categories that ran consistently over or under, and ask why. Utilities, insurance and repairs are the usual surprises.
3. Collect contracts and quotes
- List every service contract and its renewal date and price.
- Ask for renewal quotes on insurance, landscaping and other major contracts.
- Note any planned projects for the coming year and get estimates.
4. Fund your reserves properly
Your reserve contribution should follow the recommendation in your most recent reserve study. Cutting reserves to keep assessments low usually leads to special assessments later.
5. Add a sensible contingency
A small contingency line, often a few percent of operating expenses, covers unexpected costs without dipping into reserves.
6. Present it clearly to owners
Share a one-page summary that explains what changed and why. Owners accept increases far more readily when they can see where the money goes.
Questions about your community?
Our team is happy to help. Email info@epsilonpm.com or request a proposal.