Budget Season is Quickly Approaching: A Crash Course in HOA Budgeting

As summer winds down, HOA boards and management teams know budget season is right around the corner. This is when financial planning takes center stage, as the decisions you make now will shape your community’s operations, services and priorities for the year ahead.

Setting association budgets doesn’t have to be overwhelming. With a thoughtful approach, it can be an opportunity to align your goals with financial realities, set meaningful priorities and ensure smooth operations throughout the year.

Budgeting is More Than Numbers

A well-planned budget reflects your community’s goals and values. Think of budgeting as a planning tool rather than a restriction.

It’s a way to:

The 4 Steps to Create an HOA Budget

1. Planning
Start with an annual management plan. What are your community’s goals? Which items are mandatory (such as insurance or legal fees), and which are discretionary (like holiday decorations or social events)? Once you have the foundation set for your management plan you can start to prioritize based on item importance and available resources.

Tip: Create a budget committee or taskforce to gather feedback from homeowners. Understanding their expectations can help shape a budget that reflects community priorities.

2. Gathering Information
Accurate budgeting depends on solid data. Review financial statements, reserve studies and service contracts to understand where your HOA stands financially and what obligations are ahead.

Be sure to examine:

• Balance sheets, which show your financial position at a specific point in time
• Income and expense statements, which reflect recent spending patterns
• Reserve studies, which analyze future costs for major repairs or replacements
  

3. Reviewing Revenue
Determine how much income your HOA expects from assessments, fees or other sources. The projected revenue should support the community’s goals and cover all anticipated expenses.

4. Setting Assessments
Once expenses and income are accounted for, decide what assessment levels are needed to keep your association financially healthy. Clear communication with homeowners about potential changes to assessments is key to maintaining trust.

Leave Room for Flexibility

Budgets are best estimates, not guarantees. Things change—contract rates may increase, inflation may spike or an unexpected repair may be needed. Build some flexibility into the budget for possible changes to try and avoid services or delaying maintenance.

Final Thoughts

Budget season is your association’s chance to build a solid financial foundation for the coming year. A successful budget goes beyond spreadsheets; It supports your community’s priorities, anticipates future needs and builds confidence among homeowners.

So, gather your team, review the numbers and start planning. With the right approach, you can enter a new year prepared and positioned for success.