Approved Budget for New Year

In our association the BOD prepares the budget and it doesn't require membership approval. The more your Association is responsible for, the harder it is sometimes. This doesn't make us omnipotent, we have to put at least 10% of our budget into reserves or the membership has to vote each year to allow special assessments. Also if we get out of line with dues increases we'll hear about it. (Two years after I bought here they raised dues 25%, prior BOD had held them low so no one would get mad at them. That's why I ran for the BOD) For our income we budget what expect in assessments; we know there will be more income from clubhouse rental, late fees, fines etc. but we can't budget for them because you never know how much they'll be. And you never know who's not going to pay, either.

Our Association has been around for 15 years now so we've got a pretty good handle on how much to plan for but we always add a small cushion on each item. Sometimes you end up spending way more in one category. When that happens if we don't have money from the extras listed above; we will find someplace in another line item to cut to keep from dipping into reserves. (Had to one year to pay for snow pushing and spent the next year paying it back)Remember, reserves are savings for future replacement of capital items, not something to spend capriciously.

Paul:

I look at the budget as a tool to help you manage your money. Protocol on how to do that depends on your CC&R's, but the bottom line is you can't spend more than you make. Unforeseen things happen all the time and require flexibility by the person managing the budget. I think as a BOD it is important you keep the members apprised of everything. If you had to spend more on sprinkler maintenance than budgeted let them know that, but also let them know that you are going to reduce the amount spent on community projects for the year to compensate for that. I think it is important to have some leeway built into your budget each year, about 20-25% of ours is for community projects. Those aren't hard and fast expenses and we can reduce them in any given year if we have trouble in other areas and need money.