Budgeting can be a daunting task, but with the right strategies and attention to detail, you can create a plan that is both accurate and effective. Whether you’re working on a personal budget or managing large-scale finances, following a structured approach will help you avoid common pitfalls.
Below are some expert tips to help you succeed in your budgeting efforts.
Before diving into any budget, it’s essential to ensure that all the basic data is accurate. Double-check that your square footage, unit types, and counts are loaded correctly. Don’t assume that last year’s data is correct, even if it looks familiar.
Think about when you were hired and inherited a budget written by “that” manager—would you trust it blindly? As my momma used to say, “If you assume, you make an a$$ out of you and me.” 😉 Take the time to verify your numbers upfront to avoid costly mistakes later.
When working on a budget, you should save your work in multiple places—on a shared drive and your desktop. Many of us have experienced the frustration of working late into the night, saving changes to the cloud, only to discover the next morning that the cloud didn’t sync before shutting down the laptop.
To avoid this heartache, always double-save to ensure you don’t lose hours of hard work.
Never underestimate the power of details. If you think your asset manager won’t notice the meticulous notes you’ve made, think again—we love them!
Taking the time to include detailed information upfront minimizes the number of comments and questions later on, making the process smoother for everyone involved.
One of the best ways to review a budget is to have a live or Zoom meeting with your asset manager or owner. Avoid the chaos of endless back-and-forth emails by setting up a live review.
To make the process more efficient, create a live tracking document to monitor questions and comments. Include separate tabs in your Excel file for each version of the budget, with dates noted for clarity.
This allows everyone to see the changes and toggle between versions quickly.
It’s essential to have clear goals before you begin writing a budget. Don’t assume a 3% increase in Net Operating Income (NOI) every year. Instead, reach out to your asset manager or owner to ask what their expectations or goals are for the next year.
This is especially crucial if there are any plans to sell or refinance soon, as these factors will influence the operational strategy you are planning for.
In the past few years, expenses have skyrocketed, but income has not risen at the same rate. Owners don’t always assume that expenses will continue to rise, so now is the time to find opportunities to save.
Every dollar counts! Challenge yourself to find ways to spend less than you did the previous year. If you need help, download our 2024 Property Savings Guide to get a list of potential cost-saving opportunities.
Your owners will appreciate your proactive approach to cutting costs.
No budget starting in January can be accurate unless you have a solid reforecast through December. This is especially important when it comes to forecasting income.
Triple-check your Loss to Lease forecast for December and ensure your starting number for January is correct. Trust me—you’ll thank me later! 😊
Never rely solely on the person who wrote the budget to review it. At least two other people should go through the budget thoroughly before it is sent to the asset manager or owner.
A fresh set of eyes can catch errors or identify areas for improvement that might have been missed.
When it comes to capital expenditures, getting three bids is critical. In recent years, bids for major projects have varied by as much as $50K or more, so having multiple options on hand ensures that you’re getting the best deal possible for any capex projects.
Many multi-year contracts have built-in annual increases, so make sure to review each one and budget accordingly. Now is also the time to talk to your current vendors about potential rate increases for the next year.
Don’t be afraid to negotiate for lower rates if you’ve given them more business. It’s even possible to renegotiate a contract before it expires—I’ve done it, and so can you!
By following these top tips, you’ll be better equipped to create a budget that is both realistic and aligned with your financial goals. A well-thought-out budget is more than just numbers on a page—it’s a roadmap to success.