For many condo and co-op boards, the annual budgeting process can feel like a scramble: projecting expenses, weighing maintenance increases, and trying to please everyone while keeping the building running smoothly. But done right, a budget isn’t just about getting through another year — it’s a roadmap for your building’s long-term financial health.
Chris, Daisy’s VP of Finance, unpacks how boards can think more strategically about budgeting and what “smart” planning really looks like.
1. Start with your cash position
Before looking at line items or vendor contracts, start with one question: How much cash do we actually have?
Many boards think of budgets as one-year exercises — balancing income and expenses so the numbers net to zero. But that misses the bigger picture. A building’s financial health depends on its cash position: what’s in the bank today, what’s expected to come in, and what’s likely to go out over the next few years.
If a large repair or capital project is coming up, the goal isn’t to break even — it’s to make sure the building is building cash. That forward-looking view helps avoid emergency assessments and gives residents confidence that the board is planning responsibly.
2. Build a multi-year plan — not a one-year patch
The most successful boards think beyond the next 12 months.
It’s tempting to minimize increases to keep owners happy, but that short-term relief often leads to bigger problems later. Instead, map out a three- to five-year financial plan that projects how costs, reserves, and capital needs will evolve.
Gradual, predictable increases are far easier for residents to absorb than one major hike after years of underfunding. It’s not about overcharging, it’s about staying realistic and avoiding financial whiplash.
3. Know where the money really goes
One of the simplest ways to make better financial decisions is to understand your cost breakdown.
Across most buildings, three categories typically dominate spending:
- Payroll: Your super, porters, and building staff — wages are rising, especially under prevailing wage laws.
- Insurance: Premiums have jumped 20–25% across the country in recent years.
- Utilities: Energy prices have climbed steadily and remain unpredictable.
Together, these can account for roughly 60–75% of a building’s budget. That means your true flexibility lies in a small portion of expenses — and understanding that helps boards set realistic expectations for what can (and can’t) be cut.
Transparency around these numbers is key. When residents see how much of their monthly charges go toward essential operations, they’re more likely to understand why increases happen and trust the board’s decisions.
4. Treat reserves like insurance
Your reserve fund isn’t a luxury — it’s your building’s safety net.
A healthy reserve covers unexpected repairs, capital projects, and emergencies without resorting to special assessments. As a general rule of thumb, aim to keep 8–10 months of operating expenses in reserves.
If you’re unsure where your building stands, consider commissioning a reserve study. It’s an engineering-based report that identifies future capital costs (like elevator modernizations or roof replacements) and outlines how much you should be saving each year. It’s a small investment that prevents much bigger financial shocks down the line. Read more about reserve fund best practices here.
5. Invest strategically — especially in energy efficiency
Budgeting isn’t just about managing costs; it’s also about making smart investments that reduce expenses over time.
Energy-efficiency projects are a great example. Upgrading boilers, installing LED lighting, or replacing windows can significantly lower utility costs — and often qualify for PACE financing or city and federal incentives.
For New York City buildings, these upgrades also help meet Local Law 97 requirements, which mandate reductions in carbon emissions. That means you’re not only improving efficiency — you’re staying compliant and protecting your building’s long-term value.
6. Communicate early, often, and honestly
Even the best financial plan can fail without good communication.
When boards announce maintenance increases or assessments without context, residents feel blindsided. But when they understand why changes are needed — aging infrastructure, rising insurance costs, or upcoming projects — they’re far more receptive.
Chris’s advice: “Over-communicate. Use letters, emails, and casual conversations. Don’t assume one notice is enough.”
Clear, consistent communication builds trust and helps residents see that budgeting isn’t about nickel-and-diming — it’s about protecting the shared investment everyone has in the building. If you're effective at this, you can even get owners excited about the buildings future.
The Bottom Line
A smart budget does more than balance the books — it builds stability.
By focusing on cash flow, long-term planning, healthy reserves, and open communication, boards can future-proof their buildings and reduce the stress that often comes with budgeting season.
The goal isn’t perfection; it’s preparedness. With the right strategy and transparency, your building can move from reactive to proactive — and stay financially strong for years to come.
For more help with your budget check out our budgeting guide here.
