Why reserve studies are important..
What does a reserve study do for our association?!
The reserve study is a budget planning tool that helps you understand the financial position of your association, and provides an understanding as to what options the association has moving forward. It not only identifies the current status of your reserve fund, it helps establish a stable and equitable funding plan to offset the anticipated future expenditures.
Is your current funding strategy adequate?
The Reserve Study is intended to give an Association a better idea of the timing and cost of expected major expenses. It outlines the Association’s major assets that are to be funded via the reserve account, highlighting their expected Useful Life, Remaining Useful Life and Current Replacement Cost. This knowledge, in conjunction with an in depth analysis of the association’s current funding strategy help provide some clarity as to whether the Association is trending in the right direction with their annual contributions to the reserve fund. In turn, the Association can have the confidence that they are aware of what is to come, and create a far more effective funding or savings plan.
So take the time to understand your association’s current situation, see if you are contributing enough into your reserve account, and if not, adjust your strategy to meet your stated goals. As with all financials, we recommend you regularly review and update your reserve study so that you have a current and realistic view of the anticipated costs you need to meet in the years to come.