With a comprehensive budget, your parent group can track how close it is to meeting its financial objectives. It also assures your members that their hard-earned fundraising money will be spent in ways they approve of. We outline what you need to know and what you need to do to make it happen.

If your group is brand-new: You’ll need to make some guesses but you can still follow the steps outlined here to create your budget.

If you’ve been managing income and expenses for a year or more using a checkbook: You’ll have an easier time because your budget projections will be based on actual financial activity recorded in the checkbook.

Your goal is to figure out how and where the PTO earned and spent its money in the past so you can use those numbers for future planning. To make the process easier, photocopy or print out your check register so you can make notes in the margins. If you’re stuck, use one of our sample parent group budgets as a starting point.

Income

Deposits can probably be grouped into five to seven income categories.

For example, you made three large deposits from your major fundraiser. If your PTO plans to hold the same fundraiser next year, then that major fundraiser becomes one income category in your new budget; start by assigning the total of the three deposits to that income category in your new budget.

Look for other logical groupings to create your PTO’s income categories. Other examples include:

• Membership dues

• Minor fundraiser

• Loyalty programs

• Direct donations

Expenses

You should be able to group all payments made into 10 to 20 expense categories. You can be as broad or as specific as you’d like in defining your expense categories, but keep these guidelines in mind:

• If you lump everything into a few very broad expense categories—each with a large percentage of the budget—your members will need to vote throughout the year to disperse these large budgets into different projects. This reduces the benefits gained by having a budget.

• If you have a long list of narrowly defined categories—each with a small budgeted amount—the budget may be too inflexible and you’ll be voting often to move money from one category to another.

To find a happy medium, talk to your principal and last year’s officers. Use their experience to help decide which projects should be budgeted individually and where larger, more broadly defined expense categories would be more appropriate.

• You can budget tightly for expenses (or income) when the amount is fairly predictable. For example, the presenters for the 3rd grade assembly charge your group $150 per class and there are four classes of 3rd graders next year; the total budgeted amount should be $600.

• You keep both flexibility and control by including a few broad categories. For example, you might allocate $1,500 for miscellaneous school supplies. Your group might not know up front how those funds will be used, but the principal can request up to that amount for additional items for the school building.

• If you have more than 20 percent in any one category, consider breaking that category into smaller chunks to make the budget easier to manage.

After you decide on your expense categories, use last year’s spending to estimate the right amount for each category. Don’t track spending to the penny. You just want a general idea of how much was spent in each of the expense categories.

Balancing the Budget

Put your new income and expense categories into a spreadsheet or an app like Finance Manager and fill in the starting amount for each category.

• The first income category should be your current checkbook balance.

• If your bylaws require any amount of money to be carried into the following school year, include that as an expense category.

Review your list of categories. Are there new projects planned for next year that aren’t accounted for yet? If so, add categories as necessary. Update estimates for predictable income and expense areas.

Try to get total income to equal total expenses. You can adjust the amount allotted to each category, but you don’t want to change your numbers from the checkbook review too much—unless there’s a logical reason to do so.

• If your income is higher than your expenses: Find a way to spend more money, even if it means making a category called “slush fund” or “future projects.”

• If your expenses are higher than your income: Cut back on planned expenses or find a way to bring in more money.

Final Steps

Show the budget to your executive board and to the principal; ask them to review and approve (or suggest changes).

Then, present it to the general membership for approval. Come prepared with copies of the budget spreadsheet to hand out and your notes so you can explain the assumptions you made.

Remember: A budget is a work in progress. You’re drafting an ideal plan for the year, but that draft will be adjusted as the year progresses and as you learn more about your group’s finances in practice.

Originally posted in 2016 and updated regularly. Christy Forhan contributed to this article.