Starting a Budget
The term “budget” is not a word that most people like to hear. It often conjures up images of second-hand stores, old clunky cars and bread and water for every meal. Budgets aren’t flashy – but what they accomplish may be! What many people don’t realize is that having a budget is the best and fastest way to accomplish your goals by controlling where your money goes.
Jesus said in Matthew 6:21, "Where your treasure is, there you heart will be also." Jesus knows that the biggest contendor for the position in our hearts that rightfully belongs to him is our money and our stuff. It's clear that what we do with our money matters to God.
A budget is simply a plan for how you are going to accomplish what you want to accomplish – get out of debt, save for a car, go on vacation, pursue your dream job (regardless of pay), give to a local church or charity, go to college, etc.. When you have a spending plan, you are essentially telling your money where to go instead of wondering where it went.
There are many ways to make a budget. The important thing is that you have one written down (not just in your head), that you’re not spending more than you’re making, and that you have a way to track your actual income and spending every month in order to stick to it. So let’s start with some simple steps on how to make your budget.
Get out a piece of paper or open a spreadsheet if you prefer. The first thing you need to write down is your total income for the month. This is your total take-home (after tax) pay for both you, and if you’re married, your spouse. You need to include everything - paychecks, side jobs, freelance work, child support, Social Security checks, and any other ongoing source(s) of income.
Next, you will need to list every single expense you have each month. This would include your tithes, money given to charities, mortgage or rent, utilities, cable/internet bills, groceries, car insurance, gifts for friends/family, savings, and everything in between. Every dollar you spend needs to be accounted for. Use your bank statement(s) to estimate your monthly spending. For annual or semi-annual expenses, break down to a monthly cost. We know that certain expenses, like groceries or clothing, can vary from month to month but do your best!
When you finish writing down all of your monthly expenses, add up all the expenses. The total of your expenses should be the same as your income. If your expenses are higher than your income, you need to go back and figure out where you can decrease spending in order to make your expenses equal with income. If expenses are lower than your income, you can either adjust your budget (like if the grocery budget is too small), or you can increase your payments on any of your debt. If you don’t have any debt, then you can increase your savings and giving. Once your expense total equals your income, then your budget is complete for the month.
This is where it tends to get tough – but when it becomes so worth it – live according to your budget!
It’s important to know that your budget will change occasionally. Each month there are unique birthdays, different holidays, tax refunds, vacations and so on. Your monthly expenses may change but knowing what these will be and planning for them accordingly will set you up for great success. Living on a budget, you will be ready for whatever extra expense – or income – comes your way!
Budgeting is a skill that takes time to get right. You won’t have a perfect budget the first month or two. But once you get the hang of it, you will know where you money is going and be in control of your finances – and be able to accomplish your goals!
Click here to read a story about a couple at The Chapel who paid off their debt after starting a budget.
If you would like some helpful budget tools, visit the Stewardship resources page.