God is a Planner. Before He said, “Let there be light,” He already knew in His mind every single thing that would happen…this includes knowing you and me too. How comforting! He also knew we would need help with our finances. Listen to His Wisdom:
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” Pr 21:5 NLT
We all want prosperity, but do we plan for it? Creating a working budget has to be a big part of controlling our income and outcome. As it has been said, we must tell our money where to go, or it will just go! So as we make a budget, we are telling our money where it will be spent or invested, so that we don’t waste any of these hard earned dollars. There are several categories we must think about as we build our monthly plan, so here is a list according to priority, with the line items you may want to include in each category:
1- Charity: tithes and offerings
2- Savings: emergency fund, retirement fund, college fund
3- Housing: first mortgage or rent, second mortgage, real estate taxes, repairs/maintenance, association dues
4- Utilities: electricity, gas, water, trash, phone/mobile, internet, cable
5- Food: groceries, restaurants
6- Clothing: adults, children, cleaning/laundry
7- Transportation: gas & oil, repairs & tires, license & taxes, car replacement, other like bus or subway passes
8- Medical/Health: medications, doctors bills, dentist, optometrist, vitamins, other
9- Insurance: life, health, homeowner/renter, auto, disability, identity theft, long-term care
10- Personal: things like “mad money,” babysitters & baby supplies, toiletries, cosmetics & hair care, subscriptions, gifts and so on
11- Recreation: entertainment, vacation
12- Debts: you can list any open debt here
Now just because I listed a line item in each of those categories, does not mean you might have enough cash flow in your budget to put money towards them all, or it might mean it is not something your unique family requires on a monthly basis either. For instance, we personally do not purchase a lot of clothing, so I normally don’t even add that to our budget…unless, of course, I know we are in need of it, like if we are going to a wedding and have to get a special outfit, then I will make sure I have assigned some funds towards this category. I gave you the whole list so you can see the possibilities, but of course, it must be catered to what you can afford and need. There are many months were eating out or entertainment just does not fit, so you will not add those into your monthly plan for that month. And this is why we must create a new budget each and every month, because nothing stays the same and our budget, like ours lives, just might need adjusting! Each family must come up with a working budget, that means one where they stay within the boundaries of what they bring in. What comes in, must equal what goes out. That means every dollar that comes in is assigned where it will be put, so that you are not in the negative- spending more than what you make- and you do not have any money that is not purposely used. Again I say, if you do not tell your money where to go, it will just go! Have control over every hard earned dollar! The key to making this a successful endeavor is, once you write it out, you must actually stick to it!
The working plan. Teaching how to successfully budget is very difficult in this venue, in writing just one article about this, I can miss out on so many details that are vital to understand. With that in mind, feel free to contact me with any specific questions. You can also go on Dave Ramsey’s website where he has loads of information too. But I will do my very best to get the idea across. So below is an example of a budget: let’s say you and your spouse bring home $5000 every month through income. As Christians, of course, the first thing we do is take 10% of that, and tithe to our local church, which would leave us with $4500 for the rest of our expenses. Next, we could assign $50 away towards getting that first $1000 of Emergency Fund…or here, let’s pretend we already sold all sorts of things we didn’t need and have already reached that first goal, and now we are working on getting rid of debt. That would be step two, recall the Baby Steps from last week, so we would not be saving anything else right now and can skip to the next category from above. So now we go to housing, let’s say we rent an apartment for $1000 a month, that would leave us with $3500 for the rest…are you getting the point? Below is an example of a budget that will help us stay within our means as we are getting rid of debt. (please check out the article to see this example of a budget)
|Charity: tithe||$500||Insurance (continued)|
|Housing: rent||1000||Identity theft||10|
|Electricity & gas||70||Child care||600|
|Water & sewer||30||Pocket money for him||200|
|Mobile plan||130||Pocket money for her||200|
|Internet & cable||100||Debt:|
|Food: groceries||400||Car payment||400|
Every dollar accounted for. As you can see in the example above, what came in, $5000, went out, $5000, with each dollar designated and spread across each category and line item, so that nothing was left unaccounted for. Again, this would be an example of what is called “a zero balance budget,” where every dollar coming in is being used on purpose to pay for needed expenses, as well as to pay down any debt. So the $5000 that came in is divided among the things required for this month, and what is left over is zero because it has all been used, on purpose for a purpose. There is no waste and there is no wondering where all the money went. Please note in the personal category, there are funds allocated for pocket money, or “mad money” as I like to call it, where each spouse can treat themselves in whatever way they choose. There is no arguments here, because it has already been decided, by both of you, that the amount will be used for whatever each spouse desires to use it for…so you can see, you are not depriving yourselves, so long as it fits in the budget, enjoy! Budgeting is not restricting yourself or suffering in order to control your money. It is on purpose, using your income as the blessing God desires it to be, instead of a burden, or worse, a means to cause stress and havoc! As long as it fits in the plan…which, if you are married, both husband and wife have agreed on…then feel free to stay at peace that everything is being taken care of. I will say it again though: the key to making this a successful endeavor is actually sticking to it! So we are going to have to use some self-control here, as well as some accountability. Speaking about accountability, if you are single, please find an accountability partner, someone who loves you enough to gently say, “No” when you might be tempted to go off the plan. The whole point is to 1- be responsible with the funds God has blessed us with, and 2- staying at peace while doing so!
Budgets are a display of God’s wisdom. If we truly want to be a prosperous people, who will be able to be a blessing as God blesses us, then we have to be responsible with our funds. Living life on purpose, for a purpose, is what we Christians were created to do. Our finances are certainly a part of this Abundant Life, they are meant to bless us, then serve as a blessing to others through us. But as Mr Ramsey says, “Broke people can’t feed hungry children.” Church, we must get, and keep, our funds under control for God’s Glory and for our own peace of mind. I praise God for sending this Financial Peace University plan our way. The freedom, control and confidence it has given my household over this potentially stressful area of our lives, is absolutely amazing! Do you want that too? Then won’t you join me?
Until we meet again, keep lifting your eyes to God, He’s closer than you think.
<>< Peace, Diane