Dollars And Sense // Part 3 – Budgeting
Why is a budget important?
We often think of a budget as something we sit down and work on to find out we can’t live on what we make. A lot of people feel that a budget restricts and therefore will not live on a budget. When in reality it is freeing!
For example, let’s say that I decide that I need to replace my worn-out 26” TV and would like to purchase a 55 inch HD TV. l begin setting aside money for this purchase for a period of 5 months. Once I have saved enough money I then have the freedom to begin shopping for a great price from area retailers. And once I feel confident that I have found the “best deal” I can purchase it without guilt! After all I purposefully saved money for the purchase! On the other hand, what if I came across this great deal, but had not prepared for it financially and bought it anyway? I don’t know about you, but I would have a harder time enjoying the TV because the money I just used was never intended to be used on this type of purchase but rather it was intended to be used on another upcoming bill which is due next month.
Bottom line — budgeting is common sense and helps us to spend less than we make. You can’t spend $7500 per month when you’re making $6900 per month without going into debt. If we don’t keep tabs on how we are using God’s money chances are we will end up with some serious debt.
Here are a few specifics when considering a budget:
Money can be exhausted in three ways: giving, spending and investment failure. Since we’re primarily concerned about giving and saving, we need to think through our goals in those areas first.
- Determine what your income will be going forward for the next 6 to 12 months.
- Determine how much you give
- List fixed expenses (e.g. mortgage, rent, insurance, car payment etc.)
- List all reoccurring bills (e.g. utilities, phone, etc)
- Budget your food expenses, including cost to eat out (how many times?), social/entertainment, clothing, gifts and any other category you wish to budget
- How much do you intend to save each month and what specific things will you save money for? (e.g. building an emergency fund, savings for your next car, kids education, etc)
- Allocate the necessary funds for each and every area in order to meet your goals in each specific area.
Each week review how well you have done in meeting your goals. To do this less frequently you will become overwhelmed because there is so much one must work through. Remember a budget is not intended to merely track your cash flow, it’s a lifestyle chart that makes you evaluate your stewardship of what God’s given you.
Next month we will look at some perspectives on staying out of debt and maintaining a cash surplus to handle unexpected expenses.
– Article contributed by Tim Chastain, Director of Men’s Teams of the Master’s Men ministry.