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Most of us don't have all the money we'd like to have, and we know it is a lot easier to spend more than we earn. In order to protect ourselves from financial bondage, personal and family stress and unforeseen expenses, it is important that we have a plan as to where our money will go.
This plan is called a budget.
Without a budget, it is easy to slip into overspending and overlook future expenses. Budgeting one's money will help eliminate unwise, impulse purchases and will insure that you have the necessary resources for the future.
Example: If a person lives week-to-week without a budget, consider potential problem areas they may encounter:
There are plenty of "unexpected" expenses that the average person will encounter; a budget will help you expect the unexpected. (Luke 14:28-31)
How Do I Develop A Budget?
Budgeting begins with your purpose and plan for the future. Where do you want to go in life? What are your priorities? What do you need? What do you want? Every budget will be slightly different because of differences in family goals. Here is how to get started: (Write these seven questions, and their answers, in your notebook).
1. How much money do I make every year?
(Some people have varied income, so you should take the average yearly salary and divide it by 12. We will begin working from that number on a monthly budget.)
2. What do I spend my money on that is necessity?
(shelter, food, clothes, electric bill, insurance, etc.)
3. What do I owe to others?
4. What are my giving goals?
5. What expenses do I have that are "wants?"
(these are things that you do not intend to stop, but you recognize that they are not as important -- internet, newspaper, pizza money, etc.)
6. What do I want to save for the future?
(retirement goal, college for kids, cash reserves, new car, etc.)
7. Are there any anticipated expenses I will have on a yearly or bi-yearly basis?
(dental, glasses, clothing, computer, vacation, Christmas, etc.)
With these seven questions answered and listed, you should have a good start on your personal budget. The task is taking all these answers (often our "ideal" world) and making them fit into the reality of our income. What you have going out can't exceed what you have coming in.
Budget Hints & Ideas:
--If you have extra money show up, put it into the flow of your budget (pay off debt, savings, etc.) Don't just blow it!
--Keep all your bills together in an organized way. Also, keep a list of anticipated expenses and the month you expect to encounter them.
--Start with the bare essentials, and then go from there. It is very possible that you will have to forfeit some of your habits & fun for a limited time in order to maintain a balanced budget.
--Each spouse should be given a moderate "allowance" of purely spendable money (for baskets, and chocolate, and fishing, and golf, etc.). Without a little bit of "flex" money, we might go crazy! So build "fun" into your budget, but agree to stay within the agreed limits.
--Read a book on budgeting your money and trimming expenses. This will help keep you motivated and give you fresh ideas to be as effective as possible.
Thought & Discussion Questions:
Why do we not feel like budgeting our money?
How is a healthy budget like a healthy diet?
How often should a budget be adjusted?
What if the source of and amount of money varies from month to month?
What are some different "systems" of budgeting that can work?
If a person is having trouble making a budget, would it be helpful to ask a trusted friend to look over the numbers?
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Go to Part 5 of Money Basics>
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