How To Make A Budget
Financial generosity doesn’t happen by accident. It also isn’t easy. Generosity requires a labor of the heart, mind, and resources. Begin by looking at where you are spending your money, this is often a snapshot of where your heart is. You also can’t be a generous person until your are responsible. This will require making some sort of budget. Lastly, you have to commit to giving what the Bible calls “First Fruits.” Meaning you decide to give at the beginning of the month, not the end. You give to others trusting God to care for your needs.
This is hard to do in isolation! There are several men and women in Bread&Wine who are gifted, equipped, and have access to great tools to help you. Fill out the form to get connected to one of these fine folks. It is also helpful to bring others in your life into your financial processing to challenge and encourage you. This is a great thing to discuss in your gospel community or DNA group.
1. Decide your giving
I do not believe one can settle how much we ought to give. I am afraid the only safe rule is to give more than we can spare. In other words, if our expenditure on comforts, luxuries, amusement, etc., is up to the standard common among those with the same income as our own, we are probably giving away too little. If our giving does not at all pinch or hamper us, I should say it is too small. There ought to be things we should like to do and cannot because our commitment to giving excludes them. C.S. Lewis
Through prayer and processing with others in your household (spouse and children), come to an amount or percentage of giving. 10% has been a good rule of thumb for giving since the Old Testament. Here’s a very thoughtful look on why 10% is a powerful percentage to give. As you pray and discuss as a family consider how much you will give to the church but also consider how much you will set aside to meet the needs of the poor and help with the needs you come in contact with through relationship and gospel community. A generally wise way to think about your budget overall it is give 10% of your income away, save 10% of your income, and live off 80% of your income.
2. Know your income
Begin by understanding your regular income. If you receive a salary, this is simple. If you are a contract worker, have fluctuating hours, or tips make up a large piece of your income, you will want to estimate and average your income. Knowing your income is huge! You cannot be generous and responsible until you learn to give and live within your income. It is a good idea to stop here and thank God for his grace to you and his provision. Everything you have is God’s generosity to you!
3. Know & Question Your Expenses
After deciding your giving and taking a look at your income, begin listing your regular expenses and their amount. These expenses should include:
- Housing (Rent/Mortgage)
- Utilities (gas, electricity, trash, water, internet, cell phone)
- Transportation (gas, insurance, bus tickets, etc)
- Debt Payments (monthly payments for student loan, credit card debt, auto loan, etc.)
- Food (grocery and eating out)
- Cosmetic/Health (co-pays for doctors visits, haircuts, etc.)
At this point you are not listing expenses like entertainment, vacations, and shopping. That’s for later.
As you begin listing these expenses begin questioning them: Are we spending too much on rent? Do we need this cell phone plan? Should we have this auto payment or should we sell this car? Are we eating out too much? What will we have to cut back on to give the way we are called to? Again, it is helpful to include people you trust to speak into your finances.
4. Create a Plan to Pay off Debt
If you have student loans, credit card debt, or other loans hamper your goals, dreams, and giving, make a plan to pay them off. This may require taking some drastic steps; however, it will likely require a long-term plan to pay this debt off.
5. Create a plan for Saving
Most financial advisors suggest having $1,000 saved in an emergency fund, three to six months of expenses saved in case of a crisis or lost job. They also suggest saving for vacations, Christmas, and other major purchases. We typically fall into debt and cease our generosity when we are not prepared for emergencies or unusual expenses. Create a plan to save for both crisis and celebration.
6. Pray through your discretionary income
You’re now at a point to begin talking about spending money: entertainment, Netflix, hobbies, and more. However, even these decisions are stewardship decisions. Are you spending your discretionary income on things that feel like blessing and celebration? Do I spend money on things I truly enjoy and are excellent, that point me to God’s goodness? Do I spend money on cheap imitations or short-term enjoyment?