If you’re not living with a budget, I strongly recommend it. I’ve had seasons in my life where I had a budget and seasons when I hadn’t. I’ve been married almost three years and we are in a season of budgeting. Since we started using Dave’s plan we have been freed from debt except for our home (that’s Baby Step Six so we have a way to go). We were fairly smart during the first year or so of marriage by applying what we learned from some pretty dumb things we did in the with money in our former lives. We were also communicating and planning our use of money. But we weren’t smart enough, because we had this “diminishing funds” problem with this batch of money that was supposed to be our Emergency Fund. We were able to fix the problem by using a budget. This season of budgeting has now lasted 14 months, and I pray that it lasts forever.
Remember John Maxwell’s quote and we’ll get started:
“A budget is telling your money where to go instead of wondering where it went.”
–John C. Maxwell
The first step is to list out all your income: Work, Commissions, Interest etc. and set the expected amounts from each. If your income is steady, budgeting is straight forward. If you have a variable income, you need to be a bit more mindful of the ebb and flow of your income stream(s) while planning and budgeting. If you get paid every two weeks, you have a real budgeting advantage: two bonus checks per year!
The second step is to decide on your amount and destination for giving. You might be saying to yourself,
“But wait, Brian what do you mean? I have bills!”
Here’s what I learned. God created me and gave me the skills and experiences with which I can earn money. He also created money, so it is really all His money in the first place. He asks us for his first fruits, because He wants us to set aside a portion to help others. If you’re not Christian or even spiritual, please humor me, as even you have experienced some type of joy from times when you gave presents to kids, spent time with a charity, or anytime you have given something to others. There are rich rewards for generous and willing givers:
Thou shalt not delay to offer the first of thy ripe fruits, and of thy liquors: the firstborn of thy sons shalt thou give unto me.
—Exodus 22:22 KJV
Not only does he ask for first fruits of our earnings, this is one of the areas he asks us to test Him and the outcome will be blessing. Blessing on His terms:
Bring the whole tithe into the storehouse, so that there may be food in My house, and test Me now in this,” says the Lord of hosts, “if I will not open for you the windows of heaven and pour out for you a blessing until it overflows.
—Malachi 3:10 NASB
Third, is to list out all your expenses by name and amount: Rent/House Payment, Food, Utilities, Credit Cards, School Loans, etc. I like to list them in order of importance when creating the budget. If you don’t know the expenses, that is OK. You’ll learn them now that you have decided to take control of your finances. If an expense shows up that doesn’t fit on your budget, you’ll need to remember to add it next month. Some of our expenses only occur every three, six, or twelve months, so I also keep track of those and set aside money every month for them as well.
Now for the fun part; doing the calculations and making the budget balance. I usually use excel to help me out. I have set up calculations to help me get the budget to zero. Here is a simple spreadsheet that you could use to create your budget: SimpleBudgetTool.xls I have filled it with some example numbers. Basically, just change the areas in the pink. Begin at the top with your giving percentage then work left to right through Income, Giving, Expenses, and Saving. Try to get the two blue boxes to be “$ -” which means zero.
Next week we’ll talk about tracking our spending and relating that to our budget.