The last few weeks, we’ve been engaging in a conversation as a church around what God has to say about our resources. We’ve identified that because God owns everything, we are stewards of what He’s given to us. We believe that stewardship starts with tithing. Tithing is returning 10% of what God has given to us back to Him, because it’s His to begin with.
After we tithe, there is 90% left to work with. Below are 6 steps that our team has put together to help you budget and wisely steward what God has blessed you with. You can find even more resources on our website by clicking here.
6 STEPS TO BUDGETING
- GATHER EVERY FINANCIAL STATEMENT YOU CAN.
This includes bank statements, investment accounts, recent utility bills, and any information regarding a source of income or expense. One of the keys in the budget-making process is to create a monthly average, so the more information you can dig up the better.
- RECORD ALL OF YOUR SOURCES OF INCOME.
If you are self-employed or have any outside sources of income, be sure to record these as well. If your income is in the form of a regular paycheck where taxes are automatically deducted, then using the net income (or take-home pay) amount is fine. Record this total income as a monthly amount.
- CREATE A LIST OF MONTHLY EXPENSES.
Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage, car payments, auto insurance, groceries, utilities, entertainment, student loans, retirement or college savings — essentially everything you spend money on.
- BREAK EXPENSES INTO TWO CATEGORIES: FIXED AND VARIABLE.
Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. They included expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on. These expenses, for the most part, are essential yet not likely to change in the budget.
Variable expenses are the type that will change from month to month and include items such as entertainment, eating out, and gifts, to name a few. This category will be important when making adjustments.
- TOTAL YOUR MONTHLY INCOME AND MONTHLY EXPENSES.
If your end result shows more income than expenses, you are off to a good start. This means you can prioritize this excess to areas of your budget such as paying off any debt faster. If you are showing a higher expense column than income, it means some changes will have to be made.
- MAKE ADJUSTMENTS TO EXPENSES.
If you’re in a situation where expenses are higher than income, you should look at your variable expenses to find areas to cut. Since these expenses are typically non-essential, it should be easy to shave a few dollars in a few areas to bring you closer to your income.