Many people think budgeting is unnecessary, however the vast majority of people who do not budget tend to be in poor financial condition and the other few will likely come into a bad financial condition at some point in their lives because they fail to currently employ this principle. Some financial advisors proclaim that budgeting is unnecessary, but we find they actually teach budgeting when we look deeper into their instructions.
They often call it by another name such as spending plan, income / expense plan, etc. For example, one financial advisor said he doesn’t budget rather when he receives his income, he immediately sets aside a percentage to pay expected taxes, puts ten percent into a savings account and ten percent into an investment account. Then, he spends no more than what is left and repeats the process when he next receives income.
Well, that is budgeting. It’s a principle for which there are various methods to carry it out. It can be intricate or simple. Generally, the more creditors you have the more intricate it will have to be to navigate the maze and this is what causes many to ultimately slip and fall into financial turbulence and ruin. That is why you want to engage debt-freedom, so you can have a simple budget that helps you keep life in perspective and weather every storm that will eventually come your way.
Scripturally speaking, the underlying parameter is the same no matter which method is used. You should have a written plan to spend far less than your income and identify necessary alterations to your lifestyle and spending habits to eliminate all your debts.
In the end analysis, any good business or personal financial situation relies on budgeting in order to get on, stay on, and grow on a secure foundation. The method that we employ and encourage entails the following.
1. List all your net monthly income. This is gross income minus taxes paid and owed to governments and other costs that will be payroll deducted by your employer and which you do not have access to spend (health care, union dues, etc.).
2. Subtract the tithe and offering.
3. List all your monthly bills. Bills due more often and less often than monthly should be re-calculated to an amount equal to a monthly payment.
4. Now, subtract all monthly payments from your net monthly income.
The remaining balance shows whether you expect to have a surplus or deficit. If money remains (a surplus) then you can divvy it up to spend on household needs, personal items, savings, and investments. When money is lacking to pay all of your current monthly payments (a deficit), then you must look at every option possible for immediately reducing monthly expenses to get you to a financial situation where all your needs can be provided. Otherwise, you will continue to create greater financial problems in your life.
A deficit points you to one or more options to help eliminate it. First and foremost and always necessary is seeking God’s will in praise, worship, and prayer so the supernatural power of God will provide where human effort cannot. Second is making expense and spending reductions. This includes calling creditors to work out debt-forgiveness and better payment arrangements. Third is finding work (overtime, a new job, a second job, or a no cost or very low cost entrepreneurial endeavor) that increases your income to a point well beyond your expenses in order to more quickly get out of debt and begin the wealth building process.
When things are so tight you cannot pay all of your debts it is important to properly prioritize. Honor the Lord in your giving and only make monthly payments for mortgage / rent and necessary transportation to and from work. Money left over should be saved to build up a six-month emergency fund from which you can take care of emergencies that arise and later negotiate debt payoffs. In some instance you may have to trade in the expensive home and car for something more reasonable for your current situation in order to right your ship. Food and clothing are important however most people have more than enough to make it through a rough financial period or can obtain it free form local food banks, thrift stores, churches, friends, and family.
Short-term and long-term planning of anticipated income and expenses is vital to your financial well-being because it lets you know what you can reasonably purchase now and months into the future. A deficit lets you know there is a financial problem that needs correction and a surplus lets you know there is money left over that must be managed correctly in order to engage and complete the commission He assigned to the body of Christ and to you.
Budgeting is equivalent with knowing the state of your flocks and herds so your wealth can endure beyond your generation. Diligence in mapping out your financial future month-to-month and year-to-year is what it takes to repair damaged finances and maintain good financial health.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Proverbs 27:23-27, Habakkuk 2:2-4, Luke 14:28-32, Philippians 4:11-13
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You can find books authored by Randy and Karen Parlor at www.Amazon.com.
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