Part II - The Joy Of Budgeting: Navigating the Course

By Renee, LSWA

Starting a budget is like starting on a journey. You have to know where you are to set your course. Step one is knowing your present level of spending. You may want to keep a daily spending diary for a few weeks to a month to help you know how you spend your money. Compare that with your monthly income.

Step two is determining what represents a reasonable standard of living at your present income. For example, according to Crown Financial Ministries, a family of three/four with an income of $45k should not be spending more than 32% of their net spendable income on housing in an average housing market. That's about $890/month total on all housing expenses including utilities and maintenance. In high cost housing areas, the recommended amount is 55% or $1551/month. This website also provides percentage values based on your income for other areas of spending as well.

You should now be ready to develop your budget. Be sure to include a reasonable amount for personal spending like clothing, entertainment, vacations. You will have these expenses so why wouldn't you budget for them. Not budgeting for them is what gets us into trouble. I recommend following the Monthly Income and Expenses Chart provided on the Crown website. This chart will detail the breakdowns under each category. The budget categories are:

1. Tithe
2. Taxes
3. Housing
4. Food
5. Automobile
6. Insurance
7. Debts
8. Entertainment & Recreation
9. Clothing
10. Savings
11. Medical
12. Miscellaneous
13. School/Child Care
14. Investments

Beware of unforeseen problems that can wreck your budget. Hidden debts, bookkeeping errors, impulse spending, and gifts can sabotage the best of budgets.

Hidden Debts: Do not overlook non-monthly debts like family loans, doctor bills, etc. It is good to keep a list of these and review and revise as needed.

Bookkeeping Errors: An accurately balanced checkbook is crucial. Choose a method that you are most comfortable with and keep it up. I highly recommend Money Matters software or all your budgeting needs, including a computerized checkbook.

Impulse Spending: These items are unnecessary purchases made on the spur-of-the-moment. We often try to rationalize these purchases with comments like, "I deserve this," "It was on sale," "I was going to buy it any way," or "I couldn't resist!" Impulse purchases are not restricted to things like clothing, toys, games but range from homes and cars to trips. Every purchase should be considered in light of the budget. The key to controlling our impulses is discipline. Self impose a 30 day wait period. If after 30 days you still feel you need the item and it is budgeted for, then buy it. (Read: "Budgeting and Watching Out for those Deals")

Gifts: Overspending on gifts is a huge budget buster for most. If gifts are a part of normal spending then budget for them and reasonable buy ahead for them. My family budgets throughout the year for birthdays and Christmas. This usually works but there are times when we struggle with making this work. To help bring the cost of gift giving under control, consider the following:

1. Keep an event calendar and figure what you would need to budget for each month.
2. Do not buy gifts on credit, especially Christmas, unless you are going to pay it off in the 30 day cycle.
3. Make gifts. Homemade gifts are treasured.
4. Draw names rather than giving to everyone.
5. Our children don't need elaborate birthday parties every year. My 7 year-old can't remember what he got for his birthday 2 years ago but he does remember that I couldn't be there because I was in the hospital! Your love and presence is the key to a happy birthday, not the latest and greatest gift.

The goal in all of this is to meet the family's needs without causing any further debt. But beyond that, the goal is to live debt free and financially responsible. In doing this, we can truly experience all of the wonderful plans God has in store for our lives.