Part I - The Joy Of Budgeting (Seriously?)

By Renee, LSWA

Seriously. For too many people, the word budgeting leaves a bad taste in their mouth. Punishment comes to mind for many. It does not have to be that way. A budget is simply a financial management tool for the home. We plan our meals, our car tune-ups, our work week. Why wouldn't we plan our home money management? Bringing these areas under control relieves burden, worry, anxiety and stress. It maximizes our finances so we can be more effective in all areas of our life.

The goal is to live within our means. That is, we don't spend more than we make on a monthly basis. Ideally, this means that we don't use credit cards for daily living expenses and we practice self-control. It means we keep our needs, wants and desires in check.

Needs are the purchases required to provide for our basic requirements. This includes housing, food, clothes, medical expenses, transportation. Wants involve choices about the quality of the items/services we purchase. New car vs. used car, fast food vs. fine dining, 3 bedroom home vs. 5 bedroom home, etc. Desires are choices that can be made only out of extra funds and once all other obligations have been met. This is where we get into trouble. We often confuse our wants and desires with our needs.

This is where it can become tricky and emotional for most people. Needs have to come first. If having a $150 cable bill or paying for your teenager's unlimited text messaging is keeping you from being able to pay your mortgage or rent in full every month then a critical decision must be made: MAKE MORE MONEY OR SPEND LESS. It is better to cut expenses that attempt to increase income but it is also painful. Ideally, that decision is better made before a crisis hits but all too often we compensate our crisis with our credit card. The result is a spiraling cycle of debt that results in more credit, second mortgages, second jobs all in an attempt to treat the symptoms but not fix the problem. Emergencies will happen but if we are consuming all of our monthly income, the result is indebtedness.

Where do we start? In "The Financial Planning Workbook" by Larry Burkett, he suggests we first recognize the divisions of income. They are:

1. Tithe: The first part belongs to God. We are stewards of what He has entrusted to us.
2. Tax: The government wants its share.
3. Family Needs
4. Debts
5. Surplus: It is the surplus that allows us to help others and provide the flexibility to meet emergencies without the use of credit. It allows us to invest and multiply our assets.

Speaking from experience, I can tell you that this really works. My husband and I don't always get it right but we never waiver from the goal-living within our means. If you can begin to walk this road, joy and freedom from financial bondage can be yours, regardless of whether you make $18,000 a year or $80,000 a year.

Next week, we will discuss road blocks and establishing a budget in Part II.

Resources used:

Crown Financial Ministries has articles and downloadable forms including a great income & expenses chart that my family uses.

"The Financial Planning Workbook" by Larry Burkett