Lesson Six

“The Wisdom Of Budgeting”

“….You wicked and lazy servant, …… And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.”            (Matthew 25:26, 30)

            While the Lord here is condemning the one talent man for not using what he had, the principle would seem to apply also in the misuse of what one has been given. When we do not use wisely what we have been entrusted with, are we not just as unfaithful and unprofitable as the one talent man who didn’t use what he had. Again, the emphasis needs to be placed on what our attitude should be! We are not owners, but managers of God’s money! (Psalms 24:1; 50:10-11). We need to be good managers. We just have title to it for the brief time we are here on earth. Then, in the day of judgment we will give an accounting for how we have managed God’s resources! But….isn’t it amazing that God trusts us with His goods and puts us on our honor to use it wisely!

            The writer of Proverbs  portrays Wisdom as one crying in the streets for people to listen to what she has to say (Proverbs 1:20 -21), and reminds her listeners that only fools hate knowledge (Proverbs 1:22 ). Thus, with a proper outlook towards possessions:

(1)  It will help us not to be a waster. (Proverbs 18:9)

(2)  It will help us to be free of greed and stinginess. Giving will be looked upon as a privilege, not a duty. (Colossians 3:5)

(3)  It will rid us of a dependence on money for happiness. Nothing is sure in this life! If we lose all, life will not fall apart. (Job 1:21 )

(4)  It will change our value system…..we will trust in God, not in possessions. (Matthew 6:19-20).

(5)  It will rid our life of worry over money—having it or the lack of it!             (Matthew 6:33).

(6)  It will give us a sense of accomplishment for good. And will be put in charge of more when we use what we have been given, wisely! (Matthew 25:23, 29).

(7)  We will truly learn the law of sowing and reaping….that we usually reap more than we sow. (Galatians 6:7-8; Malachi 3:10 ; 2 Corinthians 9:6-10).

(8)  We will truly learn the law of sharing….that a gift to others is a gift to God.            (2 Corinthians 8:14-15; Proverbs 19:7; Matthew 25:35-40).

THE VALUE AND PROPER USE OF A BUDGET

            A fundamental factor in helping not only to control our spending, but to have a positive cash flow at the end of the month, is a BUDGET! A budget is a means to an end! It is not an end in itself. It will help us to accomplish our financial goals if we will let it. It can help assure wise use of the money entrusted to me. A budget is a means of helping to make money my servant to accomplish what I believe God expects of me. It must not be looked upon as a “monster” to be detested, but as an “effective tool” to help me be a wise and faithful steward (1 Corinthians 4:2). It should be looked upon as a road map that helps me to get where I need to go. It can help supply the discipline over my spending to keep it within the correct bounds. A properly prepared budget will serve as a motivation to control my spending, and thereby make money my servant! One of the big mistakes of our time is a “consumptive lifestyle.” It is spending more than I can afford, or spending more than I should. Debt and loose spending feed on each other to add greater burdens in our lives. A budget is designed to curb and control such. And every dollar saved, can be used to accomplish the financial goals that I have made. Without a budget to control our spending, we cannot accumulate money. Without this accumulation, we cannot reach our short-term nor long-term goals.

WORKING UP A BUDGET

            From lesson three, you have already been encouraged to do an Analysis of your Cash Flow Margin in order to get started on getting your finances in a controlled situation. From that information, you should be able to easily work up a budget that will serve your financial purposes well. A budget form has been provided with this lesson to help you, but it may or may not have some things that you would desire on it. We have also provided an illustration along with the forms to help you see how to use it effectively. It is wise also to  evaluate your budget every six months to see how well things are going. If there are changes in your financial situation, your budget will need revising.

            Also provided in this lesson is what is called a “Budget Guideline Percentages” form that can give you an average estimate of what each area of your budget should be. This will at least give you an idea of where you are in comparing with others. We are not advocating the above….only letting you have something to compare with.

            The budget forms that are provided are ones that have been a special help to myself and others. Three forms are required in order to be the most effective. The first form is the “Cash Flow Analysis Sheet” that is to let you know if you are staying within your income. The second form is for grouping your spending in categories of (1) Weekly spending; (2) Monthly spending; (3) Quarterly spending; (4) Semi-Annual spending; (5) Annual spending; (6) Miscellaneous spending. The third form is a worksheet to cover the whole year at a glance and to determine how much money you will need at the beginning of the year in order to stay in the black each month. This has been extremely valuable to me, and I hope it will be to you! As mentioned before, we have given you an example to refer to.... to help you understand how these forms are used.

BUDGET GUIDELINE

PERCENTAGES

ACTUAL GROSS INCOME FOR YEAR……………………$

 

            Giving…………………………..(10% of Gross).……$

 

            Taxes……………………………(15% of Gross)……$

 

NET SPENDABLE INCOME FOR YEAR……………………$

          Debt Reduction………………… (15% of Net)……..$

 

            Housing…………………………(30% of Net)……..$

 

            Food…………………………….(15% of Net)……..$

 

            Clothing………………………… ( 5% of Net)……..$

 

            Transportation…………………. (10% of Net)……$

 

            Medical…………………………  ( 5% of Net)……$

 

            Insurance……………………….  ( 5% of Net)……$

 

            Children………………………..   ( 2% of Net)……$

 

            Entertainment/Recreation……..   ( 5% of Net)…..…$

 

            Gifts/Special Occasions……….   ( 3% of Net)…..…$

 

            Miscellaneous…………………   ( 5% of Net)…..…$

 

TOTAL (Cannot exceed Net Spendable Income)…$       

   

 

BUDGET GUIDELINE

PERCENTAGES

ACTUAL GROSS INCOME FOR YEAR…..$  36,400

 

            Giving…………………………..(10% of Gross).……$ 3640

 

            Taxes……………………………(15% of Gross)……$ 5460

 

NET SPENDABLE INCOME FOR YEAR…$ 27,300

 

          Debt Reduction………………… (15% of Net)……...$  4095

 

            Housing………………………… (30% of Net)……...$  8190

 

            Food…………………………….(15% of Net)……$  4095

 

            Clothing…………………………  ( 5% of Net)……$  1365

 

            Transportation…………………. . (10% of Net)……..$  2730

 

            Medical…………………………  ( 5% of Net)……$  1365

 

            Insurance……………………….   ( 5% of Net)……$  1365

 

            Children………………………...   ( 2% of Net)……$    546

 

            Entertainment/Recreation……....     ( 5% of Net)……$  1365

 

            Gifts/Special Occasions……….      ( 3% of Net)…….. $    819

 

            Miscellaneous…………………      ( 5% of Net)…….. $  1365

 

TOTAL (Cannot exceed Net Spendable Income)…...$  27,300       

 

BUDGET BREAKDOWN

Year_____

 

I.  WEEKLY……………………………………………………………………………… $

1.       Contribution ……………………………………………            $

2.       Food & Household items……………………………….          $

3.       Gasoline………………………………………………..               $

4.       Children’s School Lunches…………………………….           $

5.       Children’s Allowances…………………………………            $

6.       Husband’s lunches……………………………………..           $

7.       Wife’s lunches………………………………………….            $

8.       Miscellaneous…………………………………………..            $

 

II.      MONTHLY………………………………………………………………………… $

1.       House Mortgage or Rent……………………………….           $

2.       Utilities: Electricity…………………………………….              $

                        Heating………………………………………              $

                       Telephone…………………………………….             $

                       Water…………………………………………              $

3.       Cable…………………………………………………...               $

4.       Hospital Insurance……………………………………..            $

5.       Car Loan……………………………………………….               $

6.       Charge Cards…………………………………………..              $

7.       Parent’s Loan…………………………………………..             $

8.       Bank Loan……………………………………………...              $

9.       Life Insurance Loan…………………………………….            $

10.    Home Equity Loan……………………………………..             $

11.    Mortgage Insurance……………………………………            $

12.    Disability Insurance……………………………………            $

13.    Life Insurance………………………………………….              $

14.                                                                                                            $

15.                                                                                                            $

16.                                                                                                            $

 

III.    QUARTERLY………………………………………………………………………… $

1.       Sewer…………………………………………………..               $

2.       Garbage………………………………………………..               $

3.       Soc. Security & Federal Income Taxes………………..           $

4.       State, City, Other Taxes……………………………….             $

5.                                                                                                               $

6.                                                                                                               $

7.                                                                                                               $

 

IV.    SEMI-ANNUAL………………………………………………………………… $

1.       Car Insurance………………………………………….              $

2.       House Taxes…………………………………………..               $

3.                                                                                                               $

4.                                                                                                               $

5.                                                                                                               $

 

(Budget Breakdown…..Continued)

V.  ANNUAL………………………………………………………………………… $

1.       Lectures……………………………………………… $

2.       Subdivision Fee……………………………………… $

3.       House Insurance…………………………………….. $

4.       Vacation..……………………………………………. $

5.       Vitamins, etc………………………………………... $

6.       Christmas Gifts……………………………………... $

7.                                                                                                           $

8.                                                                                                           $

9.                                                                                                           $

 

VI.    MISCELLANEOUS………………………………………………………………… $

1.       Once a year gift….…………………………………... $

2.       Property Taxes…..………………………………… $

3.       Upkeep on House……………………………………. $

4.       Improvements on House…………………………….. $

5.       Furnishings in House……………………………….. $

6.       Clothing…………………………………………….. $

7.       Upkeep on Car………………………………………. $

8.       Other transportation………………………………… $

9.       Doctors……………………………………………… $

10.    Medicines…………………………………………… $

11.    General School items……………………………….. $

12.    Eating out…………………………………………… $

13.    Baby sitting………………………………………….. $

14.    Magazines/Newspapers……………………………... $

15.    Special Activities……………………………………. $

16.    Birthday Gifts……………………………………….. $

17.    Anniversary Gifts……………………………………. $

18.    Other Gifts…………………………………………… $

19.    Toiletries…………………………………………….. $

20.    Dry Cleaning………………………………………… $

21.    Animal Care……………………………………..….. $

22.    Personal Care/Grooming……………………………………….. $

23.                                                                                                       $

24.                                                                                                       $

25.                                                                                                       $

26.                                                                                                       $

 

PLEASE NOTE:   Any item that is paid in one or more payments and you know the month(s), be sure to place by that item those month(s). This will be needful for the next Form.

BUDGET BREAKDOWN

Year_____

I.  WEEKLY… $ 200.00

1.       Contribution ………………………………………... $  115.00

2.       Food & Household items…………………………….              $    60.00

3.       Gasoline……………………………………………..   $    15.00

4.       Children’s School Lunches………………………….               $

5.       Children’s Allowances………………………………                $

6.       Husband’s lunches…………………………………..               $

7.       Wife’s lunches……………………………………….                $

8.       Miscellaneous………………………………………..                $     10.00

 

II.      MONTHLY… $ 1450.00

1.       House Mortgage or Rent…………………………….               $   740.00

2.       Utilities: Electricity………………………………….  $    100.00

                        Heating……………………………………  $    

                       Telephone…………………………………. $      50.00

                       Water………………………………………  $     15.00

3.       Cable………………………………………………..    $      22.00

4.       Hospital Insurance…………………………………..                $    292.00

5.       Car Loan…………………………………………….   $    100.00

6.       Charge Cards………………………………………..  $

7.       Parent’s Loan……………………………………….. $

8.       Bank Loan…………………………………………...  $

9.       Life Insurance Loan………………………………….                $

10.    Home Equity Loan………………………………….. $

11.    Mortgage Insurance………………………………….               $

12.    Disability Insurance………………………………….               $      23.00

13.    Life Insurance……………………………………….. $   128.00 

14.                                                                                                            $

15.                                                                                                            $

16.                                                                                                            $

 

III.    QUARTERLY… $ 1235.00

1.       Sewer………………………………………………… $

2.       Garbage (Feb, May, Aug., Nov.)…………………….              $      35.00   

3.       Soc. Security & Federal Income Taxes………………             $  1200.00

4.       State, City, Other Taxes……………………………..                $

5.                                                                                                               $

6.                                                                                                               $

7.                                                                                                               $

 

IV.    SEMI-ANNUAL… $ 795.00

1.       Car Insurance (June, Dec.)………………………….                $   420.00

2.       House Taxes (Mar., Sept.)…………………………..                $   375.00

3.                                                                                                             $

4.                                                                                                             $

5.                                                                                                             $

(Budget Breakdown…..Continued)

 

V.      ANNUAL… $ 1525.00

1.       Lectures (Feb)…..……………………………………                $    200.00

2.       Subdivision Fee (June) ……………………………...               $      75.00

3.       House Insurance (July)…..…………………………..               $    400.00

4.       Vacation (Oct……..…………………………………. $    250.00

5.       Vitamins, etc (Dec)..………………………………...  $    350.00

6.       Christmas Gifts (Dec)…..……………………………                $    250.00

7.                                                                                                               $

8.                                                                                                               $

9.                                                                                                               $

 

VI.    MISCELLANEOUS… $ 4270.00

1.       Once a year gift….………………………………….  $

2.       Property Taxes…..………………………………… $

3.       Upkeep on House……………………………………                $    400.00

4.       Improvements on House…………………………….               $  

5.       Furnishings in House………………………………..                $    200.00

6.       Clothing……………………………………………..   $    200.00

7.       Upkeep on Car………………………………………. $    250.00

8.       Other transportation…………………………………                $    180.00

9.       Doctors………………………………………………  $     700.00

10.    Medicines…………………………………………… $   1300.00

11.    General School items……………………………….. $

12.    Eating out……………………………………………  $

13.    Baby sitting…………………………………………. $

14.    Magazines/Newspapers……………………………..               $

15.    Special Activities…………………………………… $

16.    Birthday Gifts……………………………………….  $    140.00

17.    Anniversary Gifts…………………………………... $

18.    Other Gifts…………………………………………..   $     100.00

19.    Toiletries…………………………………………….  $ 

20.    Dry Cleaning………………………………………..   $

21.    Animal Care……………………………………..….   $

22.    Personal Care/Grooming………………………………………. $

23.    Catch-All items……………………………………..   $     500.00

24.     Credit Cards………………………………………..   $     300.00

25.                                                                                                            $

26.                                                                                                            $

 

PLEASE NOTE:   Any item that is paid in one or more payments and you know the month(s), be sure to place by that item those month(s). This will be needful for the next Form.