Do you have a big savings goal? Do you struggle to keep your spending in check? Do you feel like you have no idea where your money goes month after month? If any of these questions resonate with you, a personal budget is worth considering. A budget will help you determine how to use the money you earn each month. It can shed light on bad spending habits, keep you from spending money you don’t have, and help you prepare for emergencies.
Why start a budget?
A personal budget is a tool to help you make intentional decisions about your financial behaviors. Our behaviors, in turn, are affected by our beliefs and attitudes. As followers of Christ, we ultimately want to make sure our hearts, thoughts, and behaviors all align with God’s Word, and that includes the way we handle our money. The Bible has a lot to say about money (over 2,000 verses, in fact!) and it’s a stark contrast to the commonly held views in our culture.
While culture says money is our personal possession, the Bible says that everything we have belongs to God (Psalm 24:1). While debt isn’t a big deal in our society, God cautions us against it (Proverbs 22:7). When the world tells us the number in our bank account determines how successful we are, God reminds us that he is the one who provides for us (Deuteronomy 8:18). We constantly hear “money can buy happiness,” but God tells us that money cannot make us happy (Philippians 4:11-12) and we have to carefully watch where we find our motivation (Matthew 6:21). When our culture prioritizes taking care of self first and giving from what’s left over, God desires for us to put him first (Matthew 6:33). On top of it all, in a society that says “every man for himself,” God loves when we live generously because it points people back to him (2 Corinthians 9:6-8).
In light of all this, what will your budget say about your values? Will it reflect God’s heart for our finances, or will it line up more with what society says about money’s role in our lives? As you consider this, here are some practical steps to create a budget you can stick to:
How to Build a Budget
List your monthly income
Before determining where your money will go each month, the first thing you need to do is figure out how much money you’re working with. If you have a salaried position at your job, this should be pretty straightforward. If you work an hourly job, multiple jobs, or work freelance, however, it’s a little more complicated. In these situations, you may want to look back over several months, see how much you made, and average it out to estimate your monthly income.
Once you’ve locked in your monthly earnings, you’ll divvy it up into different categories and expenses so there is no amount unclaimed – this is called a zero-based budget.
List your giving
Jesus tells us to give as freely as we have received (Matthew 10:8), which is why it’s important to make generosity a priority in your budget. Whatever amount you decide, make sure your budget consistently sets a portion of your income aside for giving.
List your savings
After setting aside the amount you’re planning to give each month, decide how much of your monthly income will go toward savings. If you’re new to saving money, you may want to start by building an emergency fund – between $500 and $1,000 you can access if the unexpected happens like a flat tire or a broken furnace. That way your entire budget isn’t flipped upside down just because something breaks! If you have a savings goal like a college fund or a down payment on a house, decide what your end goal is and how much you will set aside each month to reach it.
Subtract your monthly expenses
With what you have left after giving and saving, tackle your recurring expenses. Ramsey Solutions identifies four key categories that most expenses fall under, known as the Four Walls: food, utilities, shelter, and basic transportation. Just like the four walls of a house need to be protected first, the Four Walls of your budget are the highest-priority expenses. These payments ensure you have food on your table and a roof over your head. A bare-bones budget should include these four categories.
What do I do with what’s left?
After your giving, savings, and Four Walls are addressed in your budget, you may find you still have some money left over. It’s up to you how you use it! You may decide to increase your giving or savings, upgrade a household expense (like unlimited data or faster internet), or use it on something fun. Don’t forget to set money aside to make debt payments!
Budget Hacks
If you’re looking for some ways to create more wiggle-room or make more informed choices with your budget, here are some of our favorite tips:
- Save on your grocery budget by utilizing grocery pickup – you can watch your total add up in the cart before you place your order, plus you avoid impulse purchases at the grocery store.
- Enroll in a rewards program for discounts or points toward future purchases.
- If you’re buying a house, save up enough for a down payment of at least 20% of the asking price when you buy a house to keep your mortgage payment lower and skip having to pay additional mortgage insurance.
- Find a roommate to split expenses with.
- Use an app like GasBuddy to find the cheapest fuel prices near you.
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For more budgeting pro tips, check out this article on Budgeting Hacks to Make You Financially Successful, or take a look at these other resources:
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