Family Finance
“Be thou diligent to know the state of thy flocks and look well to thy herds.” (Proverbs 27:13)
Studies have shown that one of the leading causes of divorce is problems with the family’s finances. Homes and families are literally being torn apart because of a failure to be diligent to “know the state of flocks” and to “look well to thy herds.” As our church focuses on stewardship in the month of November, I believe that it is very important for the health of our family relationships that we take a step into studying the finances of the family and how they can be well managed.
Diligence is the key to well manage finances. Budgets should be set, and we will look at that here in a moment, but the best budget in the world is only worth the diligence put into maintaining it and the self-discipline behind following it. Without diligence a budget will surely fall. Without self-discipline a budget of is of no affect. Therefore, a wise steward will be honest with his budget, diligent and its maintenance, and disciplined in its practice.
HOW TO CREATE A BUDGET
#1 Prepare your budget ahead of time. – A budget is a spending plan for your income. It is necessary than that your plan be in place before you start spending the money. Most bills are sent on a monthly basis; therefore, it is good to create a budget one month at a time. Prepare it before for the first of the month so that your plan is in place a ready for a new month.
#2 Figure your income low. – If you have a variable income, it is best to figure on the low end of what it will possibly be. Inevitably there will be times with a varied income that your paycheck is smaller than you had anticipated, when you have figured your income low then it keeps those smaller paychecks from being a crisis to your budget.
#3 Calculate your expenses. – Make a list of your expenses and add them up. For variable expenses you will do the opposite of what you do with your income, figure your expenses high. This will keep high bills from being disastrous to your budget. It is always easier to adjust for a bill that is less than you planned for than to adjust to one that is more than you planned for. It is imperative that you be completely honest with your expenses, if you forget something or you underestimate an expense it can be absolutely disastrous to your budget.
#4 Compare your income to your expenses. – If your expenses exceed your income than you have a problem and cannot go forward with creating a budget until you fix it. The easiest way to fix a lop-sided budget where the expenses exceed the income is to trim expenses. However, there are times when there are no expenses that can be cut which means that another or a greater source of income must be added. You need to go through your expenses and put them in order of importance. Here is a good example list of expenses order of importance.
A. TITHES – Because the tithe is holy unto the Lord it should be at the top of your list. We are promised and blessing if give our tithes and a curse if we do not. (Malachi 3:8-10) If our finances are tight the last thing, we can afford is for the Lord to be fighting against our finances this month because we withheld His tithe.
B. HOUSING – After your tithe you need to secure the roof over your head. You need to make sure that you have a place to come home to every night. There are a lot of things that you can do without.
C. UTILITIES – This is truly part of securing your housing. When we say utilities we are referring to the basic utilities of electric, gas, water, and waste. This does not include cable, internet, or even phone service. Those are further down the list.
D. FOOD – You need to make sure that you have food on your table. This does not include eating out. This is strictly food that you buy and prepare at home. No matter how busy you are eating out is a luxury, not a necessity. If your struggling to make your budget work you should avoid spending the money to eat out.
E. TRANSPORTATION – After your housing is secure you need to be sure that you have transportation. This refers to your expense of gas money or bus ticket. Whatever form of transportation you use that gets you back and forth to work is important so that you can maintain your income.
F. PAYMENTS – Now we start talking about payments. This is car payments, loan payments, credit card payments, medical payments, insurance payments. Anything that comes in as a monthly bill for service or debt belongs here in priority.
G. LUXURY – This is the final category or priority. A luxury is defined here as something that is not necessary to your living or ability to provide. Despite popular opinion such things as having a cellphone / smartphone or home internet are luxuries, not necessities. Online subscriptions to Netflix or YouTube are luxuries not necessities. Television is not a necessity, but a luxury. If you have a need to start trimming expenses, you need to start trimming here. You will find that when you start trimming expenses there are ways to still take advantage of several of these luxuries without having to spend a lot of money for them.
#5 Balance Your Budget – Once you have established that your income exceeds your expenses than you start to take your expenses and assign them to your sources of income. For example, if you receive a bi-weekly paycheck and you get paid twice a month, then take your expenses and divide them up between the two paychecks. Determine which paycheck is going to pay for which bills.
This is a very basic way to maintain the family finances, but it works. It will require you to revisit your budget often to refresh your memory. It will require you to stop impulse spending. It will require you to be diligent to do a budget new every month. It will require you to have self-discipline.