Using God's Wisdom in Balancing your Budget, by Dr. LeRoy Randolph

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God's Wisdom: In order to use God's wisdom to balance our budgets we need to start with God's book: The Bible. The Bible gives us the guidelines that God has established for breathing financially free, and for securing His blessings on our effort:

1.All wealth belongs to God (Psalm 24:1; Haggai.2: 8; Psalm 50: 10-11).

2.We are stewards (managers) of God's money and will have to give an account to God someday (Luke 16:2; Romans 14: 12).

3.We brought nothing into this world with us and we'll carry nothing out when we leave (I Timothy 6: 7).

4.We must plan to give God a portion of His entrustment to us, according to a plan, as He has prospered us (I Corinthians 16:2; II Corinthians 9: 6).

5.God expects us to save by plan also (Proverbs 21: 20).

6.We must provide for our families (I Timothy 5:8).

7.God expects us to provide necessities for needy Christians (James 2:14-16).

8.We are to freely give to government that which is due (Romans 13:7; Matthew 22:21; Luke 20:25).

9.God expects us to live with contentment within our income (I Timothy 6: 6-8)

10.Having recognized these nuggets of God's wisdom, it should be abundantly clear that we couldn't fulfill God's desire for our financial lives without a plan.

Our Budget

A budget is merely a plan. It is a written plan coordinating income and expenses. Remember that everybody has a plan. If you don't plan to succeed, you have automatically planned to fail! The good planner will normally have a budget. If you have already determined that your current expenses exceed your current income, you cannot avoid planning.

The budget will:

Help those who are not living within their means to do so;

Help those with a potential surplus (excess of income over expenses) to fix their level of expenses;

Help establish a reasonable level of living for those who want to do so; and

Provide a guide for using God's money in accordance with His principles.

The first step is to list the monthly expenses. List all the expenditures for the month indicating the amount due and the due date. (Note: Any expense, which is other than monthly, is to be divided into a monthly expense: bi-monthly expense is divided by two; semi-annual expense by six; and annual expense by twelve. Some expenses vary and are made on impulse. Both husband and wife should record every expenditure of more than a quarter for thirty days, to determine these amounts with some accuracy.)

The second step is to list all available income each month. If the income is other than monthly, use a yearly average and divide it into months.

The third step is to compare the income with the expenses. If the total income exceeds the total expenses, then you will budget to: (1) provide a written plan to visualize your goals, (2) reflect your habits and detect potential problem areas, and (3) help family communications by eliminating disagreements over money

When Expenses Exceed Income

The fourth step for those whose monthly expenses exceed the monthly income, is to begin budget analysis. A plan needs to be put in place to reduce expenses. An alternative is to try to increase the income. Not only is it not always possible, but it often hurts the family by requiring somebody who needs to be at home more to be away. Another alternative is to avoid reality, pretend there is no problem and ignore the bills. That approach has proven to lead to: (1) depression buying which aggravates the problem; (2) bill consolidation, which without changing the spending habits will solve nothing; (3) marital disharmony leading to separation and maybe divorce; and/or (4) bankruptcy, none of which are in God's plan. The only sound godly choice is to learn to cut your expenses down, and live within your income (I Timothy 6:6). That requires budget analysis.

Budget Analysis

In analyzing each expense area we must learn to distinguish between:

Needs - necessary purchases such as shelter, food, clothing, and healthcare.

Wants - in the area of the necessary, decisions about the quality of purchases need to be made. "Steak vs. hamburger" or "a new car vs. a used car."

Desires - choices which should only be made out of surplus funds after all other obligations have been met.

In order to live within your income, reduction (and sometimes elimination) of many habitual "wants" may be necessary. Some are living "higher on the hog" than they can afford.

The SAVINGS are the key to: (1) staying out of debt and (2) your long-range plan (having an adequate income when your earning capacity is less in your later years). That means that it must be divided into two accounts (and you decide how much to each):

Replacement Account (for everything that breaks or wears out) to avoid going into debt.

Retirement Account (to supplement your income when your earning capacity slows). If you neglect the SAVINGS area you will probably eventually live in debt and be dependent on the government or others during your latter years! You cannot afford not to save something out of every dollar earned!! I am also convinced that you cannot get out of debt unless you learn to save.

Using God's Wisdom In Balancing Your Budget: What Can I Afford

Affordability has to be viewed from the standpoint of:

Ability - the determination of whether or not the resources are available to make the purchase; and then,

Desirability - not withstanding the ability to purchase, is it reasonable in view of the possible sacrifice of other things. Some things are not "affordable" not because the money is not available, but because its purchase is not reasonable considering the importance of other things the money could be used to provide for.

Opinions differ widely on the question of what percentage of income should be allotted to each category of a budget. Here is my best advice on determining whether or not something is affordable for those just getting started on building a budget: I suggest that you budget based on spendable income, i.e. that net income after deductions for taxes and social security. It is simply easier to manage the amounts that you control. Let's take for our example a family of four (4), consisting of husband, wife, and two young children, with a gross income of $28,000. Their net income after taxes and social security deductions might well result in a $2,000 net income. Budgeting with that net income the family could afford the following:

CATEGORY %'S ADVICE AMOUNT

TITHE 10% 10% $200

SAVINGS 5-10% 10% $200

-Replacement

-Retirement

HOUSING 20-35% 28% $560

FOOD 5% 15% $300

UTILITIES 6-8% 6% $125

-Phone

-Gas

-Electric

MEDICAL 5-8% 7% $140