This month, we were to take an even closer look ant investing, however a more urgent need has come up, so we will focus on family budgeting and record keeping.

We need your input and submissions!

Suggested Reading

Understanding Financial Stewardship
Learn What God Has to Say about Managing Your Money

Budgeting is Good Stewardship

Whether you have a lot or very little, you need to know where it's going and make wise plans for its use. You already know that, so this isn't an article about the importance of budgeting; it's a piece on how to do it in a practical way, a way that actually works in the real life you live.

But a word of advice before we start: Budgeting is a family affair and to some extent everybody should take part. It's important that you and your husband work together on this no matter which one usually pays the bills, etc. If you're a family of one, find a trusted friend to help you keep things realistic. You may think you can get by with less than is possible or you may be more extravagant than necessary, and other eyes are more likely to notice these quirks than you are.

And of course, you know that your Lord must be a part of the process. Study scripture, pray and pray again!

Let's Get Started

People usually have no real idea of how much they spend on food each month, or on clothing every year, etc. Because of this, most budgets fail. You may have done this in the past. You sit down, make out a budget and are determined to follow it, only to completely fail or have no idea if you failed because you have no records to show whether you stayed on the budget or not. After all, you're not an accountant! Bookkeeping failures derail more budgets that over expenditures, so we need to take a new approach...

So, let's go step by step:

1. I know you've got a computer, but unless you are actually using it with a bookkeeping program, go out and buy a simple 12 column ledger book. I suggest this because, that little book can be opened and written into a whole lot easier than booting the computer and inputting data.

2. Now, we'll set up monthly fixed categories and annual payments. Place your fixed categories in the left column of the first page and place the amounts in the column just to the right. Here are some examples:

• Income
• Tithing (offerings don't go here, just tithes)
• House pmt. or Rent
• Loan Payments
• Credit Card Payments
• Insurance Premiums (if due monthly)
• Any other fixed monthly payments
• Cable TV Fees
• Internet Access Fees
• Periodic Payments (leave amount blank for now)

Child care, tuition, membership dues, etc. may also belong here if they cost a fixed amount each month. Your personal categories will vary, but you get the idea.

3. On a new page, take annual or semi annual payments like some insurance premiums, and divide the total by the number of months spanned. For example, if your home insurance costs $600/year, you would divide by 12, getting $50. List these categories along the left column, listing monthly amounts in the column just to the right.

Don't forget periodic expenses that aren't payments. If you need new glasses every year, treat it like an annual payment even though you aren't "billed" for it regularly. You know the expense is coming and need to be prepared.

Add these up and you now know how much you must set aside each month so a financial crisis doesn't overtake you each time the homeowners insurance or other non-monthly payment comes due.

Go back to your first page and place the total amount to set aside monthly beside the Periodic Payments category you entered earlier. This is a fixed expense.

4. Add all fixed expenses and compare with your fixed income. (Hopefully your income is larger than your expenses total!) The difference is what you have to budget. Start a new page and write this number at the very top as a reminder.

5. On this new page (it may take 2), place the you varied categories in the top header boxes of the columns. Here are some examples:

• Varied Income (in excess of your fixed income)
• Food
• Misc. Household (supplies, repairs, etc.)
• Misc. Personal (clothing, grooming, etc.)
• Misc. Auto (gas, repairs, etc.)
• Utilities (if not a fixed amount)
• Telephone (don't include with utilities)
• Child Care (if amount varies)
• Offerings
• Medical
• Education
• Kids Mad $
• Adults Mad $
• Entertainment

Again, your personal categories will vary, but you get the idea. Do try to keep it simple. Lump as many as you can in general headings, but don't mix Telephone with Utilities because you may want to adjust your telephone spending later on and it's good to have a record.

6. Now, make a guess at how much to allocate each category and using pencil write in the amount above the category heading. This isn't as easy as it sounds because you can't spend more than you have!!!

You may discover that there is just not enough to go around. If that's the case and you are also in debt, some hard choices will need to be made. But that's a subject for another article... For now, just make the entries as best you can. And bring your situation before the Lord.

7. Once you're satisfied with your category names, find some business sized envelopes and label each with a category and the current month. You'll do this every month, so buy a box of about 100 envelopes.

You are now finished with the hard part, the part many folks complete. The next part is actually easier but less often accomplished because people make it too complex.

Keeping Records With Envelopes

1. Separate your envelopes into two groups, one for billed items, like phone or utility expenses and a second for shopping categories like food or household.

2. Place the first group of envelopes in a convenient place near where you sit to pay your bills and as you pay these expenses, insert the bill in the appropriate envelope. You may also want to write the amount on the back for easy tallying later.

Once you have paid all the bills in a category for that month add them up and enter the total under the appropriate heading, say Utilities, and set the envelope aside. As each category is completed for the month bundle them in a rubber band.

3. Carry the Auto expense envelope in your vehicle (if you have more than one vehicle, make an envelope for each one, but not a ledger heading for each)and carry the rest of the second group's envelopes in your purse - you may need to get a bigger purse!

Now each time you buy something, get a receipt and place it in the proper envelope. That's it. So simple your five-year old could do it. All it takes is determination and your commitment to form some easy new habits. Just remember to get receipts and put them in envelopes EVERY time you spend money or give it to the kids, or whatever. If the money goes out a receipt goes in.

4. About once a week or at any convenient interval, total up the contents of each envelope and enter the amounts in your ledger under their headings. In the left column, date you entries. Now you can see how your spending rate compares with your budgeted amount for each category. This doesn't accomplish a lot the first month because your guessed at budget amounts are probably not even close to reality, but in future months, it can help you find areas of overspending.

5. At the end of the month, when you have all your totals, compare them with your penciled in budget allocations above the category headings and make a more realistic budget which you can live by.

It Takes Time

It may take several months to fine tune your budget, but you can begin making some adjustments and forming better budgetary habits right away.

Don't get discouraged. This takes some time but is well worth the effort. Remind yourself that this is part of your job as a good steward of God's resources. The suggested reading above is an excellent guide and inspiration to hekp motivate you to make and keep a budget.

Plus there is an added bonus. All those envelopes have created an automatic filing system for tax records and in the event you need a receipt to return something you bought last month.

Next month, we'll take this a step further and show you how to make money with your envelope budget. Meanwhile, you can take an easy first step toward better stewardship by getting a budget in place now.