Fewer subjects stir more interest than money. Sticking to a budget is vital to financial success.
At our world headquarters in Pasadena, California, as I complete this article for The Plain Truth, it's budget preparation time. Our department heads are toiling over the previous year's facts and figures to which plans for expansion are added. So a new fiscal year begins with plans for a balanced budget. Balanced budget? What's that? An impossible dream? Or an economic necessity? The United States government has come face to face with the greatest national budget deficit in history. Balancing the budget is one of the biggest problems most governments face. Most corporations face. And most individuals face. Sooner or later it simply must be done, or financial chaos will result. National governments can and often do delay the agony of balancing the budget by printing more money. When they do, the result is inflation. That only delays the inevitable need for better budgeting. Any government resorting to such a method eventually is going to have to bite the bullet and get its financial house in order. Corporations that find themselves in budget deficit have to make dramatic cuts. Inventories are cut back, salaries reduced, sales promotionals increased, employees terminated — anything to balance the budget. If not successful, corporations go bankrupt. But what about individuals like you and me? What we do know, is that in our own lives, we too have trouble making ends meet. And the tragic result of improper financial management for the individual can be the same as a large corporation or even a national government bankruptcy.
Setting Up a Budget
The most successful way to manage your income is establishing and sticking to a budget. If you have tried it, you'll know it is not easy. At all income levels, very few families find they have enough income to meet their needs and desires. In fact, most find their wants increase even greater than their incomes. Salary increases never seem to keep up with expenditures. Poor people must abide by a rigid budget. They simply do not have enough to worry about the extras in budgeting. They learn somehow to live on what they have, and hope for better days. As one moves into middle-class income range, it would seem funds could be set aside for savings, emergencies and other needs. But for many it never works that way. Inflation, the lure of advertisers and the temptations of a credit-oriented society seem to keep the middle class at least one step behind financial security. And the wealthy? One would think upper-level income families would be the most successful of all in budgeting. But far too often increased financial resources merely mean increased expenditures. With more money comes a finer home, automobile and •designer clothing, expensive restaurant dining, foreign travel, etc., etc. And the budget may not balance. No matter where you find yourself in the economic spectrum, it's time you set your finances in order. For several years The Plain Truth has been warning readers to learn to tighten their belts. The Western world has enjoyed, overall, unparalleled prosperity from the end of World War II until recent times. But the future will not always be so prosperous. When and if harder times come, you cannot print more paper money or juggle huge corporate funds to balance your budget. You will have to prepare and stick to a plan of sound financial management. Budgeting is learning to calculate your needs in proportion to your income. It sounds simple, but it isn't for two reasons: 1) We often don't have sufficient income for what we perceive our needs to be; and 2) our wants and desires usually overcome us and we classify them as "needs." Let's see if we can help you establish a sound financial plan.
The Budget Meetings
The first thing to do is hold a family budget meeting. Just like a corporation or government, hours of meetings must be held involving all facets of the budgeting process. I have been surprised at how many families simply never discuss finances. I recently asked my Family Relations class at Ambassador College how many of them knew their family's income and had participated in family budget meetings. Out of 125 students only 10 or 12 could respond positively. College Financial Aids officers confirm many young adults are lacking understanding when it comes to money matters. So a family budget meeting (or series of meetings) will help every family member understand how the money will be spent during the coming year. Children at an early age can be brought into the conversations. Of course very young children won't fully understand, but they will learn as the years go by. Long-range goals such as saving for the down payment on a home, a new car or for a college education for the children must be understood along with how to meet the rent payment, buy new school clothing and provide a weekly allowance for the teenagers in the family. If the teenagers knew how difficult it is to meet all the family desires on Dad's income, they might be more anxious to get an after-school job where necessary. One of the first items of business is for the family to understand its fixed expenditures — those funds that simply have to be paid. They include national and state taxes, mortgage or rent payments, utilities, transportation needs, a certain amount of food and clothing and any major long-term credit debts. Most families will find these fixed expenditures consume a large portion of their income. It's surprising how little is left. With that knowledge, though, it becomes possible to understand how vital each family member's contribution is. But before coming to the discretionary areas of the budget, the most important point of all should be discussed.
Put God in the Picture
It may come as quite a surprise that God should be the first priority in budget discussion — but there is nothing more essential. The modern world we live in has either forgotten God entirely or has relegated him to low priority. Many budget their salaries and find they have little or nothing left for God. "Why, I can't afford to make contributions on my salary" is a common refrain. Governments, of course, have not made budgeting easy nor taxation voluntary. Taxes are taken from wages before the employee receives his paycheck. After taxes, most families pay fixed expenses and then allocate whatever discretionary moneys may remain. That can take the entire family income. But it need not! Financial success does not begin with detailed family budgets. Such details come later. Financial success begins with God. Most people seldom stop to think God made this vast universe and this beautiful jewel of a planet called earth. He capped it off by creating mankind in his own image. God has given humans dominion over the physical creation. We can farm the land, mine the natural resources, develop the technological skills to make life more comfortable. No one should deny how much God has given. But what does that all have to do with family finances? Much! For use from all this world's resources, God has allocated for himself a tithe, or 10 percent, of the increase we receive from our efforts. Unlike most governments God does not take the tithe before you receive your check. It is within your power to pay or not pay the tithe. For most of recorded human history, the majority have not known about, have forgotten about or have simply refused to honor God with a tithe of the increase. No wonder so few families or wage earners enter into a partnership arrangement with God. Here is what God's Word, the Bible, says about partnership with him: "'Will a man rob God? Yet you rob me. But you ask, "How do we rob you?" In tithes and offerings. You are under a curse — the whole nation of you — because you are robbing me. Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this, 'says the Lord Almighty,' and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it'" (Mal. 3:8-10, New International Version throughout). Isn't it strange that in our modern affluent Western world there should be so much financial trouble? Huge corporations struggle — some go bankrupt. Gigantic modern nations are on the verge of debt collapse. Personal and family bankruptcies are at an all-time high. You can do little at the national and corporate levels. But you can do a lot at the family level. It may be time for you to step back, take a fresh viewpoint from God's perspective of family budgeting and start your family budgeting process. all over. If the head of the family gathers everyone to a miniature corporate budget meeting to discuss the coming year, you will all be able to understand and work together toward family financial success.
Where to Start
The first order of business is to acknowledge God in the family financial picture. If you have not discussed his place in the world and universe, do so. Then determine, as God instructs, to place God's tithe (his claim of 10 percent of your increase) as the first budgetary priority. The next 90 percent is yours for its proper allocation. To put God at the top of the financial priority list to some sounds foolish. But we are dealing with principles that transcend and supersede normal human reasoning. By tithing we are acknowledging God and his partnership in our lives. We show that spiritual values are superior to temporal and material things. Then God blesses us. It's that kind of arrangement. I know many people who tithe — give a full 10 percent of their incomes to God — and even give more through occasional offerings. Among them is a humorous mathematical riddle: "When is 90 percent equal to or greater than 100 percent?" The answer: "When it is the 90 percent of my income after I have paid my tithes." "You mean," some question, "that after giving 10 percent, what I have left will go as far or even farther than the whole 100 percent would have?" That's right! But you'll never know till you step out in faith and try it.
Tithing Teaches Budgeting
The word budget implies proportioning your income into a series of categories. Think of each portion as a percentage of the money you have available. The first 10 percent of your increase is God's. The remaining 90 percent can now be allocated. Tithing gives us the principle of percentage allocation. There are two categories into which you must divide your budget. The first area we will call fixed expenses. Fixed expenses are those that will come every month and will be about the same each month. Second, there are variable expenses. You can also call these funds discretionary moneys. These are expenses we will all have, but the amount we spend from month to month might vary considerably. A fixed expense such as your monthly mortgage payment or rent will usually not significantly change. Other such fixed expenses. will be cost of utilities — especially heating costs in winter — telephone, food, household expenses and transportation. After your tithes and offerings, there is a part of the budget over which you have little control — taxes. The government has to function and in most nations derives a portion of its funds from a percentage of each person's income. These taxes are usually withheld from wage earners before receiving pay. In addition to taxes, there are other funds that are withheld from salaries. These include payment into a social welfare or social security fund, pension plans, required insurance, sometimes union dues and other smaller amounts. Since they are withheld, you have practically no control over them. But they must be calculated into your budget. The three largest expenses most families incur are the cost of housing, the cost of food and in northern climates the cost of home heating. In some cases, there will be little left after these major items. Most families will find that food and housing will consume more than half their budgetary allocation. In our modern industrial world, a majority of families purchase and operate at least one automobile as a principal means of transportation. Some families may be able to rely on public transportation such as a bus or subway system to provide a portion of their transportation needs. These costs will also be a fairly fixed expense. A budget must be established for fuel and maintenance cost of an automobile or for transportation fares. Another fixed expense is insurance. Most families carry some form of life insurance, homeowners' or renters' insurance and automobile insurance. In some nations many of these insurance needs are provided by the state and are part of the system of taxation one is charged in that nation. In other nations, insurance is a private matter and must be paid for separately. Many employers will provide insurance programs to employees and will at least cover a portion of these needs as a fringe benefit. The remaining variable expenses are simply what the name implies: a variety of budget areas determined by a family's needs and based on the amount of money available for such expenses once fixed expenses have been budgeted. Variable expenses include the cost of clothing — certainly a necessity — but usually not allocated on a monthly basis. In addition there are expenses for entertainment, recreation, vacation and travel, savings, gifts and personal allowances. Your budget percentages will vary, but the important thing is to know where your money should be going based on a sound plan.
Art of Sticking to a Budget
All this family meeting and planning may sound good. But making a budget work requires diligent effort. And budgeting should be fun. That's right, fun. Jesus said, "I have come that they may have life, and have it to the full" (John 10:10). To add to that which brings about a full, rewarding and fun life, each family's financial resources should be allocated to obtaining the maximum benefit. Some in the professing Christian world have almost come to regard poverty as a virtue. They mistakenly think the Bible says, "Money is the root of all evil." The Bible does not say that (but it does warn about not setting one's heart on riches in an improper manner). What the Bible does say is, "For the love of money is a root of all kinds of evil" (I Tim. 6:10). It is lusting after money or the things money can buy that is wrong — not the diligent hard and honest work that will bring appropriate financial gain. We have already read in Malachi 3 that God would bless us abundantly if we place him and his way first in our decisions and in our lives. And that blessing is physical as well as spiritual. In this regard the apostle John wrote, "I pray that you may enjoy good health and that all may go well with you, even as your soul is getting along well" (III John 2). So while the Bible makes it plain God would have us prosper, it is also plain we get ahead by hard work and proper planning. It would not be good for God to hand over untold wealth to anyone. We first must learn to effectively handle what we have been given, then God will add more. And that's where budgeting comes in. From tithing we learn to allocate percentages of our income, beginning with the most important allocation of all — that of God's rightful 10 percent. Then to budget the rest wisely and efficiently, we learn to accept the challenge to live within our means and achieve a balanced budget. That is indeed an accomplishment. And it is fun. Sticking to a budget, learning when to adjust because of emergencies and needed changes, growing together as a family in allocating our miniature "corporate" assets — these are some of the most rewarding experiences of life. You may need further help in working with your family finances. So why not read our free booklets Ending Your Financial Worries and Managing Your Personal Finances. They will give you an in-depth picture of how to handle your financial life.
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