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BUDGET BUDGET WORKSHOPWORKSHOP

Jim Sutherland, Ph.D., Jim Sutherland, Ph.D., Director Director RMNI.org/financial-RMNI.org/financial-ministry.htmlministry.html

BIBLICAL FINANCIAL PRINCIPLESBIBLICAL FINANCIAL PRINCIPLES

PLANNING WITH PLANNING WITH YOUR SURPLUSYOUR SURPLUS

• God’s plans God’s plans nevernever fail (Is. 14:27; Ps. fail (Is. 14:27; Ps. 33:11), so we need to 33:11), so we need to trytry to understand to understand God’s will (Eph. 5:17; Jer. 9:23-24).God’s will (Eph. 5:17; Jer. 9:23-24).

• Planning is “spiritual” (Prov. 12:5; 16:3)Planning is “spiritual” (Prov. 12:5; 16:3)• Get good counsel (Prov. 12:15; 13:10)Get good counsel (Prov. 12:15; 13:10)• God can will in our will (Phil. 2:12-13)God can will in our will (Phil. 2:12-13)• ““What has God given What has God given youyou faith to faith to

believe Him for ?” believe Him for ?” Bill GothardBill Gothard

• Try constructing a financial timeline, using 70 Try constructing a financial timeline, using 70 years.years.

TWO APPROACHES TWO APPROACHES TO SPENDINGTO SPENDING

• From a false assumptionFrom a false assumption

• of what “ought” to be able to spend.of what “ought” to be able to spend.• ““I owe it to myself!” “I deserve to be I owe it to myself!” “I deserve to be

able to ….”—a deductive approachable to ….”—a deductive approach• From actual income/provisionFrom actual income/provision

• From From withinwithin the circle of God’s the circle of God’s provision—an inductive approachprovision—an inductive approach

Income usually isn’t the major Income usually isn’t the major issue in budgetingissue in budgeting

• Here is a list of the nations with the Here is a list of the nations with the highest percentage of consumers who highest percentage of consumers who have no spare cash: 1—America (22%) have no spare cash: 1—America (22%) 1—Portugal (22%) 3—Canada (19%) 41—Portugal (22%) 3—Canada (19%) 4—United Kingdom (17%) 5—France —United Kingdom (17%) 5—France (16%) 6—Netherlands (15%) (16%) 6—Netherlands (15%) ACNielson Online ACNielson Online

Consumer Confidence Survey—Global Survey, 1/11/2005 Consumer Confidence Survey—Global Survey, 1/11/2005

• But godliness with contentment is great gain--1 But godliness with contentment is great gain--1 Timothy 6:6 Timothy 6:6

HOW TO BUDGET— HOW TO BUDGET— 7 STEPS7 STEPS

1. Pray for wisdom (James 1:5) and for self-1. Pray for wisdom (James 1:5) and for self-control (Galatians 5:23). Habitual control (Galatians 5:23). Habitual overspending is a spiritual issue.overspending is a spiritual issue.

2. BEFORE spending, plan MONTHLY 2. BEFORE spending, plan MONTHLY expenses and LONG TERM GOALS expenses and LONG TERM GOALS (greater than 1 year, requiring savings).(greater than 1 year, requiring savings).

3. Record DAILY expenses in a columnar 3. Record DAILY expenses in a columnar ledger or software program—keep a ledger or software program—keep a running total in each expense category running total in each expense category (using the ledger or on the outside of a (using the ledger or on the outside of a cash envelope).cash envelope).

BUDGETING STEPSBUDGETING STEPS4. At 4. At month’smonth’s end, TOTAL expenses in end, TOTAL expenses in

each category and compare with each category and compare with target figures, and adjust for next target figures, and adjust for next month, if needed.month, if needed.

5. Compare ALL expenses and with 5. Compare ALL expenses and with ALL income.ALL income.

6. Move any surplus to savings, 6. Move any surplus to savings, earmarking it for a particular need.earmarking it for a particular need.

7. Deduct any shortfall from your next 7. Deduct any shortfall from your next pay before spending it.pay before spending it.

Go to Go to www.crown.org/Tools/budgetguide.asp to find percentages for each to find percentages for each category for your income.category for your income.

Budget busters:Budget busters:

Print this form at Print this form at http://rmni.org/files/financial/income_and_expense.pdfhttp://rmni.org/files/financial/income_and_expense.pdf

Typical Budget Problems -1Typical Budget Problems -1• Spending over 40% of net spendable income Spending over 40% of net spendable income

(gross income, less taxes and giving) for (gross income, less taxes and giving) for housing & utilitieshousing & utilities

• Long distance/cell phone bills too high Tip: Long distance/cell phone bills too high Tip: use www.tel3advantage.com use www.tel3advantage.com

• Food category out-of-control, including eating Food category out-of-control, including eating out Tip: shop from menusout Tip: shop from menus

• ““Over-recreating,” including cable, trips and Over-recreating,” including cable, trips and fitness clubs & movies Tip: spend from envelopefitness clubs & movies Tip: spend from envelope

• Paying too much for auto insurance & having Paying too much for auto insurance & having inadequate life insuranceinadequate life insurance

Typical Budget Problems -2Typical Budget Problems -2• High debt load and failure to even list and High debt load and failure to even list and

total all debt Tip: debt list at total all debt Tip: debt list at www.rmni.org/financial/debt_list.pdfwww.rmni.org/financial/debt_list.pdf --add --add interest ratesinterest rates

• Little or no savings—failure to plan for Little or no savings—failure to plan for future needs and goalsfuture needs and goals

• ““Miscellaneous” spending out-of-controlMiscellaneous” spending out-of-control

• Unable to pay for private schoolingUnable to pay for private schooling

• Putting too much or too little into Putting too much or too little into retirement investments retirement investments

Typical Budget Problems -3Typical Budget Problems -3

• Little giving to Christian causes & too Little giving to Christian causes & too much giving to relativesmuch giving to relatives

• Inadequate or inordinate tax deductionsInadequate or inordinate tax deductions

• High cost of health insurance—consider a High cost of health insurance—consider a good Christian health cooperative: seegood Christian health cooperative: see

www.samaritanministries.orgwww.samaritanministries.org

Budget BalancingBudget Balancing

How do Americans try to balance their How do Americans try to balance their budgets?budgets?• Cutting down on take-away meals—66%Cutting down on take-away meals—66%• Saving on gas and electricity—61%Saving on gas and electricity—61%• Cutting back on out-of-home Cutting back on out-of-home

entertainment—60%entertainment—60%• Spend less on new clothes—54%Spend less on new clothes—54%• Not driving as much—47%Not driving as much—47%• Switching to less expensive grocery Switching to less expensive grocery

brands—42% brands—42% ACNielson Online Consumer Confidence Survey—Global ACNielson Online Consumer Confidence Survey—Global Survey, 11/2005 Survey, 11/2005

6 LEVELS OF GIVING6 LEVELS OF GIVING

1. Giving little or nothing. Among Baby-busters (18-35), only half gave anything to the church in 2002.1

2. Inadequate giving. Giving less than 10%.3. Obedient giving. Giving a tithe.4. Giving beyond obedience--beyond the

tithe.5. Giving generously, being “willing to share”

(2 Cor. 9:6).6. Surpassing generosity. Giving out of God’s

bounty, becoming a conduit of His blessing (2 Cor. 9:8,10-11). In Larry Burkett’s terms, we become a pipeline, instead of a pail.

1 George Barna, “Americans Were More Generous in 2001 Than in 2000,” 4/9/02, accessed at www.barna.org on 2/7/03

BUDGETING TIPSBUDGETING TIPS• At year’s end, total all expenses for At year’s end, total all expenses for

each category and divide by the each category and divide by the number of months included, to number of months included, to refine your monthly budget figures.refine your monthly budget figures.

• You may have to adjust your budget You may have to adjust your budget each month, especially if your each month, especially if your income varies (using a computer income varies (using a computer spread-sheet helps—here is a spread-sheet helps—here is a template: template:

• rmni.org/files/financial/Budget Spreadsheet.pdfrmni.org/files/financial/Budget Spreadsheet.pdf

More BUDGETING TIPSMore BUDGETING TIPS• Expect UNEXPECTED expenses. Satan will Expect UNEXPECTED expenses. Satan will

try to discourage you. This is the reason for try to discourage you. This is the reason for an emergency fund. The budget may take an emergency fund. The budget may take at at leastleast 6 months to begin to work smoothly. 6 months to begin to work smoothly.

• If you use software (QuickenIf you use software (Quicken™, ™, Money Matters™, or MS Money™), use both Money Matters™, or MS Money™), use both

a checking account (for checks & debit a checking account (for checks & debit cards) AND a “cash” account, then combine cards) AND a “cash” account, then combine them when running reports. You may also them when running reports. You may also need a credit card account (you pay them off need a credit card account (you pay them off each month, right?), and again, combine each month, right?), and again, combine accounts for a report. Using software makes accounts for a report. Using software makes tax season fairly simple.tax season fairly simple.

FINANCIAL STATEMENTFINANCIAL STATEMENTAs of_________________As of_________________

(Courtesy of Christian Financial Concepts, Inc., now Crown Financial Ministry)(Courtesy of Christian Financial Concepts, Inc., now Crown Financial Ministry)Visit the Financial Ministry section of www.RMNI.orgVisit the Financial Ministry section of www.RMNI.orgASSETSASSETS

Liquid AssetsLiquid Assets[1][1] LIABILITIES[2] LIABILITIES[2] ___________________ ___________________ $$____________ ___________________ ____________ ___________________ $$______________________ ___________________ ____________ ___________________ ______________________________ ____________ ___________________ ___________ ___________________ ____________ ___________________ ______________________________ ____________ ___________________ ___________ ___________________ ____________ ___________________ ______________________________ ____________ ___________________ ___________ ___________________ ____________ ___________________ ______________________________ ____________ ___________________ ___________ ___________________ ____________ ___________________ ______________________________ ____________ ___________________ ___________Total liquid assets $____________ TOTAL LIABILITIESTotal liquid assets $____________ TOTAL LIABILITIES $$______________________ Invested AssetsInvested Assets[3][3] ___________________ $_______________________________ $____________ ___________________ _______________________________ ____________ ___________________ _______________________________ ____________ ___________________ ____________ NET WORTH $___________________ ____________ NET WORTH $____________________ ___________________ ____________ ___________________ ____________ (Total Assets less Total Liabilities)(Total Assets less Total Liabilities) ___________________ _______________________________ ____________Total invested $____________ Total invested $____________ Use AssetsUse Assets[4][4] ___________________ $____________ TOTAL LIABILITIES___________________ $____________ TOTAL LIABILITIES ___________________ ____________ AND NET WORTH $___________________ ____________ AND NET WORTH $______________________ ___________________ _______________________________ ____________ ___________________ _______________________________ ____________ ___________________ _______________________________ ____________ ___________________ _______________________________ ____________Total use assets $____________Total use assets $____________ TOTAL ASSETS $____________TOTAL ASSETS $____________

[1] [1] Cash, Savings Accounts, Checking AccountsCash, Savings Accounts, Checking Accounts[2] [2] Outstanding Real Estate Loans, Credit Cards, Auto Loans, Personal LoansOutstanding Real Estate Loans, Credit Cards, Auto Loans, Personal Loans[3] IRAs, TSAs, 401ks, Investment, Real Estate, CDs, Antiques presented at fair market value.[3] IRAs, TSAs, 401ks, Investment, Real Estate, CDs, Antiques presented at fair market value.[4] [4] Residence, Autos, Personal belongings presented at fair market value.Residence, Autos, Personal belongings presented at fair market value.

Do your assets exceed your liabilities? Do your assets exceed your liabilities? Use this guide to determine the answer. For Use this guide to determine the answer. For more Christian stewardship information, see more Christian stewardship information, see http://www.rmni.org/financial-ministry.htmlhttp://www.rmni.org/financial-ministry.html

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