MDF Week 7
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Budgeting
Budgeting
Welcome back—before we begin I should give you an update of what the plan is for this class seeing as this is the last week of the block.
We are going to extend this class one more week with Pastor Jared finishing up the class next week. Then the plan is to start a mini-series on the One Another's that will take us up to Christmas. There is four Sundays in November and then 3 in December before we get to Christmas.
This weekend is the Mother-Daughter Retreat Friday/Saturday (you can still register today if you haven’t yet) with all the ladies from the church joining for a ladies conference during the day Saturday.
November 22nd we have a Thanksgiving Eve Service at 6:30 with baptismal. If you are a follower of Jesus Christ and have not been baptized—talk with your parents about and consider doing that. There is a meeting November 12 after church for more information.
December 9 is the Christmas Party at 5 PM
December 13 is babysitting night where you (and the staff) will watch the younger kids in the church so their parents can go buy you christmas presents (or enjoy a nice evening without you)
Okay—what did we talk about last week? Giving!
This week we are going to talk about budgeting.
And before we move forward I want to say most of what I am going to say today and most of what the bible has to say about budgeting is principle based rather than practical base. You are not going to hear a lot today about how you should do something but rather things to consider and/or avoid.
With that being said two principles to frame our discussion:
Budgeting is biblical and wise
5 The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.
13 Come now, you who say, “Today or tomorrow we will go into such and such a town and spend a year there and trade and make a profit”— 14 yet you do not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes. 15 Instead you ought to say, “If the Lord wills, we will live and do this or that.” 16 As it is, you boast in your arrogance. All such boasting is evil. 17 So whoever knows the right thing to do and fails to do it, for him it is sin.
28 For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? 29 Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, 30 saying, ‘This man began to build and was not able to finish.’
The bible is clear that those who do not plan or do not consider the future are fools.
2. We are to be flexible or tentative
What do I mean by that? We are finite and plans may change. Things outside of our control, by God’s providence will come up or happen and you must adapt to and cannot be fixed or rigid in your “budget” to not want to do anything
What might some of these things be? Sickness, death, major events, natural diasters, calling to another area or church, etc.
9 The heart of man plans his way, but the Lord establishes his steps.
Okay so clearly the bible tells us to plan and consider the future.
Why don’t people budget?
too much trouble
bad at math
parents didn’t budget
overwhelmed
don’t have enough money to budget
Those are all reasons, none of them very good. The reality is failing to budget is actually bad stewardship.
What happens when you don’t budget?
We don’t know where the money goes. You are unprepared for just about anything. You have no idea how much money your spending at various places.
Let’s do a quick example—if you don’t budget you fail to realize how quickly small purchases add up—someone tell me their starbucks order?
Guys don’t worry I like starbucks and get coffee there I’m not going to condemn it.
Okay lets look on the app—that drink costs $X. Not a huge deal—that drink isn’t a crazy amount, Not a big deal. Now what if you go every week—thats $X a month, $XX year. What if you go twice a week—thats $x a month, $xx a year
By not budgeting you fail to see that. Its not just coffee—lets say your like me and everytime you go grocery shopping you end up in the ice cream isle.
A thing of ice cream is over $5 now so if you get one tub every week that ends up being $260 a year. If you want the good stuff and you get the drumsticks those are about $8 a box and that ends up being $416 a year and if your a big family you need two boxes so thats $832 a year.
If you go to wendys after class—they have the four for four but you always end up adding something so lets say its $6 and you go after class on Monday, Wednesday and Friday well that ends up being $18 a week and $936 a year. If your high flutin and go to Chipotle its basically $10 now so thats $30 a week and $1,560 a year
Heres my point—there is nothing wrong with any of those things, But if you don’t budget and plan for those purchases in what we discussed alone you end up with hundreds of dollars of unplanned and unaccounted for expenses.
Why is budgeting important: lets take a quick snapshot of Ohio:
In Ohio:
Average income $58,000 (household) (Family of 4)
Housing: $14K (24%)
Health Care: $11 K (19%)
Transportation: $15 K (26%)
Groceries: $9 K (16%)
Taxes: $5K (9%)
Phone: $2K (3%)
Total: $56,000 (96.6%)
So what does budgeting looking like?
There is 3 basic steps to establishing a budget regardless of where you are at in your life.
Estimate your monthly income and expenses
Refine your budget by reviewing recent income and expenses
account for as many categories as you can
don’t underestimate certain categories
don’t fail to account for various things (sports, conferences, car maintenance, etc)
Record every dollar spent or received (we will discuss some tips at the end)
Determine FIXED EXPENSES vs DISCRETIONARY EXPENSES
What are some fixed expenses? (oftentimes can be adjusted some but there is a base amount you have to spend monthly)
housing, transportation, medical, groceries, insurance, cell phone (bill)
What are discretionary expenses? (you can control how little or much you spend)
entertainment, dining out, travel, electronics, clothes, cell phone (device)
When budgeting you are able to make changes when numbers don’t add up. Perhaps you are doing everything you can and cut out all discretionary expenses and yet you still are not making ends meet—you may have to make major adjustments to a fixed expense category—housing, car, etc.
What do you do with irregular income? What does the bible say to do?
Turn to Genesis 41
1 After two whole years, Pharaoh dreamed that he was standing by the Nile, 2 and behold, there came up out of the Nile seven cows, attractive and plump, and they fed in the reed grass. 3 And behold, seven other cows, ugly and thin, came up out of the Nile after them, and stood by the other cows on the bank of the Nile. 4 And the ugly, thin cows ate up the seven attractive, plump cows. And Pharaoh awoke. 5 And he fell asleep and dreamed a second time. And behold, seven ears of grain, plump and good, were growing on one stalk. 6 And behold, after them sprouted seven ears, thin and blighted by the east wind. 7 And the thin ears swallowed up the seven plump, full ears. And Pharaoh awoke, and behold, it was a dream.
14 Then Pharaoh sent and called Joseph, and they quickly brought him out of the pit. And when he had shaved himself and changed his clothes, he came in before Pharaoh. 15 And Pharaoh said to Joseph, “I have had a dream, and there is no one who can interpret it. I have heard it said of you that when you hear a dream you can interpret it.” 16 Joseph answered Pharaoh, “It is not in me; God will give Pharaoh a favorable answer.”
25 Then Joseph said to Pharaoh, “The dreams of Pharaoh are one; God has revealed to Pharaoh what he is about to do. 26 The seven good cows are seven years, and the seven good ears are seven years; the dreams are one. 27 The seven lean and ugly cows that came up after them are seven years, and the seven empty ears blighted by the east wind are also seven years of famine. 28 It is as I told Pharaoh; God has shown to Pharaoh what he is about to do. 29 There will come seven years of great plenty throughout all the land of Egypt, 30 but after them there will arise seven years of famine, and all the plenty will be forgotten in the land of Egypt. The famine will consume the land, 31 and the plenty will be unknown in the land by reason of the famine that will follow, for it will be very severe. 32 And the doubling of Pharaoh’s dream means that the thing is fixed by God, and God will shortly bring it about.
Plan in prosperity for famine. When times or good or if you are on an irregular income, plan and prepare when you have those good months—sales bonuses or seasonal work, to prepare for the times of little.
So what do we do if we are failing to follow a budget.
Why do you think people fail to follow budgets?
There are some spiritual roots to the problem:
Greed—we overspend because we buy into the worlds lie of materialism—we want more.
15 And he said to them, “Take care, and be on your guard against all covetousness, for one’s life does not consist in the abundance of his possessions.”
2. Envy
30 A tranquil heart gives life to the flesh, but envy makes the bones rot.
3. Indulgence
5 Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.”
4. Man Pleasing—we spend to gain acceptance by others
5. Laziness
4 A slack hand causes poverty, but the hand of the diligent makes rich.
The root of lots of budget failures is a spiritual problem—a heart problem
Other reasons we fail to follow budgets:
Avoid overspending
17 Whoever loves pleasure will be a poor man; he who loves wine and oil will not be rich.
20 Be not among drunkards or among gluttonous eaters of meat, 21 for the drunkard and the glutton will come to poverty, and slumber will clothe them with rags.
We have been given and have access to good things from the Lord. We over indulge—we want too much.
3 who forbid marriage and require abstinence from foods that God created to be received with thanksgiving by those who believe and know the truth. 4 For everything created by God is good, and nothing is to be rejected if it is received with thanksgiving,
The problem is not the things themselves—that is a temptation if we just don’t have a Lexus or don’t have the iPhone 15 or don’t get the new Nikes than we will be doing okay.
Our problem is not that spending itself but that we spend in abundance—we just keep spending because we just want more.
And why do we overspend?
We compare ourselves to others. Clothes, houses, cars, phones, vacations, eating out, birthday parties, etc.
We make impulsive purchases. “Nothing is a good deal if you can’t afford it.”
We make major purchases or commitments without planning or prayer
We don’t shop or spend wisely
We overspend because we don’t prepare. A lot of people think that budgeting is very constricting but in reality it is very freeing.
Ways to budget:
Envelopes
App or spreadsheet
Pen & Paper
I use an App called YNAB (You need a budget) it costs me $105 a year with tax.
Some key reasons I use it:
I set up all my categories which for us are split into different types:
Fixed (rent/mortgage, groceries, gas, cell phone, life insurance, car insurance, internet, medical, giving, software subscriptions, gifts, work outs, stuff i forgot to budget for. These all get a set amount each month and that is what we spend
We have debt payments or expenses (student loan, car payment and then we set aside money each month for major subscriptions things like amazon prime or YNAB))
We have “fun categories” or flexible (Selah, christmas, vacation, babysitting, lexy and I each have clothing budgets, dining out, fun money)
We have long term planning accounts (new car, house projects, savings, etc)
All of our finincial accounts are linked to this so everything i make a purchase no matter which card I used, it imports to this and I have to assign a category. If I spend $15 on my discover card at taco bell, it removes $15 from the dining out category and puts it into the discover category so at the end of the month it is ready to pay the credit card bill.
We are able to look at this and see where we are spending a lot—we noticed we just kept spending more and more on dining out and it was because we started getting meals for Selah (or something) so it costs 33% more everytime we went out. We planned an amount for groceries at the beginning of the year and about halfway through just like everyone else we noticed we were averaging almost double what we planned so we had to adjust.
This has allowed us to plan and respond in real time instead of at the end of the month or the end of the year.
Sometimes we have categories that are very specific that we put money into each month and then after an event that category is removed—we went on a cruise last year and we saved money each month leading up to it obviously once it was done we didn’t need to keep saving that money went elsewhere. I put aside money for Uganda, after the trip was over obviously we didn’t need it anymore.
But like I said at the beginning you have to be flexible. We have had to make adjustments for things unplanned or things forgotten about.
Selah did gymnastics this year—it costs like $60 a month—where do I pay for that from? We have never had kids never paid for sports so we had to make a plan for where to pay for that.
My glasses got broken a couple months ago—we had to replace them that had a price to it, you don’t plan for that they were not that old.
Listen we are far from mastering this thing and in many ways we are not the people to ask about this stuff but I am up here so I am being transparent with you guys on some ways we do things.
I have not always been good at this. My first couple years in college I had no plan—i would just look at my bank account, see I have the money and spend it. And that is how you end up in debt and with your utilities shut off because you don’t plan at all. I needed a car so I went out and bought one. I had the money to make the payment so I didn’t care. Students this might not mean anything to you but adults will—the interest rate was 13%. I didn’t know and didn’t plan so it ended up costing me. I still drive that car and thankfully I was able to refinance and then pay it off quicker than they wanted me to so it helped me.
Any questions about budgeting?
How many of you have more than $50 to your name? How are you going to spend it?
All of you budget and you don’t even know it. You look at how much money you have and how many people you want to get Christmas presents for and then plan the money you have for what you want to spend.
