Similar to the post I did on Work!!!! the word budget is known to strike pure fear into those that hear it. It's hard to think that we work 40 hours plus per week, get a paycheck and once we bring home the bacon now we have to limit our self on the things that we want using a budget... Please! We worked hard for the money and we can do whatever we want with it. Right? To answer your question you are absolutely correct! You have a choice but you also have to live with the consequences of your choice.  Not to get too personal but your children have to live with that choice and in some cases their children and thus... the cycle continues. So, what does this have to do with a budget?  Well, if you ever want to begin to get ahead with money and start to create generational wealth you have to keep an account of every dollar you have. In fact, Proverbs 27:23 says, "Be diligent to know the state of your flocks, And attend to your herds;"

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Back in those days a common occupation was a shepherd and their sheep were one of the most valuable assets they had. It was how they made a living, from the sheep's wool, to using them for trade, or evening cooking up some lamb chops. To be a good shepherd they would have to know the condition of their sheep, how many sheep they had, defend their sheep, and care for their sheep. It's clear that this took diligence. I hope you are starting to see the correlation between shepherding sheep and being a good steward over the money God has allowed you to earn. To be diligent to know where your money is being spent you need a plan... that plan is a budget! Most people think a budget is limiting, but in the words of Dave Ramsey, "A budget is telling your money where to go instead of wondering where it went." Here are some budgeting tips to get you started in the right direction:

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1) Look at Your Pay Stub

 

This tip may seem goofy, but in the world of direct deposits and electronic pay stubs it can easily be over looked. Get familiar with your pay stub so you can have an accurate idea of what is expected to come out of your check such as taxes, medical insurance, retirement (if you are out of debt), etc. before you are paid. I would suggest seeking counsel from a tax professional you trust to make sure the right amount of taxes are being taken out. A large tax refund is not a good thing; it's the government keeping your money interest free!!!  It's your money & you should want it now! Better understanding your pay stub will allow you to better forecast your income in a budget to give you a good estimate on how much money you have coming in for the month.

2) Prioritize Your Spending

 

When doing the spending portion of your budget list your priorities in order from the top of the list to the bottom. I would suggest including "needs" as the higher priority items and wants as the lower priority (I know you may not like it but what's the point in having the newest shoes when your car needs new breaks and it's 20+ miles to work. Getting in 20 miles a day could be healthy I supposed). Ask yourself, which one is more important?  Here is a quick example of a monthly budget:

Income: $3000.00

1. Tithing: $460.00
2. Rent/Mortgage: $650.00
3. Electricity: $100.00
4. Water: $50.00
5. Car payment: $300.00 (I hope you paid cash for a car see Money Mistakes Vol. 1)
6. Gas for Car: $80.00
7. Car Insurance: $75.00 
8. Trash: $25.00
9.  [Insert Need]
10. [Insert Need]
11. [Insert Need]
12. [Insert Want]
13. Clothes: $100.00
15. Cable: $150.00

This budget gives you a good bases for prioritizing what is most to least important in your budget.  Remember you have to make the decision on importance.

3) Review & Change the Budget as Need

 

This should go without saying, but I will admit (so would my wife), this was a hard one for me to get over... your budget can change within the month! You or you and your spouse are the owner and operators of your budget. You can change it whenever it's needed. Since you estimated your income for the month and it's probably not changing unless you get another source of income you know what you're working with. Therefore if you need to change the budget, simple... move money from one category and put it in another as needed. If your married, make sure you & your spouse agree on this every time. If you're single you're free to do what you want but stick to what you planned and change the plan accordingly.

4) Do A Budget Every Month

 

This is one of the most important points when it comes to a budget! You have to do a budget EVERY SINGLE MONTH, this is the diligence we spoke about earlier. The first couple of times you do a budget it will be difficult but after 3 months or so you'll start to get the hang of it and eventually it will be like second nature. Also please do your budget in the month before for the month ahead.  That means in June you should be creating a budget for July and in July you should be creating a budget for August.

In The Millionaire Next Door by Thomas J. Stanley & William D. Danko (great read by the way) on page 42, the question was ask, "Do you know how much your family spends each year for food, clothing, and shelter?" According to the book, almost two-thirds of the millionaires (62.4%) answered "yes" to the question. How do you think they were able to know that information? I am going out on a limb here... I think the answer is they do a budget!  So please, pick-up those millionaire habits now, so you can be a millionaire later... For some of us hopefully sooner than later!

If you need financial coaching or help with a budget and would like a consultation email us at:
foffcoaching@gmail.com

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