Seeking Financial Freedom Part 14

Welcome if you are visiting us for the first time here on Wednesdays!! If you want to start at the beginning of this series click on Seeking Financial Freedom on the right hand side of the screen..you will have to scroll down a bit to find it....

BUDGET is the word this week!! Okay so maybe that is too scary of a word.....so if you can't talk "budget" then let's talk about a SPENDING PLAN........whatever you call...it means making a plan on how you will spend your money which will enable you to stretch your dollar even farther!

Here is what the book has to say: (p130)

Why BUDGET?
Budgeting is not always fun, but it is the only way to follow through and apply what has been learned about getting out of debt, saving and giving while still meeting basic needs. Regardless of income, most of us have difficulty making ends meet unless there is a plan for spending. Expenses always tend to rise just a little higher than income.

Budgeting provides an opportunity to pray about spending decisions.

How to Budget (p. 131-138)

Step One: Begin where you are today

Developing a budget must begin with the current situation. Determine precisely how much money is earned and spent. Most people do not know what they are actually earning and spending. For this reason it is essential to keep a record of every penny for a month to get an accurate picture in order to complete an estimated budget.
I would recommend that you buy a little notebook (one that is small enough to fit in your purse or your pocket)
one for you and one for your spouse. Each time you spend any money write is down. When Justin and I did this we would write what we bought and how much we spent....it helped us to know exactly where we could be better stewards...(aka: figure out where we were throwing away our money)

If your wages are not the same each month ( like with a commissioned income), make a conservative estimate on your annual income and divide by 12 to establish a working figure for your monthly budget. The same goes for things like real estate taxes, insurance, vacations...estimate how much you spend on each, then divide by 12 to determine your monthly cost.

Step Two: The solution is where you want to be

To solve the problem of spending more than you earn, you must either increase your income or reduce your expenditures. It is that simple: Either earn more or spend less.

Adding to your income

A part-time job, or better yet, a project that would involve the whole family are ways of increasing your income. The ever-present danger of increasing income is the tendency for expenses also to rise. To avoid this problem agree ahead of time to apply any extra income to balancing the budget the budget. Another potential problem is that a family member may sacrifice relationships in order to earn extra money.

PERCENTAGE GUIDELINE FOR EXPENSES: (after giving & taxes)

Housing********** 25-38%

Food*************10-15%

Transportation**10-15%

Insurance********3-7%

Debts************0-10%

Entertainment***4-7%

Clothing*********4-6%

Savings**********5-10%

Medical/Dental** 4-8%

Miscellaneous***4-8%

School/Child Care*5-10%

Investments*******0-15%

------------------------------------------------------------------------------------------------

Estimated monthly Budget

Gross monthly income:_________________ 8. Entertainment_________

Salary:______________________________ Babysitters___________

Interest:_____________________________Vacation:____________

Dividends:____________________________ Pets:______________

Other Income:_________________________ Other:______________

LESS:============================== 9. Clothing:_____________

1. Giving:___________________________ 10. Savings:______________

2. Taxes:___________________________ 11. Medical Expenses:_____________

NET SPENDABLE INCOME:________________Doctor:_____________

==================================== Prescriptions:____________

LIVING EXPENSES Other:_______________

3. Housing:__________________________ 12. Miscellaneous:_______________

Mortagage/Rent:_________________________ Toiletries/Cosmetics:__________

Insurance:_____________________________ Cleaning/Laundry:____________

Property Taxes:_________________________ Allowances:____________

Electricity:_____________________________ Subscriptions:___________

Heating/Cooling:________________________ Birthdays/Anniver:_________

Water:_______________________________ Weddings/Showers:___________

Garbage Service:________________________ Christmas:________________

Telephone home:________ cell_____________ Postage:______________

Maintaince:____________________________ Other:___________

Other:_____________________________ 13. School/Child Care:____________

4.FOOD ______________________________Tuition:___________

5.TRANSPORTATION:___________________ Day Care:_________

Payments:____________________________ Other:___________

Gas & Oil:__________________________ 14. Investments:__________

Insurance:__________________

Maint./Repair:______________

6. INSURANCE:_________________

Life:___________

Medical:_____________

Other:_____________

7.DEBTS:______________

(excluding auto & house payments)

=====================================TOTAL LIVING EXPENSES:_________

INCOME vs LINVING EXPENSES:

Net Spendable Income:________________

Less TOTAL Expenses:_______________

SURPLUS or DEFICIT:_______________

Step Three: DO NOT STOP!!!!!

The most common temptation is to stop budgeting......Remember that a budget is your plan on how to spend your money...it shoud be reviewed on a regular basis.

PROVERS 24:3-4 "Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts. (LB)

COMMITMENT

Keep a careful record of all spending for the next 30 days to determine you rsurrent situation. After that, plan a budget suited to your income and personal goals. Put the budget into practice!