Five Keys to Developing a Successful Budget

Editor's Note: This article is adapted from materials used in the  No Debt, No Sweat! Christian Money Management Seminar.

There’s no way to overcome financial problems without a budget. Even if we don't always like budgeting (see part II of this series), your budget is the lumberjack that’ll show you how to get out of the forest of debt. It’s also the map that will guide you to future financial success.

There are five things I believe will help any family develop a successful, long-term budget or as I prefer to call it: A Personal Financial Freedom Plan:

1. Teamwork. The most important human relationship in any person’s life is the one you have with your spouse. If you are married, you and your partner are one. This means that, ideally, all the important, life-shaping decisions should be made together. In my opinion, it is a real mistake for one person in a marriage to take "ownership" of the money and budgeting.

Let me clarify. In every relationship, one person usually has more ability and interest in money management than the other. There is certainly nothing wrong with allowing that person to use his or her natural gifts in the marriage. But, whichever person manages the money should remain humble and open with their spouse. And, conversely, the other mate should not ignore his or her responsibility to be a partner by remaining involved and engaged in the budgeting process.

But what about the biblical roles of husband and wife? While I accept the biblical concept of male leadership within the family, I do not believe that the husband is always the best money manager. I bring this issue up because a lot of Christian couples struggle with this. We did.

Before we married, we were both anxious to prepare ourselves. One of the books I read made a big point about how the husband should handle all the money and pay all the bills. Being too young to discern good advice from bad, I told Bonnie that I would be handling the money and paying the bills. Well, it wasn’t long before I realized I’d made a mistake. I was simply too busy to deal with every last penny of our finances. So, I swallowed my pride, and asked Bonnie if she would mind handling the bill-paying at home. Thankfully, she agreed, and she does a better job than I ever could.

2. Learn what your true income is. Very few people really take note of their true income. By "true income," I’m referring to the actual number of dollars that your family brings in each month. These are "net" dollars after withholdings have been made for taxes, Social Security, and so forth. This money is reliable, for-sure income that isn’t dependant on unpredictable overtime, bonuses, or other wishful thinking. The only way to have an accurate, workable budget is to know exactly how many spendable dollars you have available.

3. Do your budget on a monthly basis. I like to encourage people to prepare a new budget every month. As you’ll see in Step 5, this won’t be a matter of reinventing the wheel each month since your budget’s format will already be in place. But by preparing a monthly budget you gain at least two benefits:

a) It forces you to review and rethink your spending habits regularly.

b) It encourages good husband-wife communications.

Many couples find the best time to prepare the next month’s budget plan is during the last three or four days of the present month. This way, the budget is finished before the new month begins, and they have a good idea of what’s just ahead financially.

4. Do your budget in written form!!! This may be the most important, yet the most overlooked, of any of the five steps. Whether it’s a contract, a new law, or the history of a nation — it is never considered definitive until it is written down. Until that point, it is just an idea that is open to revision.

If your family budget is going to have life-changing impact it deserves to be written down. There are at least two benefits to a written budget:

a) Clarity. A written budget can be reviewed and discussed by all parties involved. Everyone can accept, reject, or suggest changes. Open and informed discussion is easy — and no one is able to later say that he or she didn’t understand.

b) Commitment. Once final changes are made and agreed on, it is easier to commit to a budget that is in written form.

5. Prepare your budget in order of priority. Ask this question: "If I don’t have enough money to do everything I want to do right now, where will my first dollars go?" Then, prepare a budget in that order. Typically this priority list stays the same from month to month. Different people will have different priorities. Our family’s hierarchy of priorities places our basic sustenance (food, shelter, clothing), our giving, and our moral and legal commitments to others (debts) at the top of our list. This is a personal matter of soul searching and prayer for every Christian, and it will be different for every family.

Steve Diggs presents the No Debt No Sweat! Christian Money Management Seminarat churches and other venues nationwide. Visit Steve on the Web at  www.stevediggs.com or call 615-834-3063. The author of several books, today Steve serves as a minister for the Antioch Church of Christ in Nashville. For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four children whom they have home schooled. The family lives in Brentwood, Tennessee.

A complete financial compendium, 19 chapters
• What you can do today to get out of debt and kill the Debt Monster
• A,B,C's of handling your money God's way
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• How mutual funds work
• How to stop fighting over money
• What to teach your kids about money
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• How to develop a budget that works -- forever!
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