Budgeting for Beginners

5 02 2011

The Bible has over 800 verses on financial management.

 On budgeting and planning ahead:
“The plans of the diligent lead surely to plenty,
but those of everyone who is hasty, surely to poverty.”
Proverbs 21:5

 “Go to the ant, O sluggard, observe her ways and be wise,
which, having no chief, officer or ruler,
prepares her food in the summer and gathers her provision in the harvest.”
Proverbs 6:6–8 

 “For which of you, intending to build a tower,
does not sit down first and count the cost,
whether he has enough to finish it—
lest, after he has laid the foundation, and is not able to finish,
all who see it begin to mock him,
saying ‘This man began to build and was not able to finish’?”
Luke 14:28–30

 On “keeping up with the Jones”:
“No one can serve two masters.
Either he will hate the one and love the other,
or he will be devoted to the one and despise the other.
You cannot serve both God and Money.”
Matthew 6:24

This is the second post in a short series on financial management.  The first post was on Training Your Children to be Financially Responsible and how to set up a chore chart/allowance system.  My next post after this will be on giving/tithing followed by one on steps to eliminating debt.

My husband and I have met with several couples over the years who wanted to tame their debt-driven lives.  Money came in.  Money went out.  In many cases, no one knew where, exactly, it went.  Yet they often wondered why there was so little, if any, left at the end of the month.

Each family has unique financial needs.  Our system is not a one-size-fits-all approach.  Generally speaking, if you are new to budgeting, this should help.

Step 1:  For one month, regardless of how often you are paid (weekly, bi-weekly, or monthly), keep track of your receipts.  At the end of the month, total your expenses for each of the following categories:

  • Charitable giving—more on this topic next week
  • Mortgage/Rent (HOA dues, homeowners/renter’s insurance)
  • Food (groceries, eating out)
  • Utilities and Water (electric, natural gas)
  • Auto (insurance, gas, maintenance, loan)
  • Telecommunications (phone, Internet, cable)
  • Medical (medical/life insurance, prescriptions, co-pays)
  • Clothing
  • Child care
  • Entertainment (movies, travel, concerts)
  • Education (books, supplies, tuition, field trips)
  • Debt reduction (credit cards, student loans)—more on this topic in a couple of weeks
  • Saving (money market, CDs, college fund)
  • Investment (stocks, IRAs, retirement)
  • Miscellaneous

 There are several systems to accomplish this.

  • Disciplined Approach:  Set up a spreadsheet or purchase budgeting software such as Quicken or Money, and keep track digitally, recording each expenditure as you go.
  • Half-Serious Approach:  Create an envelope system and stick receipts into the proper envelope as you get them.
  • Lazy Boy Approach:  Throw all your receipts in a box, and worry about it at the end of the month.

Of course, I recommend the disciplined approach.  I have actually been using the same budget spreadsheet since 1994 when I first set it up as a senior in college.  It’s a little out-dated compared to the software and online tools available today, but it works. 

Step 2 (done in conjunction with step 1):  Communicate frequently with your spouse about your goals, needs, and wants.


  • Getting out debt (credit card, student loans, auto loans, mortgage)
  • Saving for future purchases and expenses (travel, remodeling, new car)
  • Saving for education expenses
  • Saving for retirement
  • Increase charitable giving

Needs                                                   Wants                                  
Food                                                     Eating out
A place to live                                    Remodeling/upgrading on things that still work
Heat, electricity                                 High speed Internet, Netflix, Cable
Automobile                                         Any vehicle you can’t pay for in cash
Cell Phone                                          Smart phones with all the apps
Clothing                                              Anything at a mall
Insurance (home, life, medical)     Student loans
Giving                                                  Movies, concerts, iTunes, vacations

Please don’t misinterpret me.  I’m not saying anything in the “Wants” category is wrong or bad.  (Well, anything causing you to borrow on credit is never a good idea.)  Many people simply confuse needs and wants.  Most adults need a cell phone.  Most adults do not need a smart phone with a gazillion apps and unlimited texting.  Humans have survived millennia without those tools.  Chances are, you and your family can survive a few months or years without the latest and greatest tech gear until you are able to maintain a debt-free lifestyle.

Step 3 (done in conjunction with steps 1 and 2):  Enlist the help of a financially disciplined friend to get you started on the actual process of setting up a working monthly budget.  Better yet, if you are a married couple, get together with another married couple.  Whomever you meet with, choose wisely.  You wouldn’t seek marriage counseling from someone in the midst of divorce.  So don’t seek help from friends who are in the same financial mess as you. 

Step 4 (in conjunction with steps 1-3):  With your spouse and trusted friend/advisor, choose your categories for monthly expenses and set realistic amounts.

  • Start with maintaining the necessities such as a mortgage/rent, utilities, food, giving, auto, child care, and medical expenses.
  • If you do not have an emergency fund of at least $1000 in a liquid account somewhere, that, too, needs to be a priority.
  • After necessities (not wants!) are taken care of, emphasis should be placed on debt reduction.  
  • All other categories—entertainment, telecommunications, clothing—are secondary.
  • Savings and investments should be suspended until you are out of debt.             

I cannot stress the importance of working with another person or married couple to guide you through this process.  Accountability, encouragement and conviction from others who are not directly impacted by the state of your finances can make a significant difference in the success (or failure) of meeting your financial goals.

I would love your comments.  What works for you?  What areas are challenging?  If you need help getting started, don’t hesitate to contact me.




One response

14 02 2011
Giving to God (first, last, or not at all?) « To Kick a Pigeon and Other Musings

[…] discipline.  You may want to read through Training Your Children to be Financially Disciplined and Budgeting for Beginners before proceeding on this post about […]

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