Most people change their life by their appearance or by their careers or even through a spiritual conversion. All of this is good if there is a vision. A vision for your life creates direction, purpose and mission. Changing your life happens in four distinct areas: personal growth, family, health, and career. If you focus or change your life in these areas, you will see a great change. If you change any of these areas, you will change your financial future. Changing your financial future starts with a vision. To facilitate your personal vision in those four areas, you probably will need to have a financial budget. Good managed finances will certain impact the achievement in those four areas. One survey suggests that over 33% of people do not operate a budget properly.
To take control of your finances and your life, establish a budget. Whether you have a negative, zero sum or positive net worth, begin to use a budget to reign in your finances and to increase your net worth. The process of planning and budgeting is important to your survival. God does not expect us to be in debt nor does He expect us to spend irresponsibly. He expects us to give, save, invest and spend responsibly. Every prudent man dealeth with knowledge: but a fool layeth open his folly (Proverbs 13:16). God wants us to be prudent spenders, not foolish ones. Prudent does not mean frugal; it means to use wisdom. A prudent man deals with the reality of a situation—he has a plan. …Write the vision, and make it plain upon tables, that he may run that readth it (Habakkuk 2:2). When you have a plan or a goal, you run toward it to accomplish the feat. When you have a plan for your budget, you will see how to attack and retake control of your finances.
I have provided a sample of my family’s weekly budget worksheet. My wife and I use this formula to guide our family through the financial planning process. Let’s go through the details of the worksheet. First is income, which is the amount of money brought home after taxes. Always be aware of the amount of income coming into the household. The income can range from a bi-weekly salary to reimbursement of expenses from a prior pay period or it can also cover any increase you received that week.
The next area is expense, which is categorized as debt, living expenses, and savings. I have listed every expense my family incurs. Debts are also a reoccurring expense. A debt is something that you must service; it is owing. If you are in debt, the goal is to pay it and ultimately get out of debt. I have devoted an entire chapter on debt, which will be discussed later. Savings is another area of expense. This is a good expense. Savings can be set aside for college tuition, retirement, an emergency fund or just general funds, etc. However, it is still considered an expense.
The last area on the worksheet is cash surplus/deficit. This is defined as the actual cash (or lack there of) available now.
If you don’t want to use the budget sheet I have included, here are three easy steps to create a personal one for you and your family.
Understand the amount of income you are receiving each month or week. If your income varies because you are self-employed or paid on commission, start with your base pay then put additional increases as a separate category. The base salary will give you a baseline for good management of your income.
Get wise about your spending. Detail every item you spend and itemize those expenses.
Subtract total expenses from total income. This is similar to net worth; however, this budget tells you automatically how much money you have on hand at the moment.
Once you get the spreadsheet running to meet your needs, electronic or otherwise, you should plan your budget for an entire year. Planned spending helps you control unnecessary purchases. This is usually beneficial when you have major purchases and activities. My family has used the planned budgeting for all sorts of things such as kids’ expenses for school, vacations, payment of future bills, and our giving. These planned expenses will give you a quick snapshot of your finances at any point in time. Planned expenses will help you to become disciplined in your spending.
Having a budget is the best weapon to attack finances. Proverbs 27:23 states, “Be thou diligent to know the state of thy flocks, and look well to thy herds.” The budget enables you to address your expenses in a systematic way each week, month or year. If you stick to it, you will see the changes in your net worth.
You have the ability to change your circumstances; it starts now with your budget.