Proverbs 3:9 states, “Honor the Lord with your wealth and with the first fruits of all your produce.” All people are given resources and money from our great Creator, and we are entrusted to be wise stewards of those resources. Throughout my time as a NEXUS financial coach, I have learned the phrase “God Owns It All.” This means that God is ultimately in control of our resources and it is all His. The moment we begin to entrust our resources to God is the moment we will not have to worry. By doing this, we can learn to be content with what we already have. If we continue to be wise stewards with the resources God has entrusted us, He may choose to give us more, although that is not a guarantee. In the Bible we see the “Parable of the Bags of Gold.” The servant who hid the one bag of gold was punished by taking away his only bag. This is applicable to individuals today because if we are selfish with the resources given to us by God and do not take proper care of them, they may be taken away. It all comes back to God owns it all. One way to help manage God’s resources well is by creating a budget to help guide your actions and decisions. I’ll walk through a few key steps below.
Budget is a commonly used term in daily life; however, many people do not know the definition of it. A budget is an estimate of income and expenses over a set period of time. A budget is subject to change and must be updated from time-to-time. During my time in the military, I have constantly been reminded “If you fail to plan then plan to fail.” A budget is a plan that helps an individual see money coming in and where money is going. From that, a person can evaluate if they need to decrease their spending habits, increase their income, continue what they are doing, or maybe even increase their spending…say by giving it away.
Coming Up with a List
Any effective budget will have a detailed list of all income and expenses. The more a person knows about their spending patterns as well as where income is coming from, the better spending habits they can create. Income sources may include investment income, income earned from a job, income given to a person from a family member or friend, etc. Expenses may include utilities (electricity, gas, water, internet, etc.), health care costs (health and dental insurance, prescriptions, co-pays, and the patient portion of medical bills), insurance (car, home, life, etc.), and educational expenses. And don’t forget to add lifestyle expenses, savings, and giving into your budget!
A budget is versatile in that there are several methods to track it. Tracking spending is critical in staying within a spending plan. First, people may decide to use the receipt method. These individuals hold onto receipts and sort them into categories based on expenses. Then, they are inputted into a spreadsheet of some kind or on paper. Second, the checkbook method is used. This involves using checks for most purchases, recording transactions immediately, and keeping an up-to-date balance. Third, a commonly used technique is using technology, whether that is an app or computer software such as Microsoft Excel. With the increasing use of technology, people have begun tracking expenses and income on an easily organized spreadsheet that produces visuals.
In the 21st century, we have seen a boom in the use of technology, specifically in phone apps. Some useful apps for smartphones for budgeting include Mint, PocketExpense, and EveryDollar. Mint is an app that allows a user to link their credit and debit card to the account and automatically tracks purchases. A user can set spending limits in different expense categories and then will be told if they go under or over that limit. PocketExpense and EveryDollar are apps on iPhone that allows a user to set a budget and track all expenses. A useful feature of PocketExpense is a user can take a picture of all receipts and store them on the app for easy reference. Once a transaction clears an account, the user can mark “Cleared account,” to stay organized. A useful feature of EveryDollar is that you can create a “fund” which always you to carry the remaining unused balance of a category over for the next month.
Keep in mind that every person’s situation is different! There are various different ways to create a budget and track it. Find what works for you and stick to it! And remember to always update the budget because life changes constantly. There are always new expenses, new sources of income, and changes in lifestyle.