August 16, 2012 by Will Ray
Budget – the dreaded B word. Few things have caused as many knock-down, drag-out wars like budget discussions. It seems like we fight about budgets everywhere – in our homes, our workplaces and nonprofit organizations, and in government. Someone is always griping about their budget somewhere.
While the last few may be out of my scope of experience, Nancy and I just hit the four-year mark of our marriage, so I’ve been living on a personal budget and helping other people create theirs for close to five years. Budgeting is similar to running or aerobic exercise for me. It’s not “fun,” but it’s rewarding in the long-term and a measure of progress towards your ultimate goal.
The best simple definition I’ve heard of a budget is from John Maxwell, who said, “A budget is telling your money where to go, instead of wondering where it went.” You would be in an extremely rare (like white-snow-leopard rare) minority of people if you’ve never looked in your wallet or checking account and wondered, Where’d it all go? It happens to all of us at some time or another.
I’m not sure if y’all know this, but I plan to be rich one day. I have two main sources to help guide my way there: the Bible (my guide for life in general) and rich people. (Three sources if you include Dave Ramsey.) I think if you want to be what someone else is, you should do the things that they do. By “rich people” I mean people with wealth – not people with high incomes that live the high life with no real wealth. So lets take a look at what these sources say.
I’ll share one Old Testament and one New Testament Scripture that relate to budgeting. Proverbs 27:23-24 says, “Know the state of your flocks, and put your heart into caring for your herds, for riches don’t last forever, and the crown might not be passed to the next generation.”
Flocks and herds were a common measure of wealth in Biblical times, so we can understand that the writer of this verse was encouraging the reader to look carefully over his wealth, to pay attention, and to know what’s going on. Budgeting forces us to do that, to know what’s coming in and determine what’s going out.
Jesus said in Luke 14:28-29,
“Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish.’”
When you sit down with your spouse (or by yourself) at the table before the month begins and you hammer out what this month is going to look like financially, you are “estimating the cost.” You’re figuring what it will take to live out this month. If you visualize your financial life as the tower, each month is like a part of a new floor on that tower. It builds on the past and takes you towards the completion of your ultimate financial goal.
So do rich people really make a budget as well? Well I can’t speak for every rich person, but studies point to an emphatic yes. Thomas J. Stanley wrote an incredible book called The Millionaire Next Door, which was compiled after years of intensive research about the habits and choices of the wealthy.
He found that the typical millionaire spends 8.4 hours per month – about 100 hours per year – devoted to planning, budgeting, and preparing for their financial lives. This includes budgeting (monthly and yearly), investment planning, and other financial functions. How much time each month do you spend? I know I don’t spend that much.
So, if you’ve fallen off the bandwagon for budgeting, or need to get on the bandwagon for the first time, let’s do this! Start tracking your expenses for this month, so that you can have a baseline from which to budget for next month. And stay tuned! I’ll write about how exactly to do a budget, some great resources to help you budget, and the benefits of budgeting in the near future.
Question: What’s your biggest frustration when trying to do a budget?