orçamento budget

Money and Family. 5 steps to plan your finances with a budget

Following on the series Money and Family, the 10 Commandments for Your Finance Management, today we’ll see the importance of the household budget. It is the way to the best decisions regarding money. Let’s see how to do this in practice.

Reading time: 5 min
Versão em Português

Budget is a plan or part of a financial plan. Through it the expected values for incomes (inputs) and expenses (outputs) are identified in the near future. In the case of a family, it is always easy to discover these values.

Thus, a simple budget helps a lot in the organization and control of finances. But it is impressive how only few families have a written budget. As a plan, the budget must be written.

Robert Morris says “we plan to fail when we fail to plan.”. That’s a great truth. And note that planning is not enough, it is necessary to do it correctly.

If you only have in your mind a good notion of how much money you need for this month you are on the wrong track. In this case it is necessary that the amount of money your family expects to receive and spend is written and also well monitored.

Discover your budget incomes

First of all, identify how much money you get on average. Let’s talk, for example, on a monthly basis. I know most people do not have the same financial input every month, and this can be a problem. But the solution is simple. You just consider the average financial income of the past 3 months.

That value is important because your finances will never go well if you spend more than you earn. It seems obvious, but in practice this is the only reason people have serious financial problems. So after discovering your financial entry it is possible to move to the second step.

Discover your budget expenses

It is time to estimate your ideal expenses. That was my great doubt. Am I spending an adequate value with housing, transportation, education, etc.? That’s where I paid the most expensive course of my life in a single weekend in Sao Paulo. And it worth it! But I realized that this is simple too.

And I’d like to presente below the ideal values for spending on each household expense. You do not have to stick to those numbers, but they give you a great idea on the ideal values. I believe you might also need to make slight adjustments. But try to focus on those values because balance is the reason for a budget’s success.

These are the numbers ( 50 / 10 / 10 / 10 / 10 / 10 ):

10% >>> Tithes
10% >>> Donation
10% >>> Education
10% >>> Investments
10% >>> Leisure
50% >>> Needs

In needs include all the essential expenses like housing, transportation, food, insurance, phone, clothes and gifts. All this needs to fit into 50% of your budget.

I emphasize that leisure is the necessary part for your family to be rewarded for their work. Here you can include restaurants, parks, shows, etc. Saving an amount for vacations is also interesting. You deserve to have fun together and you can spend money on it.

Investments must include short and long term reserves – we’ll talk more about this soon. Education is actually the best investment and there must be a budget devoted exclusively to this constantly.

Donation is the amount of money you will use to help or honor people and organizations. Giving money makes anyone happier and more prosperous. And the tithes are the first part you give back to God, remembering your position as a good steward. This part is a key to God’s blessing on your finances.

Spend the time you need here before moving on to the next step. If you have managed to combine your spending with your financial income, congratulations! If not, talk to your spouse and decide what expenses need to be cut. You can also ask for the help of someone else. Usually the problem is not needs but desires. So don’t let your emotions guide your choices. Decisions should be made with the head, not with the heart.

Get to the “zero” leftover

It is so important that your budget is realistic and balanced that the third step is to confirm the following equation:

Income – Expenses = Zero

Remember that this third step has 3 numbers: the minuend, the subtract, and the difference. Hmmm… if you don’t like math, just have patience. If that doesn’t add up you will have a bomb about to explode in your hands.

So check out that the leftover is zero. As a good steward, you don’t accept waste. So, just as you should not spend more than you earn, you should also not have leftover money in your budget.

Track all your expenses

The fourth step is the most difficult because it requires discipline. After the written budget, you will need to track your expenses. Each expense, without exception, must be written down. And at that point the best method is making a spreadsheet. If you find out something that is better for you, good! But make sure every expense is recorded.

So, at the end of the month (or period you prefer) you will be able to compare your plan with your reality. Of course in every home there are surprises, unexpected expenses or incomes. Then, from that moment you will really be controlling your finances. The satisfaction of seeing your finances getting adjusted will be wonderful. You will realize that you are on the right path.

Discover opportunities to donate money

I love this part. I believe that all people are happy to donate money. Although many do not like the idea, when they get courage and give, they discover a priceless joy.

Have you donated money or bought a valuable gift for your parents? Or paid for a couple’s honeymoon? What about given a tip out of the ordinary, kind of bigger than the value of your meal? Use envelopes or bank transfers to donate to people you know and especially to people who can never repay you. The Bible says that God loves those who give gladly.

‘You should each give, then, as you have decided, not with regret or out of a sense of duty; for God loves the one who gives gladly. ‘

2 Corinthians 9:7

After the budget ready, make your money work for you

So you can be sure how much you earn and how much you spend, without wasting money. You will really be in control of your money. And you can make the lives of people around you much better. When necessary, seek help. We all need someone to help us at certain times.

Considering this, take the time to plan your budget and start making your money work for the sake of your family.

Prayer: God, thank you for always being good and meeting my needs. Please help me write a budget that is true and allows me to control my money. I know that if I do my part, you will do the rest. I ask this and I give you thanks in the name of Jesus.

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