Family Budgets That Work
September 2004
Materials adapted by Jim Lamar for the
Christian Women’s Job Corps from
1 of
the Tyndale House Pocket Guide™
the same name written by Larry Burkett
Financial Problems: How they start
The root of the problem is
ATTITUDE
 greed – wanting the best
 ignorance – we didn’t know
 covetousness – keeping up with the Joneses
 indulgence – indulging your desires
 impatience – getting rich quick
2
What the Bible Says
About it all . . .
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Greed – I Timothy 6:10
Ignorance – II Timothy 2:15; Romans 1:13
Covetousness – Exodus 20:17
Indulgence – Luke 9:23
Impatience – Matthew 6:20
3
How to Avoid Financial Traps
 First and foremost - a relationship with Jesus
Christ is needed to overcome the World’s
attitudes toward money
 Then you can apply sound financial
principles that will keep you out of trouble
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Never risk money you cannot afford to lose
Avoid things you don’t understand
Demand information to evaluate opportunities
Seek good, noninvolved Christian counsel
Set time to pray and seek God’s direction
4
The Basics of Family Budgets
What is a budget?
 A budget is a financial plan
 to balance spending with income
 for controlling spending
 to manage your money
 Planning how you will use the finances God
blesses you with is a wise choice.
 Failure to plan ahead often causes problems.
 Over 70% of divorces site financial problems
as a major contributor to the failure of the
marriage.
5
Two Common Tendencies
 Establish a plan but never follow it.
 Establish an unrealistic plan that allows
nothing for a balanced family life.
Both of these lead to more
frustration and discouragement.
Your plans must be both realistic and applied.
6
Getting Started – An Expense Diary
 For 30 to 60 days
 Record every dime spent
 Categorize the expenditures
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








Housing
Food
Automobiles
Insurance
Debts
Entertainment
Clothing
Medical
Savings
Miscellaneous
7
Monthly Income & Expenses
Income Per Month
Salary
Interest
Dividends
Notes
Rents
Other
Total Gross Income
$3,000
Less
1 Tithe
2 Taxes
Net Spendable Income (Gross - Tithe & Tax)
3 Housing
4 Food
5 Automobiles
6 Insurance
7 Debts
8 Entertainment & Recreation
9 Clothing
10 Savings
11 Medical
12 Miscellaneous
Total Expenses
Net Spendable Income - Total Expenses
What’s your
income?
$3,000
$300
$450
$2,250
$600
$300
$300
$400
$300
$100
$100
$100
$200
$2,400
-$150
Pages 28 – 29
in your book
What’s your
outgo?
8
Once you know how
much you are
spending, you can
check to see how this
spending pattern
compares to the
guidelines on pages
32-33.
Where’s your
money going?
9
Percentage Guide for Family (of 4) Income
Gross Income
1 Tithe
2 Taxes
$
15,000 $ 25,000 $ 35,000 $ 45,000 $ 55,000
10%
10%
10%
10%
10%
2%
15.5%
19%
21.5%
23.5%
Net Spendable
$ 13,200 $ 18,625 $ 24,850 $ 30,825 $ 36,575
3 Housing
38%
38%
34%
30%
27%
4 Food
15%
12%
12%
12%
11%
5 Automobiles
15%
15%
12%
12%
12%
6 Insurance
5%
5%
5%
5%
5%
7 Debts
5%
5%
5%
5%
5%
8 Entertainment & Recreation
4%
5%
6%
6%
7%
9 Clothing
4%
5%
5%
5%
6%
10 Savings
5%
5%
5%
5%
5%
11 Medical
5%
5%
4%
4%
4%
12 Miscellaneous
4%
5%
5%
7%
7%
13 School / Child Care
10%
8%
6%
5%
5%
14 Investments
8%
9%
13%
15 Unallocated Surplus Income
Pages 32 – 33 in your book
10
Percentage Guide
(Using Gross Income of $25,000)
Housing – 38% maybe a little more or
less – if it gets above 40% it is very difficult
to balance your budget
Food – 12% try making daily menus to
watch what you buy
Autos – 15% - not a lot of money, treat a
car as a Point A to Point B contrivance –
not a luxury item
Debts – 5% MAXIMUM – best to stay out
of debt
11
Percentage Guide
(Using Gross Income of $25,000)
 Insurance – 5% Life and health, doesn’t count
home or auto
 Entertainment & Recreation – 5% watch it
carefully and enjoy it while keeping it under
control (never go into debt for E&R)
 Clothing – 5% don’t be a slave to latest fashion
fads
12
Percentage Guide
(Using Gross Income of $25,000)
 Medical & Dental – 5% even more if you don’t
have a group insurance program
 Miscellaneous – 5% for all those things you don’t
know about until they happen
 Savings – 5% very important that you save
something for a rainy day, because it will rain
eventually and you don’t want to increase your debt
just to buy an umbrella.
13
Starting a New Budget
After you know what your current level of
spending is . . .
And you know what the guidelines say
your spending should be based on your
SPENDING
income . . .
LIMIT
10
You can develop a budget that handles
the areas of overspending.
14
Budget Analysis
Per Year: _____________________
Net Spendable Income per Month: ________________________
Per Month: ____________________
Monthly Payment Category
Existing Budget
Monthly Guideline Budget
Difference (+ / - )
New Monthly Budget
1 Tithe
2 Taxes
Net Spendable
$
3 Housing
4 Food
5 Automobiles
6 Insurance
7 Debts
8 Entertainment & Recreation
9 Clothing
10 Savings
11 Medical
12 Miscellaneous
13 School / Child Care
14 Investments
Total of items 3 - 14
$
15 Unallocated Surplus Income $
$
$
$
$
$
$
$
$
$
Pages 44 – 45 in your book
15
 It’s okay if your new budget doesn’t exactly
match the guidelines.
 The key is to make sure your new budget does
not exceed your Net Spendable Income.
 This is called “balancing your budget.”
Remember:
If your outgo exceeds
your income - your upkeep
will become your downfall!
16
Key Points About Budgets
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Use a written plan
Provide for God’s work
Limit your credit
Consider purchases carefully – Is it necessary? Is it the
best buy? Is it an impulse buy?
Save some
Set your own goals
Get out of debt
Avoid indulgences
Seek counsel
Stick to your plan
Avoid ATM’s
Avoid automatic overdraft protection The Budget Tamer
Balance your check book to the penny EVERY month
Use duplicate copy checkbook
Have a designated bookkeeper
17
Eight Steps to Budgets that Work
Don’t forget hidden debts
for example:
Quarterly payments for insurance
Annual real estate taxes
Annual property taxes
Set aside money every month to
cover the bills BEFORE they come.
18
Eight Steps to Budgets that Work
Control impulse spending
Use a delay purchase plan – 30 days
Check & record 2 other prices
Allow only 1 at a time
NEVER use credit cards for these
See chart on page 53 of the book
19
Eight Steps to Budgets that Work
Plan Gift Giving
Keep an event calendar – save up
Make crafts – give personal time
Draw names
Do not use credit
Help children earn money for gifts
20
Eight Steps to Budgets that Work
Watch Miscellaneous Spending
Follow the budget
Record where you money goes
Stay within your budget
21
Eight Steps to Budgets that Work
Divide Responsibilities
in the Home
Husband and wife must work together
The budget must be fair to everybody
A good budget brings peace – not conflict
22
Eight Steps to Budgets that Work
Develop Good Records
It is impossible to manage your
money without keeping good financial
records.
It is impossible to have a home
budget without balancing your
checkbook.
23
Eight Steps to Budgets that Work
Get Out of Debt
- (and stay out)
Determine where you stand (page 62)
Contact your creditors
Reduce the debts
Stick to your priorities
Beware of borrowing more
Cut up the credit cards
24
Eight Steps to Budgets that Work
Set Family Goals
1.
2.
3.
4.
5.
Trust
Savings
Family Share Time
Husband / Wife Time
Ministry to other people
25
Long Range Plans
Life Insurance
Cash Value, also called whole life, universal
life, permanent insurance, etc. – relatively
expensive initially, may be too much for
younger families or those already in financial
trouble to afford
Term Insurance – cheaper to afford for younger
families, can be set up as decreasing term
(consistent cost but decreasing payout) or as
level term (increasing cost but constant payout)
The key to how much insurance you need is balance. Providing for a
sudden loss is appropriate but be careful not to over insure.
26
Long Range Plans
Health Insurance
If a group plan is available this is almost always
the best bet
If a group plan is not available then a major
medical plan is probably best. If you must use
this option then you will need to make sure you
have a savings equal to the cost of the
deductible which you are responsible for.
27
Long Range Plans
Disability Insurance
As with health insurance, a group plan is
desirable if available
Balance is needed
Be careful not to spend all your money on
insurance
28
Long Range Plans
Retirement
Don’t rob your family of joy today while chasing
an elusive retirement Nirvana later
Save what makes sense for your family
Annuities
Endowment policies
Mutual funds
Don’t forget to enjoy the sunshine while saving for that rainy day!
29
Cost Saving Tips
Food
Don’t take children grocery shopping
Never shop when hungry
Shop food sales & advertised specials
Use a written list
Avoid processed and sugar coated cereals
Use “house” brands
Use coupons – ONLY if you were going to buy
the item anyway
Buy in bulk if possible, but check prices to make
sure you are really getting a good deal
30
Cost Saving Tips
Housing
Look for an older house you can fix up
Look in areas that are not growing
Location – location – location
Avoid paying for unnecessary frills
Buy for your current (or immediately visible)
need
31
Cost Saving Tips
 Automobiles
Save first – buy later
If you have to borrow, take the money with you and buy
with cash
Borrow against your savings if you can
Do you really need a new car or just want one?
Do you really need a fancy sports car or would a much
cheaper sedan work?
32
Cost Saving Tips
Entertainment & Recreation
Relax at home
Picnic or cook out instead of eat out
Vacation during the off season
Fly the “red eye”
Be creative – entertainment doesn’t have to be
expensive
33
Cost Saving Tips
Clothing
Budget your teenager’s clothing allowance and
let them have a say in the selection
Can you sew?
Select outfits that can be mixed and matched
Shop discount outlets and re-sale shops
Select washable fabrics
Beware the fashion fads
34
Cost Saving Tips
Medical & Dental
Get an annual checkup
Practice preventive medicine
Teach your kids proper dental care
Use generic drugs – same benefit – lower cost
35
Beware of Advertisers Gimmicks
Would you deprive your family?
you (your family) deserve the very best . . .
Sex appeal
wear our clothes and you’ll be sexy, desirable . . .
Super sale – prices rolled back!
did they raise the price before they rolled it back?
Strategic layout
check the top shelf and bottom shelf out
36
Thank you for your kind attention.
May God richly bless you as you work
towards getting control of your finances.
Any questions or comments?
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