After 35 years of budgeting, my wife and I can confidently say that God used effective budgeting to help us achieve financial freedom His way. In the first 15 years of our marriage, finances were very tight and budgeting was essential to our progress. Here are some top secrets we have learned:
→ Start where you are now.
- Too many people feel they don’t have enough income to successfully budget. That is never true, and I can tell you countless success stories of people who started budgeting with very little income and saw huge results over the next 5 years.
- When we started budgeting, we were a single income family making less than $30k per year with our first child. We had 3 children before we hit our 6th anniversary. Even though our budget was tight, following it allowed us to live within our means and save between 10%-15% of our income each year.
→ If you are married, create your budget together. One of you can take the lead on updating and maintaining the budget model, but both must commit to supporting it. It never works unless both spouses commit.
→ Simplify your banking before you start.
- One bank (joint accounts if married)
- One credit card (joint, if married)
→ Limit the budget categories. (Core categories are Housing, Grocery, Auto, Clothing, Entertainment, Miscellaneous, Giving, Car Replacement, Vacation, Savings). You can add more if you prefer, once you have your budget working smoothly, but keep it simple at the start.
→ If married, have separate his and hers budget categories for some fun money that you can spend freely without discussing details.
→ Use a banking App to help you track spending by category.
→ Use a spreadsheet to maintain your budget categories and carry over unused balances from month to month.
→ If your savings is less than 10% of your gross income (target is > 15%) then you need to either work to increase income or reduce expenses.
→ Make giving a priority. God blesses our budget when we are obedient and faithful with our giving!
→ Keep your emergency fund and all short term budget category balances liquid in your bank savings account or similar easily accessible low risk account (i.e. - not in stocks).
→ Stay flexible. You will need to fine tune your budget regularly.
→ Until you are debt free (excluding mortgage), use your monthly savings to pay off all consumer and auto loans.
→ Once your vehicle loans are paid off, continue making the same payment into your car replacement budget category so you can buy a good used vehicle for cash and never borrow for a vehicle again!
→ Don’t buy discretionary items not included in your budget assumptions until you have thought about it for at least 30 days (i.e. - avoid impulse spending).
→ Review memberships and subscriptions annually and determine if they are worth keeping.
→ Once consumer debts are paid off, use your savings to pay off your mortgage early and invest for the future.
→ Discuss your budget with your spouse at least monthly and agree on what adjustments may be needed.
→ Review your net worth annually to track progress and use this to help you set net worth improvement goals for the upcoming year.
→ If you have children, start them off around age 7 or 8 with a simple budget with 3 categories: Giving, Saving, and Spending.
Memorize Proverbs 13:11 to help inspire you be patient: “Whoever who gathers money little by little makes it grow!” (NIV)
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