GOD’S MONEY and YOU: I Have a Budget. How do I make it work?
My name is Loema Titanji and I have been a member of TrinityLife for a little over 5 years. As part of the Trinity family, I’ve had the pleasure of serving on both the choir and the worship team – ministries which have both blessed me greatly. Some of my favorite activities include singing, cooking, baking, reading, working out, spending time with family and friends and road trips with my fiancé. When I’m not doing one of these things, I work full-time for a local biotech company as Controller, running the accounting department. I’m an alumna of University of Baltimore where I earned both an undergraduate Accounting degree and an MBA in Finance. I am also a CPA, licensed in the state of Maryland. I’ve always had an affinity for numbers and logical thinking, so accounting is a great fit for me. I count myself blessed to have a profession that I lov
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I Have a Budget. How do I make it work?
Have you decided to start using a budget but find that you are dreading the process? Have you created a budget and had difficulty sticking to it?
Remember this: a budget is just a plan to guide your spending and keep your finances on the rails. While most people are aware of the importance of budgeting and derive some measure of comfort in knowing exactly where their money is going, actually sticking to one is a challenge for most of us. In this article, I would like to provide some more insight into the importance of budgeting as well as share some helpful tips.
So, why budget in the first place? Firstly, in order to understand your cash flow. Simply defined, cash flow is the difference between your income and expenses for a particular period. Unless you are excellent with numbers, it is difficult to have a good handle on your cash flow without budgeting. Regardless of how much or how little you make, if you spend more than you earn, you go broke. When you know what your cash flow is, it becomes more difficult to overspend.
Best case scenario: your income exceeds your expenses and you have positive cash flow. A great goal to have is always to have positive cash flow. With positive cash flow, you are better placed to put more money towards savings, giving, paying down debt, investing or saving for a vacation.
If expenses exceed income, you have negative cash flow; which is a much less desirable scenario and could lead to all sorts of problems. One of the biggest reasons we get into debt is that we spend more than we earn. Negative cash flow is something to be avoided at all costs. Even worse is having negative cash flow and being unaware of it. Once you start budgeting and can identify the problems in your cash flow, you can correct them and get on the right path.
When you lay out your spending for the month in advance, you will know exactly what your cash flow is and how much room you have for the occasional splurge. Budgeting does not necessarily mean that you have to suddenly live a Spartan life devoid of all joy. In light of that, here are a few tips that can help with managing your budget and personal finances:
Plan for big expenditures: It is easy to plan for those expenses that are fixed and the same amount each month. However, certain expenses like new tires for your car or planned house repairs may require a big payment every few months. Adjust your spending in prior periods to put away funds to meet the upcoming obligation. This way, you don’t wreck your cash flow and dip into your savings or borrow when the time comes to pay. Remember that you only have one big pot of money to work with in any given period - if one item increases, then another has to decrease to make room for it.
Implement a cooling off period before impulse purchases: Nothing derails a budget like unplanned spending or impulse buys. You’re out running errands and decide to pop into your favorite shoe store just to browse (shoes are my weakness, so I know!). Well, you come across the most divine pair of heels that you just have to have. Here’s what I suggest you do. Go home and think about it. Once you remove yourself from the store and get a chance to think rationally, sanity often prevails. Building your resolve to resist impulsive spending is difficult when you start but it gets easier with each try. Your finances will thank you each time.
Use cash only: If you find that you lose track of your spending when you pay electronically, it may help to use cash only. There is something about paying with physical cash that makes us more mindful of the amount that we are spending. For some people, it helps to withdraw a fixed amount of cash for the week’s needs and limit themselves to spending just that amount. It is important to note that this method is most helpful if you find that you lose track of your spending when you pay with debit/credit cards.
Monitor and update your budget regularly: Life as we know it can be quite unpredictable. Therefore, monitor and update your budget regularly to make sure that it is still relevant and applicable. As life goes on, you will find that you need to add some new expense categories, remove others and/or change estimated amounts. If you update your budget regularly, it continues to be a useful tool.
Proverbs 27: 23 says, “Be diligent to know the state of your flocks, and attend to your herds”. We may no longer have actual flocks of livestock to take care of but the payment we receive for our work or the amount that we get from our other source of income is the “herd” to which we have to attend. May God grant us wisdom and guidance as we work to be better custodians of the wealth with which we have been blessed.
The tips above are by no means exhaustive. Please see the link below for several useful articles covering various aspects of budgeting.
