Since you’re thinking it, I’ll just say it—budgeting stinks. It’s boring. It makes you feel poor. It leaves you wondering why everyone seems to be able to afford eating out every night and wearing great clothes, yet you end up with a massive credit card bill when you do the same.
Nevertheless, budgeting is a skill to be mastered, especially for those who want to use their income to follow their Lord. And it’s all very simple. So pull up a spreadsheet or your pen and paper, and let’s face it together.
First, look at your recent paychecks and figure out your average salary per month. Most people get about the same amount per paycheck, but you may have a more irregular income. Try to get a realistic sum.
I get paid on a biweekly basis, so I budget per paycheck instead of per month. My rent is due on the first of the month, so I save half of it each paycheck. The best option was to open a second savings account and automatically put that money into the account—half my rent, half my electric bill, half the cable bill, etc. My ATM card doesn’t access this account, so when I have to write the rent check, the money is there.
Now that you have your income nailed down, figure out the amount you will give back to God. In the Old Testament, the Israelites were instructed to bring the first fruits of their income to the temple to offer back to God (Exodus 23, Leviticus 23, Proverbs 3:9 and more). Some people argue about whether or not we’re required to give 10 percent, but I think they’re missing the point. God delights in our willing, generous offerings to Him. We are all blessed far beyond many people in the world, and to think that we can’t afford to give back to God shows irresponsibility, at the very least.
In the past, I gave my tithe to my home church. Since my move, I’ve felt as if God was asking me to give the money to missionaries and relief efforts in the world. For me, that means supporting a close friend who is working for a missions organization, giving to World Relief and sponsoring a child through Compassion International. Ask God how He wants you to use this money that is set aside for His work.
Now you’ve got the other 90 percent or so of your income to consider. These are the main categories of expenses for most young people:
– Housing (rent or mortgage)
– Utilities (heat/hot water/electricity)
– Student loans
– Transportation (car/mass transit)
– Internet & cable
– Cell phone
– Entertainment/eating out
Clearly, your first priority is fixed living expenses—housing and utilities. Put those into your spreadsheet and, if you’re like me, figure out how you will set aside half the money per paycheck and not touch it.
Next, handle your debt. Student loans are a reality for most people, and they have to get paid off. If you have credit card debt, seriously consider how you will pay it off. Debt will never go away on its own, so keep making those payments.
Your grocery bill is far more flexible: $25 to $50 is safe to allow per week, depending on the cost of living in your area and excluding eating out. Clothing also is far more flexible. You can create an ample, sophisticated wardrobe if you focus on buying things that match each other and never buy anything that you don’t absolutely love wearing. Currently, I budget about half of what I spend on groceries or clothing each month, but you may be able to get by on less.
Look at transportation costs. Many employers have programs that will allow you to deduct commuter expenses from your income before taxes. Research it, and if it’s available, sign up! If you drive a car, consider the cost of your car, insurance, parking, repairs and gas into your expense. If you take mass transit, look into monthly passes and calculate whether they are actually saving you money.
Internet and cable television are a negotiable cost. My roommate and I have elected not to have cable television since we don’t spend a lot of time at home. We also do not have a land telephone line, but we both carry cell phones. This is far more convenient, and we’re not paying for a phone we’d never use. Check to see if your employer offers a discount on cell phone plans.
After all these high-priority expenses are on your spreadsheet, take a look at the amount you have left. If it’s negative, you have a problem. Look back through your budget and see what you can cut out.
If you have money left over, put some in an “entertainment and eating out” fund. I group restaurants with entertainment, because most of the time, we eat out to spend time with friends. Unfortunately, this cost can skyrocket, especially if you live in a big city. One great option is to suggest going out for coffee instead of dinner, since you know that you can cap your expense at $5 or so. Save money by inviting people over for meals. Another way to cut costs is to get a library card, and use it. Don’t neglect this budget category—whether or not you allow for it, you’ll spend it. To put it in perspective, think of your entertainment budget as a way of using your income to nurture relationships with others.
Are you lucky enough to have cash left over? Save it. There’s always an unexpected expense, a last-minute road trip or time between jobs. Savings is prudent and encouraged by God: “Go to the ant … consider its ways and be wise … it gathers its food at harvest” (Proverbs 6:6-8, TNIV). Even trying to save $20 a month will help you get used to saving money, and the older you are, the more important this becomes.
The last trick, of course, is to stick to your budget. If you cheat on a small part, the whole budget will fall apart. If you have trouble with using your credit card irresponsibly, then cut up the card and stick to cash. Do whatever is necessary to meet your budget each month. You may hit some rough patches or have to revise your expectations, but don’t give up.
There are two options to aid in tracking your expenditures. You can save receipts and write them down. This sounds good, but it can be hard to remember. Alternately, withdraw the money in cash from your bank account and put it in envelopes—and when the money is gone, so is that item until you get paid again. Once you adjust to the tracking process, it won’t feel as harsh.
Budgeting is not glamorous, and it’s not the most fun way to spend an evening, but it is a critical way to show God that you are grateful for what He’s given you and that you want to make the most of it.