Creating a family budget is bigger than numbers on accounting software. It has a direct correlation to your values and what you choose to prioritize as a family. When creating your family budget, you should look at some big questions like:
- What are your family’s goals?
- How do you talk to your kids about money?
- If you’re married, how does your budget empower a healthy marriage?
- Where does God fit into your budget?
If you take your time, take a long-term view, and wrestle through the big questions, your family budget can not only improve your finances, but it can empower your spiritual, personal, and financial goals. This can be the difference between budgeting for necessity versus budgeting for legacy.
Here’s a few helpful places to start as you create your family budget.
Make it Spiritual
Yes, you landed on a family budgeting article by a church, and yes we are starting by talking about God and your money. If you don’t believe in God, or if you do but are tempted to roll your eyes as you realize the church would talk about money … I get it.
Seriously, I do, and I’ve been there. If you’re interested, you can take a few minutes to hear a bit about my story.
We love talking about God, and we love talking about money and possessions, but when you mix the two, that’s when many of us leave the room. Here’s the truth, the reason churches talk about money is simple: Jesus talked about money. Not just a little bit, Jesus talked about money and possessions all the time.
- 16 of the 38 parables (illustration stories Jesus told) were concerned with how to handle money and possessions.
- In the Gospels, 1 out of 10 verses (288 in all) deal directly with the subject of money.
- The Bible offers 500 verses on prayer, less than 500 verses on faith, but more than 2,000 verses on money and possessions.
If you examine the 2,000 verses about money and possessions in the Bible, what we can learn is that our financial contentment isn’t a condition of our income or expenses, our spreadsheets, or our family of origin … it’s a condition of our heart. Jesus knew this, which is why he spent so much time talking about it. (Just look at Matthew 6:19-24)
So my first tip in making a family budget is to make it spiritual. Ask God how you should budget for your family. Spend time in prayer and solitude (if you’re married do this together) and contemplate some tough questions.
- What things does God want you to do with the resources He’s given you?
- Are there things you currently spend money on that don’t honor God?
- How does God want you to use your finances to change His world?
If you’re not a believer or new to this God thing and want to skip this first step, can I just ask … why not try it? Why not just take some time in a quiet place and with an open and prayerful disposition consider your financial situation and goals.
Guide for Leaving a Legacy
Make it Personal
After you have taken the time to make your family budget spiritual, next, take the time to make it personal. If you’re married, I would suggest that you go through this step with your spouse. Here’s an easy and fun exercise to help you discern your family goals.
- By yourself, find a distraction free place, get a pen and paper, and set a 10-minute timer. When the timer starts, simply start writing out all the things you would love to see your family do in the next 10 years. These should focus on who your family is becoming more than what your family is accomplishing. Write as fast as you can and list as many things that come to mind as possible.
- When the timer goes off, spend some time reviewing what you wrote down and then arrange them into a list of 10 goals. Some may get tweaked at this time, others removed from the list, but this is where you take your fast paced brain dump and turn it into a list.
- If you’re married, take your individual lists and read them off one by one to each other. Is there anything in common? Or something on your spouse’s list that you really like? Highlight those things and then combine them into 1 list of 10 family goals for the next 10 years.
- If you have kids and want to involve them as well, I would suggest doing it at the end. Share with them your list and find ways for them to contribute to these family goals. Or leave a goal for each kid to add into the list at the end. Just remember, this is a family budget exercise and you are in charge of the family budget, not the kids. We should teach, train, and empower the next generation to lead their own families some day.
Making it personal is important because it likely shows up in your family budget. When my wife and I did this exercise years ago, it unexpectedly created a goal for us to buy a camper and see all 50 states with our kids.
That now shows up in our budget every month as we save and find creative ways to make this goal fit into our lifestyle. It also gives us a filter to say “no” to good things that we would have said “yes” to otherwise.
Make it Practical
The reason I suggest making your budget spiritual and personal, first, is because it moves what I call the “big rocks.” These are the heaviest things that require the most time, thought, and energy because they are about who you are becoming, not where you are at.
Making it practical is all about adding in who your family is becoming with the reality of your family’s current financial situation. You will be combining these “big rocks” with your current financial information to create a family budget. Here’s where I recommend starting to make a family budget.
Step 1: Find your system
A simple google search for “budgeting tool” or “budgeting calculator” will net hundreds of results from complicated software, to simple spreadsheets. I say go with whatever you like and feel most comfortable with. Just please, make sure it’s written down, tracked, and reviewed often.
I recommend making a yearly budget (I do this on January 1st every year) that estimates your income and expenses for each month.
Step 2: Add in your income
Add in your anticipated regular income. If you have a steady job(s), add in your monthly income from that. If your work is more freelance, take the average of the previous 12 months of work as your monthly income. I do not recommend including expected raises, bonuses, or gifts in this area.
For me, I like to budget conservatively and those can make our family goals happen sooner if they do happen, but I don’t count on them.
Step 3: Subtract your monthly giving and savings
This will require your family budget to have a giving and savings strategy. For us, we have learned through our generosity journey that giving back to God through His local church is life giving and brings abundant joy.
Everyone’s story is different in “how” God does this, but I have seen it time and time again. Those that give faithfully to God’s starting point of the tithe experience a contentment and joy in their lives beyond understanding. The Bible tells us that giving 10% back (of what was His in the first place) is where we should start.
I also recommend saving 10% of your income, part in short-term savings (rainy-day fund) and part in long-term savings (retirement account). This is over and beyond any work retirement plan that you are a part of. This all adds up to a minimum of 20% of your income to be subtracted from the top.
Step 4: Subtract your monthly expenses
This includes your housing, utilities, transportation, childcare, loan repayments, food (but not restaurants), insurances, etc. Take a long, hard look at each of these and ask yourself which ones are necessities and is there anywhere to save?
It’s best to create categories for these expenses such as secured debts (mortgage, auto loan), unsecured debts (credit cards, student loans, medical bills), utilities, housing, and insurance. Make sure as well that you put in your “big rocks” expenses from your family goals in this section.
The reason for the “make it personal” exercise was to capture any of those expenses to add to this section because they are that important to do.
Step 5: What’s left?
After you’ve subtracted everything from your income, whatever is left can go towards your “wants.” For my family, this includes travel, investing, blessing others, gifts, house improvements, and meals out. The more intentional and focused we get about step 4, the more fun we get to have in step 5 over the long term.
Your family budget roadmap
Creating a family budget is a roadmap to your destination. Developing a plan and taking the wisest paths will give your family the best chance at arriving at your goals. Will there be bumps and detours along the way? You betcha. But the journey can be fun with the right preparation, a steady diligence, and a long-view outlook.
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