1 family budgets that work materials adapted by jim lamar for the christian women’s job corps from...

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Family Budgets That Work

Materials adapted by Jim Lamar for the Christian Women’s Job Corps from the Tyndale House Pocket Guide™ of

the same name written by Larry BurkettSeptember 2004

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Financial Problems: How they start

The root of the problem isATTITUDE

greed – wanting the best ignorance – we didn’t know covetousness – keeping up with the Joneses indulgence – indulging your desires impatience – getting rich quick

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What the Bible Says About it all . . .

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

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How to Avoid Financial TrapsFirst 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 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

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The Basics of Family BudgetsWhat 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.

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Two Common TendenciesEstablish 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.

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Getting Started – An Expense Diary For 30 to 60 days Record every dime spent Categorize the expenditures

Housing Food Automobiles Insurance Debts Entertainment Clothing Medical Savings Miscellaneous

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Income Per MonthSalaryInterestDividendsNotesRentsOther

Total Gross Income

Less1 Tithe2 Taxes

Net Spendable Income (Gross - Tithe & Tax)3 Housing4 Food5 Automobiles6 Insurance7 Debts8 Entertainment & Recreation9 Clothing

10 Savings11 Medical12 Miscellaneous

Total Expenses

Net Spendable Income - Total Expenses

Monthly Income & Expenses

What’s your income?

What’s your outgo?

Pages 28 – 29 in your book

$3,000

$3,000

$300

$450

$2,250$600$300

$300

$300$400

$100

$100$200

$100

$2,400

-$150

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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?

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Gross Income 15,000$ 25,000$ 35,000$ 45,000$ 55,000$

1 Tithe 10% 10% 10% 10% 10%2 Taxes 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

Percentage Guide for Family (of 4) Income


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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

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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

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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.

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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 income . . .

You can develop a budget that handles the areas of overspending.

SPENDINGLIMIT

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Existing Budget Monthly Guideline Budget Difference (+ / - ) New Monthly Budget

1 Tithe2 Taxes

Net Spendable $ $ $ $3 Housing4 Food5 Automobiles6 Insurance7 Debts8 Entertainment & Recreation9 Clothing

10 Savings11 Medical12 Miscellaneous13 School / Child Care14 Investments

Total of items 3 - 14 $ $ $ $15 Unallocated Surplus Income $ $ $ $

Budget Analysis

Monthly Payment Category

Per Year: _____________________ Net Spendable Income per Month: ________________________

Per Month: ____________________


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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!

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Key Points About Budgets1. Use a written plan2. Provide for God’s work3. Limit your credit4. Consider purchases carefully – Is it necessary? Is it the

best buy? Is it an impulse buy?5. Save some6. Set your own goals7. Get out of debt8. Avoid indulgences9. Seek counsel10. Stick to your plan11. Avoid ATM’s12. Avoid automatic overdraft protection13. Balance your check book to the penny EVERY month14. Use duplicate copy checkbook 15. Have a designated bookkeeper

The Budget Tamer

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Eight Steps to Budgets that Work

Don’t forget hidden debts

for example:

Quarterly payments for insuranceAnnual real estate taxesAnnual property taxes

Set aside money every month to cover the bills BEFORE they come.

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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

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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

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Watch Miscellaneous Spending

Follow the budget

Record where you money goes

Stay within your budget

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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

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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.

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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

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Set Family Goals

1. Trust

2. Savings

3. Family Share Time

4. Husband / Wife Time

5. Ministry to other people

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Long Range Plans

Life InsuranceCash 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.

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Long Range Plans

Health InsuranceIf a group plan is available this is almost always

the best betIf 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.

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Long Range Plans

Disability InsuranceAs with health insurance, a group plan is

desirable if availableBalance is neededBe careful not to spend all your money on

insurance

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Long Range Plans

RetirementDon’t rob your family of joy today while chasing

an elusive retirement Nirvana laterSave what makes sense for your family

AnnuitiesEndowment policiesMutual funds

Don’t forget to enjoy the sunshine while saving for that rainy day!

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Cost Saving Tips

FoodDon’t take children grocery shoppingNever shop when hungryShop food sales & advertised specialsUse a written listAvoid processed and sugar coated cerealsUse “house” brandsUse coupons – ONLY if you were going to buy

the item anywayBuy in bulk if possible, but check prices to

make sure you are really getting a good deal

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Cost Saving Tips

HousingLook for an older house you can fix upLook in areas that are not growingLocation – location – locationAvoid paying for unnecessary frillsBuy for your current (or immediately visible)

need

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Cost Saving Tips

AutomobilesSave first – buy later If you have to borrow, take the money with you and buy

with cashBorrow against your savings if you canDo 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?

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Cost Saving TipsEntertainment & Recreation

Relax at homePicnic or cook out instead of eat outVacation during the off seasonFly the “red eye”Be creative – entertainment doesn’t have to be

expensive

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Cost Saving Tips

ClothingBudget your teenager’s clothing allowance and

let them have a say in the selectionCan you sew?Select outfits that can be mixed and matchedShop discount outlets and re-sale shopsSelect washable fabricsBeware the fashion fads

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Cost Saving Tips

Medical & DentalGet an annual checkupPractice preventive medicineTeach your kids proper dental careUse generic drugs – same benefit – lower cost

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Beware of Advertisers Gimmicks

Would you deprive your family?you (your family) deserve the very best . . .

Sex appealwear our clothes and you’ll be sexy, desirable . . .

Super sale – prices rolled back!did they raise the price before they rolled it back?

Strategic layoutcheck the top shelf and bottom shelf out

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Thank you for your kind attention.

May God richly bless you as you work towards getting control of your finances.

Any questions or comments?

1 family budgets that work materials adapted by jim lamar for the christian women’s job corps from...

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