So a man will leave his father and mother and be united with his wife, and the two will become one body. (NCV)I. In previous lessons I mentioned establishing a budget, a written plan. As Luke 14:28-30 says, If you want to build a tower, you first sit down and decide how much it will cost, to see if you have enough money to finish the job. If you don't, you might lay the foundation, but you would not be able to finish. Then all all who would see it would make fun of you, saying, “This person began to build but was not able to finish.
The written plan allocates a certain amount to each category. The idea is a simple one. One that is very similar to the old “envelope system.” The envelope system came about in a time when many employers paid earnings in cash. To control spending, families established an effective system by dividing the available money into the various budget categories. Keeping those funds in individual envelopes. As a need came about, money was withdrawn from the appropriate envelope. The system when used properly controlled spending. When an envelope was empty, that was the end of spending in that category. Unless you and your spouse made an immediate conscious decision to short another budget to cover overspending in the prior category. I like the envelope system. I like the concept so much, that I went one step further. I set aside separate savings accounts for some of these categories. Like the envelope system it is a simple idea that is a great way to build your emergency fund in each of these categories.
A budget does require some self-discipline. Separate personal cash into categories identical to each of your spending categories. Using envelopes, but avoid spending gas money for entertainment, grocery money for eating out, or any other combination there of. As I eluded to before, when all the money has been spent from a category, you can't spend anymore in that category. Period! No two ways about it. When the money is gone, your spending is done. Also, do not get cash back at the cash register. Only write checks or use debit cards for the exact amount of purchase only. If you need to get cash, use your financial institutions ATM or write a separate check and note it as “personal cash.”
A word of caution, don't make record-keeping more complicated then it needs to be. This system requires no more then about 30-minutes a week to maintain. Only the first time should it take more time then that and that is only because you haven't been doing a budget beforehand. Once you have an idea of how much you are going to budget it will get much simpler. If you happen to be one of those families (or individuals) paid every two weeks, you will have two extra paychecks every year. If this is you, then you have the best savings plan without knowing it. I highly recommend putting these “extra” paychecks into your savings. The same would be true of any tax refunds, bonuses and gifts. This fund would be perfect for covering your non-monthly expenses such as vacations, clothing, car repairs, etc not to mention your emergency fund.
If your income fluctuates it can be difficult to find a way to allocate your spending. If this is you, what do you do? You need to estimate what your lowest average income for one year will be and figure your monthly budget based on that “average” income per month.
Some might question if building such a big savings is really Biblical. These people might even refer to 1 Timothy 6:10 which says,
The love of money causes all kinds of trouble. Some people want money so much that they have given up their faith and caused themselves a lot of pain. (NIV)In of itself money is not evil since money is amoral. The late Christian Financial author and expert Larry Burkett said, “The only difference in saving and hoarding is attitude.” That is the key to understanding this verse. The people in the verse loved money so much they left the faith to gain it. Why are you wanting to build wealth? Are you doing so because you want to become a giver and help spread God's message? Or are you doing so out of greed? If you are building wealth because of greed, perhaps you should reevaluate your relationship with God.
Building wealth is wise if you are doing so according to scripture. You should expect the unexpected. The furnace will break. The roof will need to be replaced. There is no such thing as unexpected expenses, only unplanned expenses. So plan for the unexpected.
Genesis 41:35-36 says,
Give them the power to collect the grain during those good years and to store it in your cities. It can be stored until it is needed during the seven years when there won't be enough grain in Egypt. This will keep the country from being destroyed because of the lack of food. (CEV)This is why you should have an emergency fund equal to not less then 3-6 months of your income. This means if you have an income of $30,000 then you should save $7,500-$15,000. I however, suggest that you save 6-12 months of your income. Given the same $30,000 example my recommendation would be to establish an emergency fund of not less then $15,000-$30,000. I know this won't be easy but it will help you during any times of lengthy unemployment not to mention when those so called “unexpected” expenses arise. Do NOT (under any circumstance) touch this fund for purchases. It is only for emergencies. So that you are prepared for those times.
II. In the last lesson we discussed mortgages and the fact that the mortgage should be no more then 25% of your income. Some may have thought that “there is no way on my income.” They in a sense are correct. As you can see by the chart, if you earn $50,000 or more the 25% rule applies. However, if you only earn $15,000 then that percentage increases to 35%. That is because some of those expenses that fall into this category are going to be the same whether you earn $15,000, $50,000 or $100,000. Such expenses as utilities assuming all other factors are the same. For example a $40 water bill is a bigger expense for the family earning $15,000 then it is for the family earning $50,000. In this example the water bill would be 2.666% of the budget for the family earning $15,000. Compared to 0.95% for the family earning $50,000. My suggested guidelines for each category can be seen on the chart. If you have school and/or childcare expenses then the recommended percentages must be deducted from other categories. One category remains the same no matter how much you earn (or what the circumstances). That is the tithe. The 10% that is in this category is the minimum. If you feel led in your heart to give more then that is perfectly acceptable. As 2 Corinthians 9:7 says,
Each of you must make up your own mind about how much to give. But don't feel sorry that you must give and don't feel that you are forced to give. God loves people who love to give. (CEV)III. If you are being hassled by creditors then here is what you must do. First, the most important thing to remember is that your needs and that of your family comes before the creditors.
1 Timothy 5:8 says, People who don't take care of their relatives, and especially their own families, have given up their faith. They are worse than someone who doesn't have faith in the Lord. (CEV)Let us be clear here. That is needs not wants. You need to get rid of the mindset of any wants being needs. This doesn't mean you ignore the creditors either. Doing so is not Biblical. Psalms 37:21 says,
The wicked borrow and don't pay back, but those who do right give freely to others. (NCV)Ecclesiastes 5:4-5 says,
If you make a promise to God, don't be slow to keep it. God is not happy with fools, so give God what you promised. It is better not to promise anything than to promise something and not do it. (NCV)You promised to pay back what you borrowed, so you need to pay it back. If your financial situation changed since you signed the loan papers then communicate that to your creditors. You must always communicate with them. Creditors are much more receptive to people are communicating with them. If they feel like you are trying to avoid them they will be much meaner when they contact you. Finally, stop bouncing checks. The money spent on those fees need to be going to payoff debt and ultimately to building your savings.
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