Archives For January 2012

Budgeting Is Not Complicated

Corey —  January 25, 2012 — 3 Comments

Does the thought of budgeting make you shudder? Do you think you need complex formulas or advanced software to create a good budget? Don’t worry! There’s nothing mysterious about writing down your income and expenses to see where your money is going. Once you understand the three simple parts of a budget, you won’t have any problem creating your own.

Income

The first section of a good budget should be your income. Include all sources of income that you can use for giving, saving, and spending. It helps to have three columns for your information: one to give it a name, another for the average monthly amount, and a third for the yearly amount. You’ll use this same format for your expenses as well. If your income is irregular, figure out what it usually is for a year and then divide by 12 to get an average monthly amount. List all sources of income you can think of. Anything you leave out is likely to be spent without a good purpose.

Expenses

This is where you’ll list everything you spend your money on. The best budgets track giving, savings, and taxes in addition to the typical household expenses. You’ll also want to make sure every dollar is used for some purpose and there is nothing left (positive or negative) when you subtract your expenses from your income.

It’s easiest to start with your fixed expenses – the ones that don’t change (at all or by very much) from month to month. This usually includes rent/mortgage payments, insurance payments, some utilities, and debt payments among other things. You’ll usually be able to figure these out with little effort just by checking your bills or bank account for the past month or so.

Figuring out your taxes can take a little more effort, but it’s easy if you use a tax software program and good calculator. I like to use Dinkytown.net’s U.S. 1040 Tax Calculator for federal taxes. State and local taxes are usually straightforward and based off your federal AGI (adjusted gross income). Social Security and Medicare taxes are generally 7.65% of your income (or 15.3% if you’re self-employed) until you get over $110,100 (in 2012). After that you’ll pay only the 1.45% for Medicare taxes (or 2.9% if you’re self-employed). Recent legislation has reduced the employee’s portion of these taxes by 2.0% to 5.65% (or 13.3% if you’re self-employed), but this is currently a temporary cut through February 2012.

When you’ve determined your savings goals, it’s a good idea to place those in your budget as well. You’ll want to do the same with your giving – whatever you have decided in your heart to give, put it in your budget.

I left the variable expenses for last because they typically require the most work. These are the things like groceries, gasoline, some utilities, personal expenses, entertainment expenses, gifts, and other items that can vary from month to month. You might have to track your spending on these things for a couple months to get a good feel for how much you typically spend. Whenever you spend money on something in these categories, write it down or keep the receipt. Then figure out how much you spend on average each month for each item. These are also the items you’ll really need to watch when you’re trying to stick to your budget.

Finally, don’t forget to include irregular items like car repairs, some insurance premiums, taxes and fees, and medical expenses. Plan on setting aside a certain amount every month for these items even if you don’t need the money that month. This will help you make sure you have money available for those expenses and get you away from living paycheck to paycheck. Also, don’t forget those pre-tax deductions your employer is taking out of your paychecks. It’s good to know where every dollar of your money is going so you can be sure you’re managing it well.

What’s Left Over (…or Still Needed)

If you’ve given every dollar a purpose and are spending less than you earn, you shouldn’t have anything left over when you subtract your expenses from your income. If you find you have a lot left over, give it away or save it for a specific goal. If you need more to make ends meet, look at how you can increase your income or decrease your expenses. Don’t use credit cards or loans as a fix for your budget problems!

Get Started Today!

If you don’t have a budget already, right now is a great time to start putting one together. You’re not going to create a perfect budget today, but it’ll get better over time. You don’t need fancy software or websites to make your budget. Use pencil and paper or a simple Excel spreadsheet. I use a Google Docs spreadsheet myself.

You’ll find some detractors of budgets in the personal finance world. They say this because so many people find it difficult to stick to a budget. Now that’s a different issue from creating a budget, and I’ll address it in a future post. I’ll be the first to admit that sticking to a budget is not easy.

But just going through the process of writing down all of your income and all of your expenses can be a major eye-opener. Don’t worry so much about sticking to the budget at this point. I’ll give you some tips on that later. What you do need to realize is that this process is valuable – even if you fail to stick to the budget!

Whatever methods you decide to use, make your budget your own. Don’t worry about whether you’re doing it the “right way” – just do it! Once you have control over your spending and a thorough knowledge of where your money is going, you’ll be able to manage all aspects of your personal finances much better. Feel free to share your budgeting tips in the comments!

On the About page, I state that Provident Planning is dedicated to exploring God’s Provident Plan for the personal finances of Christians. But what does that mean? What is God’s Provident Plan? It’s God’s clear Biblical message that through contentment in Christ, diligent work, and good stewardship Christians can prosper so we can give generously in the name of Christ. By following the Provident Plan, Christians can glorify God through their finances.

This message is what I discovered as I have studied personal finance in the Bible. As a Christian and someone who studied financial planning in college, I wanted to know how I could give sound, Biblical advice, but I found so many conflicting opinions that I felt I should find out for myself. After searching for all the Bible verses I could find about personal finance, I began to see God’s wonderful plan for a Christian’s personal finances.

It’s not a plan focused on making Christians rich, or how we can retire early, or the things we can do to make us feel good about ourselves or our money. No – just like every other part of God’s plans for Christians it brings glory to His name and strengthens the witness of Christ in the world. If all Christians followed God’s Provident Plan for their finances, we would radically change the Church and the world. And while it involves how we handle our money – it’s all dependent and focused on the transformation that occurs when we fully give ourselves to Christ and realize the power of His death, resurrection, and the life we have in Him. Let’s take a closer look at each part of God’s Provident Plan.

Contentment in Christ

Once we have decided to follow Jesus, He becomes everything to us. We are in a continual struggle against Satan to keep other things (especially money) from taking the place of Christ. When we find contentment in Christ and Christ alone, the importance of money in our lives diminishes and pales to the value we place on Jesus. We learn the secret to being happy in all situations – whether we’re full or starving, rich or poor, employed or jobless, single or married – nothing in this life matters at all when compared to the glorious gift of Jesus and the fact that no one and no circumstance can take that away from us. We see everything in light of eternity, and we find that nothing on earth is of more value than our faith in Christ. We come to fully believe and trust that God cares for us and will provide everything we need.

Once we have this habit of always finding our contentment in Christ, the Spirit will teach us to place much less importance on material things. We will no longer be focused solely on our own needs and wants – an early retirement, a bigger house, a nicer car, and so on. Instead, we’ll be consumed with a desire to focus on the needs of others – to feed the hungry, clothe the naked, shelter the homeless, and show God’s love to the world through our faith and our deeds. We’ll spend less and less on ourselves as we give more and more to others.

You can read more about contentment in the Bible here or by downloading a free copy of Contentment Is Wealth.

Diligent Work

Where contentment helps us to spend less on ourselves, understanding God’s call to work diligently helps us earn more money. As the gap between our spending and our income grows, we are left with more to manage wisely, prosper, and then give generously to the needs of others. The attitude and spirit we have as we approach our work can also glorify and honor God’s name. His witness can be seen in how we deal with people in our businesses and our motivation in our work.

You can read more about hard work in the Bible here.

Good Stewardship

While the Bible says little about financial planning as we know it today, God has shown us the value of using wisdom and prudence in managing our affairs. There are verses that speak to planning ahead, saving, avoiding debt, and other practical matters we will encounter in our personal finances. By wisely managing the blessings God provides (that gap between our income and our spending), we can be good stewards and have even more to give in His name.

Prosperity

As we follow God’s teaching on contentment, diligent work, and good stewardship, He will bless and prosper us. When we think about prosperity our focus needs to be on having God’s view of prosperity and its purpose. Prosperity can come in many other ways than just material blessings, and God wants us to use our prosperity to honor Him – not just make ourselves more comfortable. When God prospers us, it’s so we can further glorify Him as we give more and more to those in need.

Giving

Giving is the purpose of God’s Provident Plan. All other aspects of His Provident Plan are a means to this end. Through our contentment in Christ, we spend less so we have more to give. Our hard work provides more income so we will have more to give. Through good stewardship we avoid wasting what God has given us so we will have more to give. Our prosperity comes from God not so we can make ourselves richer but so we can give even more. God’s Provident Plan is completely focused on others – on how we can glorify God by laying down our lives and our wants for the needs of others. We live simply so others can simply live.

At the same time, we’ll realize that God’s Provident Plan gives much to us as well. Peace beyond understanding, joy beyond description, and happiness beyond compare are all ours as we trust ourselves to God’s care. When we first begin following God’s Provident Plan, we hardly realize the potential benefits it will have for our own lives because we were still mired in the views of the world. But as we follow Jesus and see that He is trustworthy and faithful, we become aware of the indestructible treasures in heaven that He has taught us to accumulate.

When we fully grasp God’s Provident Plan, we’ll see that giving in the New Covenant has nothing to do with tithing or percentages. It’s not about requirements, rules, obligations, or blessings or curses. Our giving is to be completely motivated by love – joyous and cheerful as we realize that our sacrifice is not loss but gain in Christ. We give freely, generously, and sacrificially not out of compulsion but out of our joy and contentment in Christ. Such giving is a sign of our total commitment to Christ and His teaching, and it’s a very powerful witness to the world.

Following God’s Provident Plan

Following God’s Provident Plan for our personal finances has huge implications for our lives. It goes against every motive the world gives us for why we should manage our finances well. Instead of focusing on what’s in it for us, we look at what’s in it for God and others. But we know that the rewards God has for us far outweigh the deceitful and false promises of worldly riches. If you feel God calling you to follow His Provident Plan for your finances, please browse around the website and sign up for free updates through email or your favorite feed reader!

The quote I posted on Monday was from this video. It’s about 10 minutes long if you’re interested.

Question Mark by Mario Bellucci on FlickrThe tagline for Provident Planning used to be “Personal Finance from a Christian Perspective”. And though that was clear and got the gist of what I wanted to focus on here, it still missed something major. What makes Provident Planning different from any other Christian personal finance site?

So a while back I decided to change the tagline to the current one – “Personal Finance for Life in the Kingdom”. It’s a little more obscure, but I think it comes closer to answering that question.

My hope is to focus on personal finance in a way that starts with the understanding that we, as followers of Jesus, have our primary life in the Kingdom of God. It’s eternal life, but it’s an eternal life that we’re already living now. It doesn’t just start at death.

So anything we do has to start from that perspective – including personal finance. It’s far too easy for me to take regular, good personal finance advice and try to add a Christian spin to it. That’s generally what happens in the Christian finance realm. And while I think we mean well, we can miss the broader picture of what Jesus has called us to.

By putting the focus on personal finance as it works in our life in the Kingdom, my desire is to start from a thoroughly Kingdom-focused perspective and understand what personal finance is meant to look like there. I feel that I’ve been sidetracked in the past by starting with a “worldly” personal finance focus and then trying to understand how the Kingdom of God works in that context. Wrong approach.

So “Personal Finance for Life in the Kingdom” is supposed to mean that what you’ll find here at Provident Planning is centered around the Kingdom life.

  • It’s about trying to look at all aspects of personal finance in light of eternity.
  • It’s about trying to understand how what we’re doing now fits into the economy of God rather than our economy.
  • And it’s about trying to keep our heart focused on our treasures in heaven while staying free from the worries of this life, the deceitfulness of wealth, and the desires for other things.

Now a tagline is just a tagline. It doesn’t mean much unless I stick to it. So I’m asking you all to help me keep this focus. It isn’t easy when we’re being swamped by a culture that drowns us with false ideas of “the good life” all the time. I need your help in keeping that Kingdom perspective throughout everything I write or do.

So leave a comment in a post if you think I missed something. Or just send me an email through my contact page. Walk alongside me as I walk alongside you, and let’s help each other grab hold of the prize.

There are thousands and thousands of people out there living lives of quiet, screaming desperation who work long, hard hours, at jobs they hate, to enable them to buy things they don’t need to impress people they don’t like.

– Nigel Marsh

Buying Things to Impress People

Adapted from Hello, my name is anonymous by Quinn Dombrowski on FlickrWhen I was trying to decide on a name for my business and this blog, I wanted to find something that kept God connected to our personal finances. For too long I felt like I had segregated my work from my faith. I helped people with their finances but God was hardly ever a part of the conversation.

When it came time to start my own business, I wanted to pick a name that would continually remind me that God has a very active role in our finances. I wanted a name that would point to God first and us second. I wanted a name that would integrate faith and financial planning. So I chose “Provident Planning”.

Provident

Provident points to God’s foreseeing care, guidance, protection, and provision for us. It reminds me that no matter what happens – even if all around me starts to crumble – I am still in the hands of a loving and faithful God who wants what is best for me and will provide it.

Provident emphasizes the peace and security we can have when we place all of our hope and faith in God. It carries the idea that God already knows what we need and when we need it, and He is ready and willing to supply it to us as we seek His Kingdom and His righteousness first.

The whole image of God’s providence is woven throughout Scripture in the many ways He provides for His people. He is mindful in making provision for those in need. He creates food from nothing. He sends birds and angels to minister to us. He even blesses us with rain and sunshine when we don’t deserve it at all.

And the greatest example of His foresight in providing for us is found in His Son. He made a way for us to be reconciled to Him long before we even realized our need.

Planning

Planning brings in the other side of the equation – our part. All throughout Scripture, we see a call to work diligently and use our resources prudently. Many times God’s provision required action on the part of those He was helping. They had to go do something or take a course of action that required their own effort while trusting God for the result.

Planning is not the same as worrying. In planning, we do our best to look ahead, think it out, and prepare for what is most likely. In worrying, we simply torment ourselves with anxieties and fears of the very worst. Worrying is where you’ll find a lack of trust in God.

Planning doesn’t necessitate distrusting God. The best planning happens when we do the best we can, trust the outcome to God, and rest in the assurance that this world is a perfectly safe place to be while we’re living in God’s Kingdom.

Provident Planning

I struggled for quite a while in coming up with a name, but when I put provident and planning together it just felt right. Provident Planning – it’s all about trusting in the good, beautiful, and faithful God who wants the very best for us while doing our part to use the resources He’s given us in the best ways we can.

I don’t pretend like I always remember those truths but that’s my goal. I want to live in the reality of God’s Kingdom and help others do the same – all while prudently using and caring for what He has given us.

I invite you to come along. Come and take hold of that which is truly life!

Space Shuttle Discovery STS-133 by NASA Goddard Photo and Video on FlickrAfter a long hiatus, I’ve decided to relaunch the blog. I’ve done some sporadic posting over the last year mainly because of increasing demands on my time. Things have been busy but I’m starting to find a better rhythm now. I feel like this is a good time to begin writing here at Provident Planning again.

My posting schedule is going to be much more relaxed. I’m only planning on roughly one post per week at this point because I have some other significant writing obligations coming up. (Details to come soon…) But I might publish one or two additional, shorter posts if inspiration strikes and time allows.

The posts are going to be a mix of new content and revisions of old content. I feel like I’ve been growing a good bit spiritually over the last year, and I want to go back and tackle some of the topics I’ve written on before with a slightly different approach and some (hopefully) better wording. I may remove some content altogether, but most of it will probably just be rewritten a bit. I know this will be fruitful for me, and I hope it will be for you all as well.

If you’ve visited the site lately, you’ll also notice I’ve redesigned the look. I’d be really interested in what you all think. Just let me know in the comments below.

Finally, thank you for all the support you all have continued to give me during this past year. Even though I haven’t been writing much I still get comments and emails from you all that stir my desire to continue writing. I’m looking forward to getting the conversations going again and talking with you all more. God’s richest blessings to all of you!