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Basics of Budgeting
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Budgeting is a foundational tool in exercising financial stewardship. It is creating a plan to spend your money, allowing you to determine in advance whether you will have enough money to do the things you need or would like to do. Budgeting is synonymous with discipline; a principle echoed in biblical teachings on stewardship.
Take a look at the sections below to get better acquainted with the components of a budget, the basics of creating one, and how it is maintained.
- Income: Detail all sources of income, including your salary, side businesses, investments, or any other regular income.
- Expenses: Categorize and track all your expenses. This could range from fixed expenses like rent and utilities to variable expenses like groceries and entertainment.
- Savings: Plan for both short-term and long-term savings. This could be saving up for a vacation, an emergency fund, retirement, or other financial goals.
- Giving: Allocate a portion of your income for tithing, charitable giving, or supporting causes you believe in. Recall the biblical principle of generosity.
- Document Your Income and Expenses: List all your income sources and monthly expenses.
- Allocate Funds: Allocate your funds to different categories: necessities, savings, giving, and discretionary spending.
- Utilize Tools: Use Excel templates and budgeting apps like Mint or YNAB (You Need A Budget) to organize and track your budget.
- Monitor Your Spending: Regularly check your spending to ensure it aligns with your budget.
- Make Adjustments: If necessary, adjust your budget to accommodate changes in your financial situation.
- Review Progress: Periodically review your progress towards your financial goals and adjust your budget to stay on track.
Budgeting is an involved process that requires a disciplined approach. It is an integral part of ensuring financial stewardship. As we transition to the next topic, we'll explore strategies to reduce debt, which often begins with a well-structured budget.