Creating a Budget: Step 2

Now that we have obtained a blank Spending Plan worksheet and identified our spending categories, it is time to start filling it out. Today, we are going to start with income. As previously mentioned and as will be the case as we fill out our Spending Plan worksheet, the guidance to do so comes from the resources of the Good $ense financial ministry.

The first area of our financial lives is - earning. The Pull of the Culture tells us that our self-worth is primarily determined by our position in our professional life and how much we make. This drives us to make more money and deceives us with the lie, "A little more money will solve all our problems."

But God does not value us by our position or how much money we make. None of that matters to Him. The Mind and Heart of God (which is where we want to be with all our financial decisions) counters these cultural myths with the message that our value is measured by who we are -- beloved sons and daughters of God.

Do you think that work is a blessing? Some of you may be quick to respond with an emphatic, "NO!" However, Genesis 1 states that, after creating man and woman in his own image, God blessed them and called them to join him in the ongoing management of His creation. By that act, God established that work is a blessing, not a curse, and that all work has dignity.

We should be "diligent earners" working with commitment, purpose and a grateful attitude. This is hard for some of us because we allow the situations we are in dictate our attitude in a negative way. Colossians 3:23 actually commands us to be diligent: "Work hard and cheerfully at whatever you do." This same verse also calls us to be purposeful. We are to work "as though you were working for the Lord rather than people." Have you ever thought about that? Have you ever considered going into work and telling yourself, "I'm not here to work for my boss, but rather, my Lord and Savior Jesus Christ"? How would that impact your performance? How would that impact your decision making?

We should also be grateful for the job we have. Again, how many of us are truly grateful for our job? Deuteronomy 8:17-18 reminds us that even our ability to earn is a gift from God: "You may say to yourself, 'My power and the strength of my hands have produced this wealth for me.' Remember the Lord your God, for it is he who gives you the ability to produce wealth."

Step 2: Filling out Earning/Income Section on your Spending Plan

Under Salary #1 and Salary #2, you are asked to put down your net take home pay. This is the amount you bring home every week, every two weeks or every month after taxes, insurance and all other deductions have been made. If your paycheck is always the same, that is an easy figure to write down.

However, if you make commissions or your income varies from week to week or month to month, you need to make a conservative estimate of your take home pay during the past year. For example, a $30,000 estimate of after-tax annual income divided by twelve months results in an estimated average monthly income of $2,500. In months when income exceeds $2,500, the excess goes into short term savings to be drawn on in months when income is less than $2,500. Then, at the end of the year, if you happened to have made more than $30,000, you use the excess to help accomplish one of your financial goals that you established at the beginning of the year, such as, paying down any existing debt you may have.

You will note that there is room on the Spending Plan to account for more than one income. This will apply if you have a spouse who is also working. If you are able, the idea is to live off only one income. In other words, the primary income goes to pay for ongoing necessary expenses such as:
1. Giving
2. Savings
3. Housing
4. Food
5. Clothing
6. Transportation
7. Basic household
8. Basic entertainment

The second income should be used for:
1. Additional giving
2. Additional saving
3. Accelerated debt repayment
4. Additional travel and entertainment
5. Other non-essentials

Therefore, if the second income stops for any reason, your basic needs can still be met.

Consider this: What happens to your raises?
All of us have been in the position where we have been blessed with a raise that increases our income. At first, we are so excited to have that extra money. However, after a couple of months, we wonder where it went as our spending now dictates that the raise hasn't provided us with any cushion but rather, it is needed to pay for our everyday expenses. We wonder how we could have made it before the raise!

Make sure you decide AHEAD OF TIME what you are going to do with your raises. Either intentionally apply that to one of your goals or put it in a savings account so it isn't touched. If you are ever going to start making head way on changing your financial situation and accomplish your goals, you have to spend LESS than what you make.

Congratulations! You have completed the first section of your Spending Plan worksheet.

Next time, we will complete the Giving section; which by the way, is the most important of them all!