Battling the Monthly Budget

Do you remember learning about the Battle of the Little Bighorn in history class (commonly known as "Custer's Last Stand"), a battle in which Lakota-Northern Cheyenne tribes annihilated George Armstrong Custer and all his men?

Of course, the Cheyenne tribes had the superior warriors that day. But several contributing factors led to Custer's demise: a poor military strategy and communication skills, for starters. Historians even suggest Custer put a little too much stock in his own military might, while underestimating his opponent.

Every month many families wage war of a different sort. There are no rifles and arrows involved, but much like Lt. Col. Custer's last stand, they are woefully unprepared for battle.

You see, when your family operates without a financial strategy, when you don't communicate to each other about money management or when you don't trust that God will provide Sunday through Saturday, you inevitably set the stage for a financial variation of Custer's infamous defeat.

Consider this:

• Only 1 in 5 people use a monthly budget. ¹
• Families carry 2.1 trillion in debt, up from 351.9 billion in the late 1970s. ²
• About 50 percent the families surveyed spend $2,500 to $5,000 a month on debt payments. ³
• Savings are at an all-time low, according to the U.S. Bureau of Labor Analysis. We tuck away only 1.2 percent of our income. ⁴

Now let's assume for a moment that your family has a realistic budget and a sound financial strategy. You've cut out the morning latte and weekly Amazon.com purchases, and you are among the 22 percent of Americans who claims they waste no money

If this sounds like your household, a change in tactics might be in order.

Perhaps it's time to reevaluate spending habits for necessities like housing, food, transportation and insurance. Even small savings can add up over a year.

Another option is to examine your attitude. Are you overconfident like Lt. Col. Custer or have you made God the centerpiece of your financial decisions? Are your budget battles all-consuming, or are you embracing Christ's instructions in Matthew 6:25: "Therefore, I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes?"

Maybe you've never developed a solid financial strategy. If so, sticking to a monthly budget is a good start, but it's only the beginning. Wherever you place yourself on the money management scale, the following advice from Crown Financial Ministries may relieve some of the stress and help prepare you for financial battle.

Budget Busters, Part 1

If your family struggles with making ends meet, these budget busters may be the culprit. Here's how your family can start living in the black again.

Budget busters are the large potential problem areas that can destroy a budget. Failure to control even one of these problem areas can result in financial disaster. Below we have given suggestions on how to identify potential troublesome areas before they become budget busting problems.

• Housing (38 percent of your monthly budget)
• Typically this is one of the largest budget problem areas. Many families buy or rent a house they cannot afford. Housing decisions should be based on need and financial ability, not on internal or external pressure.

• Food (12 percent of your monthly budget)
• Many families buy too much food. Others buy too little. The reduction of a family's food bill requires quantity and quality planning.

• Transportation (purchase and maintenance, 15 percent of your monthly budget)
• Often consumers are unwise when it comes both to purchasing and maintaining automobiles. Many families buy cars they cannot afford and trade them in long before their usefulness has expired.

  Other than salespeople who need new cars regularly, most Americans trade cars because they want to rather than need to. In addition, most Americans pay premium prices for repairs and general maintenance on their cars, which many times can be avoided.

• Debts (5 percent of Net Spendable Income)
• Although it would be great if family budgets restricted themselves to only 5 percent debt (credit cards, bank loans including home equity loans, and installment credit), the unfortunate norm for the typical American family far exceeds this amount.

• Insurance (5 percent of Net Spendable Income assuming an employer provides medical insurance)
• Few families understand how much and what kind of insurance is needed. Insurance should be used as a supplementary provision for the family, not for protection or for profit.

  Insurance is not designed for saving money or for retirement. So, select insurance based on God's plan for your life, not on what someone else says you need for your life.

• Recreation/Entertainment (5 percent of Net Spendable Income)
• Although Americans are a recreation-oriented society, those who are in debt should not use their creditors' money to entertain themselves or their families. The normal tendency is to escape problems, if only for a short while—even if the problems then become more acute.

  Although families need a certain amount of recreation and fun in order to maintain a healthy family atmosphere, they also must resist the urge to indulge excessively and control recreation and entertainment expenses.

• Clothing (5 percent of Net Spendable Income)
• Many families in debt sacrifice this area in their budget because of excesses in other areas. And yet, with prudent planning and buying, families can be clothed neatly without great expense.

• Medical and dental (5 percent of Net Spendable Income)
• Families need to anticipate these expenses in their budgets and set aside funds regularly to cover the expenses. Do not sacrifice family health due to lack of planning, but at the same time do not use doctors and dentists excessively. Prevention is much cheaper than treatment or correction.

• Savings (5 percent of Net Spendable Income)It is important that families establish some savings in a budget. Otherwise, the use of credit becomes a lifelong necessity and debt, a way of life. A savings plan will allow for the purchase of items with cash rather than credit, irrespective of the store.

Once you've identified these areas of your budget, how can you adjust problem areas that could become "budget busters?" Read Part 2 and find out how.

Budget Busters, Part 2

Keep monthly expenses like housing, food and transportation from breaking the bank each month.

In Part 1 of "Budget Busters," we identified sections in our budget that keep us living in the red. Now that we know why we run a deficit each month, one question remains.

How can we keep our costs from breaking the bank each month? Here are some ideas.

Housing

1. Purchase a home only if total housing payments (mortgage, taxes, insurance, utilities, phone, and maintenance) do not exceed 38 percent of Net Spendable Income.
2. Do not finance a second mortgage for a down payment and do not finance closing costs.
3. If trading, make sure it is a need and not simply a desire.

Food

1. Plan a weekly family menu and stick to it.
2. When shopping always use a written grocery list and do not deviate from it, if possible.
3. Avoid shopping when hungry or in a hurry.
4. Avoid expensive prepared and frozen foods.
5. Purchase sundry items, household cleaning products, and paper products at discount retail stores or retail warehouses.
6. Shop advertised specials and use manufacturer's coupons.
7. Try generic or store brand products.
8. If at all possible, avoid shopping with small children.

Transportation

1. Automobile expenses (monthly payment, repairs and maintenance, gas and oil, tags and taxes, and insurance) should not exceed 15 percent of Net Spendable Income.
2. Evaluate the reason for trading. Is it a need or simply a desire?
3. Can a present car be repaired for less than six monthly payments on a new car?
4. Pay cash for a new car if possible. If not, make sure the current car is paid off before purchasing a new one.
5. Buy a quality used car rather than a new one.
6. Avoid car leases.
7. Perform routine maintenance and minor repairs yourself.
8. Purchase supplies at wholesale distributors.
9. Use the cheapest gasoline recommended by the owner' manual.
10. Consider dropping collision insurance if the car is four years old or older.

Debts

1. Destroy any credit card that you cannot pay in full each month.
2. Establish a payment schedule that pays all creditors regularly.
3. Buy with cash and sacrifice wants and desires until debts are current.

Medical and dental

1. Teach children to eat the right foods and clean their teeth properly.
2. Take care of the physical body through diet, rest, and exercise, and it will most likely respond with better health.
3. Question doctors and dentists in advance regarding costs.
4. Shop around for prescriptions and ask for generic drugs.

Savings

1. Use payroll deduction, if possible, for savings. This removes the money for savings before it is received as salary.
2. If payroll deduction is not available, use automatic bank withdrawal from the checking account.
3. Write a check to the savings account as if it were another creditor.
4. When an existing debt is paid off, reallocate that money to savings.

Attitudes That Lead to Budget Struggles

God's will and plans are not always compatible with ours. When we turn our finances over to him, we must accept his direction.

The apostle John said that if we ask anything according to His will, the Lord hears us (1 John 5:14). But God's will is not always compatible with our will.

All too often we strike out on our own without seeking a clear direction from Him. We take control of the reins, feeling that we know what direction is best. This is especially true when we make financial decisions. True, we may get into debt by buying the latest and greatest hot-ticket item, but more often than not, we fritter away what we have on small purchases.

Regardless of how we incur debt, one notion is clear: We not only compromise our monthly finances if we have a cavalier attitude toward money management but we also jeopardize our relationship and dependence on our Creator.

Do you pray and seek the Lord's counsel before making financial decisions? Or are you quick to forge ahead because of what you feel are the best decisions? Consider these guiding principles to help you steer clear of attitudes often associated with money management.

1. If a Christian is worried, frustrated, and upset about money, God is not in control. God said that worry is not in His plan for our lives (Matthew 6:25). If we are relying on His guidance, He will supply all our needs, just as He has promised. So, believing that, we can concentrate on other things.

2. God will never use money to build our egos. Many times Christians become trapped by financial ego and find themselves catering to the wealthy rather than to those whom God has brought across their paths. However, in Christ we are all financially equal. When we depart from this world, we will take nothing from this world with us. All that we will have for all eternity will be the treasures we have laid up in heaven. Those treasures are not deposited by human ego, rather by humility.

3. God will not cause Christians to hoard. There is a distinct difference between saving and hoarding. Saving is biblically recommended in order to be prepared for inevitable emergencies or adversity. Hoarding is putting money aside to guard against any and all calamities, yet seldom using it for family emergencies or financial setbacks.

   A Christian cannot be within God's will and hoard money. Hoarding prevents Christians from seeing the needs of others and prohibits them from abandoning even a small portion of their hoarded funds to help the needy. Unfortunately, those who are guilty of hoarding usually can rationalize their behavior with so-called righteous arguments, but their arguments are contrary to the Word of God.

4. God will not use money to satisfy every whim and desire. It is important that we begin to adjust our lifestyles to be consistent and compatible with a Christian commitment. That commitment does not include lavishness. God does not want us to live in poverty; there is nothing inherently spiritual in poverty. Neither is there any sin in wealth. However, God does not desire for his people to live in worldly lavishness while His work needs to be funded and brothers and sisters in Christ throughout the world do not even have the basics of food and clothing.

   So, although it is not wrong to live well, we should not live lavishly or extravagantly. Our lifestyles must be guided by the Holy Spirit—not determined by the lifestyles of others. Although God does not supply the money to satisfy our every whim and desire, He has promised that He would meet our needs and provide an abundance so that we can help others. It is when we accept this principle that God will multiply our abundance as well.

To achieve God's best, we must apply what He says. Information without application leads to frustration. Christians who are not experiencing peace in financial matters should reevaluate and ask themselves: Who is in control of my financial decisions? Who is directing my paths? Am I being controlled by God or by my own desires?

Battling the Monthly Budget

A continued list of helpful resources, links and organizations related to budgets and money management.

Popular questions on this topic:

• I can't agree with my spouse on discipline with spending. What can we do?
• We want to find a good mortgage on a house, but we can't agree on how to go about it. What advice do you have?
• How much should young couples put away in savings?
• Who should work and earn most of the money in a marriage?

Related Resources

• Smart Living On One Income
• The Road to Financial Peace I-II