Jason McKnight

And the final installment of this financial journey:

Our Standard of Living plan (August 2010)

If you have been reading Grace Matters over the last 4 months, you will know that we are on a journey into God’s plans for our finances. Jesus says, “those to whom much is given, much will be required.” (Luke 12:48) Did you know that if you earn more than $50,000 you are in the top 2% of earners around the world, and that you are in the top 1% if you earn more than $75,000?  I sometimes look at my bills and inflation, or I compare myself to sports stars, business leaders, celebrities and find myself thinking that I’m just getting by. But, then I realize that I’m definitely in the top 3-4% of the world’s population, and it hits me that Jesus’ warning is aimed directly at me: I have been given much… and so much will be required from me!

How am I doing on the “much” that God has given me, financially speaking? Am I being frivolous or fruitful? Am I being shrewd or short-sighted? Kingdom-minded or self-centered? If God is going to require much from me, am I going to have it to return to Him? In other words, am I—are we as a body—living with a clean conscience when it comes to our management of God’s resources entrusted to us? Obviously, everything we are and have comes from God—our time, talents and treasure. Over the last few months we’ve been talking about our administration of God’s entrusted treasure. We’ve talked Debt, Savings/Investment, Giving, and now we are going to explore “Lifestyle” questions, or the week-in, week-out household budget.

Maybe you cringe at that word, because you don’t have one or have one but don’t keep it. Perhaps you think of a budget like a straightjacket—always telling you what you CAN’T buy. My definition of a budget is this: it’s an accurate reflection of and a written plan for your income and outgo. It reflects past/current reality, and it directs your future reality. It arises out of your actual obligations (ie., how much your giving should be, your mortgage, utilities, groceries, gas and phone are) and your realistic goals (ie., what you want your savings and planning to be). In order to get an accurate reflection, you need to record your actual spending for a month or two. Just jot down on a pad of paper every last cent that leaves your hand, and what it leaves for. And, in order to make a written plan, you need to categorize your spending.

Our family budget at this point is made up of 5 categories:

·         Giving/Savings/Investing—our tithe to Grace and support of other ministries, Prepare the Way sacrificial gifts, regular & emergency savings, and long-term investing. If, as God’s people, we are giving a minimum of 10% to the Lord’s work, and if, as wise people, we are saving a minimum of 10% (I recommend both of these percentages on our gross), then this first category may well be the largest. This is a good thing, from the perspective of training us to be godly and to delay our gratification.

·         Household—mortgage, insurance, taxes, utilities, phone, cable, miscellaneous (yard-care, repairs, etc).

·         Transportation—savings for car repairs, taxes & registration, insurance, and our next car (or a car payment).

·         Living Expenses—gas for the cars, groceries, doctors/meds, clothing, haircuts, gym, cell phone, pre-school, and all the other stuff that we use up each paycheck.

·         Saving for Future expenses—those things that we use up each year, but are not regular; stuff like Christmas gifts & vacations. We put away money each month for these, so that we are not in debt at Christmas nor at summer vacation time. What else can you think of?

If you have credit card debt, school debt or other non-mortgage/non-car debt, that would be a sixth section, and should go right under giving/savings/investing. You’ll see why in the next paragraph.

The order of these categories is important. In order to live with a clean conscience before the Lord, we need to put the boulders in place before we drop the pebbles in. The boulders are the important and immoveable things—giving, savings, and ridding ourselves of debt. That’s why those two sections should be the first two. We need to give what we need to give BEFORE we decide how much to spend on clothes. We need to get rid of our credit card debt BEFORE we make decisions about what cable package we sign up for.

The household and transportation sections come next because our house and cars are the biggest portions of a regular family’s budget. We have to make sure we allocate enough each paycheck to be good stewards here. We can’t get behind in our utilities and go on cruises every year; that just doesn’t make sense. So, we must make these planning decisions before our living expenses. (NOTE: the assumption is that the house and cars you have are appropriate for your level of income, and so you can work within that framework. If you need to move or downsize a car, that’s a whole different discussion. And, it’s a decision that several folks in the body can help you make, in a confidential counseling session. Call Mike & Stacey Wiggins or myself and we can set you up with Grace financial counselors).

Finally, we get to the Living Expenses (and future expenses) portion of the budget. By this point, a huge deal of your regular income is accounted for and allocated with a clean conscience. So, this is where you allocate the rest in a way that will keep your family fed, clothed and entertained appropriately.

If you do not have a family budget, will you do yourself and your children a favor by taking the steps to put one in place? If you have one but don’t hold to it, will you grow in discipline and shrewdness so that you do? Again, it’s all about living with a clear conscience before the Lord. Please don’t put this down without praying, “Lord, where do I need to grow?”

Keeping to a budget is a matter of discipline and shrewdness. Discipline to keep at it, and to sit down and do the record-keeping each payday. That’s what makes or breaks a budget—whether or not we actually allocate everything properly on the day we get our paycheck.

There’s another kind of discipline that makes or breaks a budget: the discipline to say NO to a good opportunity because you have a bigger YES inside (as Stephen Covey framed it). There’s a great sale—too good to pass up—but, we don’t have the money, or we don’t need the item. The discipline to say “I’ll find another sale when I have the money” keeps us on track. The discipline to know the difference between wants and needs keeps us on track.

As for shrewdness in budgeting, several folks have given me great suggestions that help them keep their costs down each month (ie., one family when from spending $450/m on groceries to $280!). I have posted them in the next blog entry for you to explore more in depth.

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