Budget Your Money—The Easy Way!
IT IS Saturday evening. Ronald and Sherry, young parents, are having their evening meal, chatting between bites of food. Their conversation, a weekly ritual of, “You wouldn’t believe how rough my week has been,” is the same as usual. Sherry tells of her domestic triumphs and failures, Ronald of his exhaustion from a week of overtime work. Acknowledging each other with nods and an occasional, “Oh, really,” the talk lulls.
That is, until Sherry mentions the new dress she bought.
From here on the conversation takes a definite turn for the worse. “Why did you have to do that? I’ve worked hard all week and still can’t pay our bills!” snaps Ronald. “If you’re that concerned, why did you buy that set of tools?” Sherry retorts.
“Because I need them for work!”
“Well, I need the dress too!”
Sound familiar? If so, you may take some comfort in the fact that many are experiencing money problems—and not just newlyweds either. Singles, retired couples, even those in high-income brackets often find themselves spending more than they make. Why, even a college professor ran into financial problems, though his salary is in the upper bracket.
The solution? Hiring a certified public accountant to manage your finances is probably out of the question. Ronald and Sherry, however, found a way that proved practical. As it turns out, they were having weekly Bible discussions with a married couple who were full-time ministers of Jehovah’s Witnesses. This couple live on a very modest income, and Ronald and Sherry were curious as to how they managed. “We have a family budget!” was their answer.
That word “budget,” though, conjures up scary images of long ledgers adorned with endless rows of figures. But don’t let it frighten you away. Though Ronald and Sherry were perhaps a bit skeptical at first, they were helped to work out a simple, yet practical, budget that not only paid their bills (without Ronald’s working overtime!) but even left them enough money to visit the world headquarters of Jehovah’s Witnesses, where this magazine is printed. Here’s the secret:
Making Up a Budget
Really, all that budgeting involves is a listing of the amount of income and a listing of expenses—and then keeping the expenses within the income. It’s quite simple. Let’s start with that income. For most of us this should be easy, as it generally involves just a few items. (Salary, interest from savings accounts, pay for odd jobs, etc.) Making out the list of expenses, however, is a bit more tricky.
You might begin by working up (or purchasing) a form such as the one shown here. Develop main headings, such as “food” and “clothing,” but don’t get too detailed and attempt to break “food” down into separate food items. Remember, too, to give yourself a listing for “unexpected” or “miscellaneous” expenses that will inevitably come up. Out-of-town guests, flat tires, or even an occasional impulse purchase are pretty hard to plan for. So you’ll want your budget to be flexible.
For each expense, try to come up with a realistic figure for how much money should be set aside for it. If you’re the type that keeps grocery receipts and bills, or who pays by check, this shouldn’t be too hard. If not, you will just have to make an intelligent guess. You’ll also want to remember monthly expenses such as rent or mortgage payments, and long-term expenses such as taxes, insurance, or a vacation.
Whether your budget sinks or swims will depend to a great extent on how realistic the figures you set are. Says one couple that has successfully lived by a budget: “Probably the most important point in making our system work is setting a realistic amount for the household expenditures. The system won’t operate if the amount set aside for the household is so small you can’t possibly get through the month on it.”
While the husband will no doubt take the lead in establishing these figures, this is definitely not a one-man project. The entire family should be involved if this budget is really to prove helpful. And naturally everyone is going to want a say in how much should be allocated for what. Wives, of course, might be concerned about the food budget. Youngsters might argue for more recreation money. By hearing everyone out, a much more balanced and realistic budget can be agreed upon. A word of caution, however: Do not let this turn into an angry bargaining session, such as governments and labor unions indulge in. There people selfishly promote their own interests. Love, however, “does not look for its own interests,” says the Bible. (1 Corinthians 13:5) Good advice for a situation like this. In fact, in one family a husband felt his love for his wife increase as he observed how cooperative and self-sacrificing she was as they established their budget.
When Expenses Exceed Income
Now that you have a rough draft of your budget, start adding up how much it costs for you to live. In some cases it will look as if you need more money than you make. If so, you had better check some of your estimated expenses. Some will doubtless have to be trimmed down. The college professor mentioned at the outset discovered that he was spending too much on food. He found that by just cutting down on eating out and on snacks, he could ease his financial difficulties. In your case, however, trimming the budget may be quite a bit more painful. You may have to scrutinize more carefully what your real needs are as opposed to wants.
Those living in the wealthier, industrialized countries especially need to consider this factor. The wisdom of the Bible’s words at 1 Timothy 6:7, 8 is often disdained in our materialistic world: “For we have brought nothing into the world, and neither can we carry anything out. So, having sustenance and covering, we shall be content with these things.” Yet for many, these words have proved their worth.
So think twice before concluding that you need to bring in more income to make the budget balance. Working longer hours, getting an extra job, or putting another member of the family into the job market may well detract too much from the quality of your family life. And oftentimes families that take on extra secular work so as to meet some particular expense find themselves in a materialistic trap: Long after the expense is met they keep working. That added income becomes irresistible. So take another look at the budget and see if yet further (painful though they may be) cuts can be made. Here are a few suggestions:
• Recreation and Entertainment: In the United States over 6 percent of income is spent on recreation and entertainment. This may just be too high for you. Reading, outings to the park, and so forth, are far less expensive than movies, restaurants, and sporting events.
• Expensive Bad Habits: Some spend $1.25 out of every $100 (U.S.) on tobacco. Gambling is another expensive vice. Would eliminating such habits strengthen your budget?
• Food and Drink: Alcoholic beverages are pleasurable but unnecessary. Plain foods, such as baked potatoes, are often not only cheaper but more nutritious than their fancier counterparts (such as French fries). In-season foods are also less costly. Rather than throwing out leftovers, find ways of using them, such as in stews and casseroles.
• Credit: Use conservatively, if at all. Money borrowed or items bought on credit may cost more because of interest.
• Telephone calls: If long-distance calls are creating a financial burden, consider cutting down on them. At times discounts are given for making such calls at certain hours of the day. Remember, too, people still enjoy receiving letters.
• Clothing: Do not rush to follow the latest styles. Conservatively styled clothes are often better purchases. A housewife may want to consider making clothing for herself and the children.
After a period of no little travail, your budget will at last look workable. A few adjustments here and there and the family can view their accomplishment with pride. But now the hard part begins.
Living by the Budget
Figures written down on paper do not solve a family’s financial problems. Actually, setting up the budget is the easier part. Living by it is not always so easy. It requires real self-control and discipline. And there is need of a way of allocating your money.
Much will depend upon the way in which you are paid, be it weekly, biweekly, or monthly. If, for example, you are paid weekly, you can make it a habit each week to parcel out enough of your wages to meet your weekly expenses, while at the same time setting aside a little bit each week so as to meet monthly and yearly expenses.
Some find it helpful to use the “envelope method.” Simply take a few envelopes and mark each one for the type of expense it represents, such as food or clothing, and the amount. On payday you can distribute your income to each envelope. So when the time comes to meet the expense, the money is ready and waiting. And if you have not allocated enough money to pay a particular kind of expense, it is simply a matter of borrowing money from another envelope to do so.
Others prefer to use their checking account to pay bills, rather than having money lying around the house. In this case you can monitor how the money is being spent by means of check stubs and deposit slips. Some even keep a separate savings account for long-term bills. They may pay their regular bills out of a checking account and then contribute each week (or month, depending on how the person is paid) to the other account to build up funds for long-term bills.
Whichever method is used, at the end of the month you should compare how much money was actually spent with how much was budgeted. A third column on the budget sheet can therefore serve to keep track of how much money was actually spent. Do not panic if at first the figures do not jibe well. Your estimated figures were just that—estimates. They were not engraved in stone. As the weeks go by, you may want to make a number of adjustments on your budget estimates until your figures approach reality. Rising expenses due to inflation may force you to adjust your estimated expenses regularly.
Too, by listing your expenses you may find yet further ways of cutting down. One man, for example, tried to cope with the rising cost of food by raising animals for food. Still he had trouble making ends meet. After keeping track of his expenses, he could see that the cost of feeding and caring for the animals was more than he was getting out of them. The solution? He simply gave up the animals and saved money.
Ronald and Sherry found that keeping a simple budget worked for them. And we hope that it will for you too. Bear in mind that the economic straits we are suffering are but an indication that we are living in what the Bible calls “critical times hard to deal with,” “the last days.” (2 Timothy 3:1) So the real cause of economic distress is out of your control. This does not mean, however, that you cannot use “practical wisdom” so as to cope better with modern life. (Proverbs 2:7) Keeping a budget may be just the thing to help you do that.
[Chart on page 25]
Expense Sheet for the Month of ․․․․․․․․
Expenditures Amount Budgeted Amount Spent
Mortgage or Rent
Kingdom Hall Contributions
Total (To be compared with total income)