As debt levels remain high, many people want to take control of their finances. Some made and then broke New Year’s resolutions, as usual, believing this was normal. And it is, for people who don’t turn resolutions into goals with action plans.
Today, if you want to work on your finances, don’t make a resolution, just get to work. For many, this is a great challenge. Where do you start? You read and heard a lot about budgets. You don’t realize that a budget is simply your best estimate of the cost of achieving specific future goals in a specific period of time. For example, next month you will pay rent, buy groceries, probably buy some shirts, give funds to God; right? Today, you can see how you might allocate next month’s available funds for these and other activities. Here are some simple first steps to get started now:
- Get seven three-by-five cards and seven envelopes, one for each card.
- In the upper right corner of one card, write your gross income and this note: This income belongs to God; He will tell me how much to keep in his Kingdom. Pray and ask him to show you this amount. On the front of an appropriate envelope, write “INCOME.”
- Calculate the amount to spend by subtracting from gross income, amount to give to God, taxes and other deductions.
- Write the amount available to spend in the center of this card and circle it. If gross income is $3,000, giving God $400, taxes $1,000, then there is $1,600 available to spend. Write $1,600 on the front of the INCOME envelope.
- On each of the remaining six cards and envelopes, write one of these categories: Taxes and Deductions, Food, Clothing, Transportation, Housing, and Other. Use your best estimate to calculate and allocate amounts to each category: say, taxes $1,000, food $400, clothing $100, transportation $200, housing $700, other $200).
- In addition to taxes, which your employer will take from you, bring cash in the amounts identified and place it in each envelope. If you prefer not to use cash, be sure to pay your credit card balance in full each month. Still, when you spend, write the details on the appropriate card. Each card should show the initial budget, say $400, and each time you spend, you reduce the balance and record the new balance. And above all, stop spending when the balance is zero. The next month, resume the procedure by adding the budget for the month.
- Before you spend, make sure you have a procedure to help you decide whether to spend. If your debt will increase, don’t spend. Whose? Yeah, imagine you’ve used up your available credit, so what do you do? Ask God to guide you.
This is not a complete budget procedure, just a start. Feel free to choose other budget categories. To get comfortable with the procedure, you can start with two articles and add one monthly.
Copyright (c) 2011, Michel A. Bell