Budgeting: Where do We Start?
Budgeting is about estimating your expectations of income and expense for a given period of time. It is a plan of operations based on the budget that you created. It is actually a ‘living’ document that should be reviewed and adjusted based on the actual numbers experienced over that given period of time.
Your church probably has historical data on the types and timing of the funds that are received. In addition, you would have data about how monies were spent during that same period of time. A budget starts with a list that includes:
- Income (type 1 – perhaps general tithes and offerings)
- Income (type 2 – designated funds for specific uses)
- Income (type 3 – fundraisers)
- Expenditures for Personnel with subitems to break out
- Housing Allowance
- Payroll Taxes for non-pastor staff
- Health Benefits
- Retirement/Annuity and more
- Expenditures for Missions and Benevolence
- Expenditures for Facilities and Office Supplies
- Furnishings and Equipment
- Office Supplies
- Liability Insurance
- Expenditures for Ministry
- Pastoral Care
(A complete list of line items for a budget may be found in my blog on the Chart of Accounts.)
Compile the amounts for each of your line items by either
- Reviewing historical deposits and expenditures
- Making your best educated guess going forward
- Calculating an annual sum and dividing between the 12 months, or estimating for each month and adding them together for a cumulative total for the year.
Now, use this document to guide how you spend monies during the year and to measure against the actual income and expenses that are recorded during the year. Fluctuations of actual to budget of more than 5-10% should be investigated to ascertain what is happening and to help you determine if either your activity needs to be changed or your budget needs to be updated. I like the idea of even giving your different ministries responsibility for their part of the budget and empowering them to then run their “operation” with accountability to that budget.
Does your church have a budget? Stay tuned for my next blog where I discuss the difference between an operating budget, having reserves and a capital budget.