Faithful Finances, Anyone?
Hello and welcome to week in our series: Ekonomia: Home Management Toward Heaven. This is budgeting week!
Several weeks ago we introduced this new series, Ekonomia: Home Management toward Heaven. If you missed that article or video, check it out here. Then we started building our home management system by Simplifying. After that we built a firm foundation of home management. Then we mastered meals, and last week we made clear cleaning plans.
If you want to watch the video version of this article, check it out below. Otherwise, continue reading for this content in blog article format.
Faithful Finances
And here we are, on to faithful finances. Wow, we nearly at the end of our Ekonomia series! This time we get to talk about budgeting. Which is fun for me. Because while I don’t like cooking or cleaning, I love math!
So the bad news is, between 70 and 80% of North Americans are in debt, and between 50 and 80% live paycheck to paycheck. It is difficult to imagine this not causing stress and anxiety. And stress and anxiety are the opposite of our goals here – we want to live a life of rest in Christ!
Starting with that in mind, lets look at our goals for having faithful finances, firmly rooted in Christ!
- Debt free except perhaps a mortgage
- Having at least three months living in savings
- To be charitable towards the needs of others
And the key to accomplishing these goals is actually just one thing. A good budget! Now, there are many different budgeting systems out there. But I am only qualified to offer you my system. Which, I think is the easiest one anyway.
Where Are You At
But before we get into budgeting, we need to evaluate where we are at. So first, make a list of all your debts. There is a worksheet for this in the free Ekonomia Printable set, which you can download from the link provided below. Make note of what the debt is, how much debt there is, the interest rate, your monthly minimum payment, and then if you are behind, how much you are behind by.
That right there is the bad news data. But we can improve this outlook, even by a little bit, by adding some more data to it!
Yup, the next step is calculating your Net Worth. In this step we add up all our debts, and then we add up all our assets. Then we subtract our debt from the total worth of our assets, and viola, our net worth! Typically this number is less scary than it is just to look at your debts alone, because this puts the debts in perspective.
And even if you don’t have debt – which, hurray, that is great! Still calculate your net worth. Which in that case will entirely be assets. Calculating your net worth yearly, twice a year, or even monthly is a good way of measuring how your finances are progressing.
Start Budgeting Where You Are
Now, onto budgeting. If you are starting from scratch, print off the last three months worth of bank statements. Make note of how much income you received and how often. Then calculate how much you spent during those three months in each of the following categories: Groceries and Eating Out, Family Expenses (mortgage or rent, utilities, phone bills, gas, insurance, and other fixed recuring expenses like subscriptions), and Other (events, gifts, etc).
You can add up the totals for each month individually, or just add it all together and divide it by three. The numbers you get show you how much you are spending on average on each category, which gives you numbers to start with as you start your budget. Even though these numbers aren’t what you want to spend, they are a realistic starting place from which you can improve.
Move Finances to Where You Want Them
Now that we know what our spending is, it is time to figure out where we want it to be. So how do we want to spend our money so that we are living within our means? Let’s look at how to build the budget you want to live by! First divide your income received in a month by 70%, 20% and 10%. Or, if you are not a math person, divide your income by 10 to get 10%, multiply that number by 2 to get 20%, and multiply the number that is 10% of your income by 7 to get 70%.
So whatever 70% of your income is, that is what you want to spend on living expenses. So your family set expenses, your groceries, and your miscellaneous spending. Spending 70% or less of your income on your day to day and monthly living expenses is the goal for living within your means.
Debt Repayment and Saving
Now the 20% – that is for debt repayments and savings. Actually, when you’re in debt, it would be good to spend more than 20% on repayment, because you want to reduce and remove the debts as quickly as possible. And even if you only have a mortgage for debt, it is good to pay it off as quickly as possible.
But if you are living off one income, 70% for living and 20% for debt repayment is reasonable.
While you are paying off debts, you also want to work at having at least 1000 dollars in savings. Then, as your debts decrease, you can work at increasing your savings. So first work towards maybe having three months living, and then 6, and then 12 months living in savings. This is a good protection against possible loss of income. Putting money towards retirements or Kid’s education comes from here. Once you are out of debt, savings toward vacations or large purchases can also go under this 20%.
Tithe 10
Finally, 10% of your income can be used for Charitable giving, regardless of whether you get tax receipts for it or not. There are so many causes and places which could use our money. But the important thing to remember is we are only doing a good thing if it is what God wants us to be doing. So pray about where God is calling you to give your money.
If you’ve followed The Byzantine Life for a while, you’ll know we started a St. Styllianos pro life prayer group. God has definitely placed the cause in support of life as a part of our family vocation, so we give part of our tithe to our local crises pregnancy centre and part of it to sponsoring a child in Ukraine through Chalice. We also support our local churches and priests.
If You Are Concerned About Tithing
I know with the many scandals our Churches have been facing, it can be difficult to think of giving to them. If this is your concern, I encourage you to give, but to be specific about what you want the money to be used for. You can earmark it for building upkeep, utilities, for paying the priest’s salary, insurance or for a specific ministry within your church that you feel able to support.
Even if you are unhappy with how things are being run (which, let’s be honest, is in our culture. No Ukrainian is happy with how another Ukrainian does things. Or Ruthenian another Ruthenian, and so on and so forth). So even if you are unhappy with how things are going, you still benefit from the availability of the sacraments, of your priest, and your parish. And like it or not, it costs money for all these things. The priest needs money for gas and to feed his family, the church needs money to keep the lights on and to provide the bread, wine, oils, candles, and incense necessary for holding a Divine Liturgy.
Our Money Belongs to God
Anyway, when we consider our money, and our finances, it is good to remember that it is not really ours. It belongs to God. For just as in the Gospel of Matthew (25:14-30) with the Parable of the Talents, God has given to us what we have, according to our own abilities. And it is our responsibility to use it faithfully and as He desires of us. And we want to return what we have to God in the end and hear from Him “Well done, good and faithful servant, You have been faithful over a little, I will place you over many thing. Enter into the joy of your Master.”
So not only do we want to live within our means, we want to do it knowing that it is what God has provided us with, according to our current abilities!
Faithful Finances: Making Cuts!
And now it is time to make some cuts!
If you are spending a lot more on groceries than you want to, decrease your budget by 10% at a time (though still aim to go under that) and keep decreasing every month until you get where you want to be. If you have implemented the Masting Meals steps of our Ekonomia Home Management System, budgeting for groceries will become a lot easier. Because if you are letting food go to waste because you are not planning meals, or because you don’ have time to cook them, that not only wastes your groceries but can also mean you are spending extra on eating out.
Now look at all the areas where you are spending on family expenses. Are there any subscriptions you can cut? Can you switch to a lower priced phone plan? Can you see about lowering any of your other bills? Maybe cut cable over the summer – or altogether?
As for other – this is where you need to exercise self discipline to live within your means. The prices of your gifts, how often you get a hair cut, or go the theatre, this is up for your discretion.
Bonus Tips
Your goal should always be to come in under budget. This is a part of your mindset, and is important to the success of the budget. So how do we motivate ourselves to come in under budget when we experience the temptation to spend a little more money? The answer is, we reward ourselves for coming in under budget. That is, we train our brains to feel joy at coming in under budget, rather than the spark our brains lead us to feel at impulsively spending money.
So when you come in under budget, you get to keep 30% of the total of leftover money to spend on whatever you want, and then 70% goes towards debt repayment, or to savings for the family. It feels a lot better to spend that 30% on a new book you’ve been wanting, then come in over budget because you bought extra snacks and some trinkets while you were shopping for other things throughout the month.
The next tip is to add an extra 100 dollars to the budget for unexpected expenses. Especially if you are starting out budgeting for the first time, there are going to be things that come up that you weren’t prepared for… membership dues you forgot about, an extra birthday party… but once you learn to anticipate these needs, you can cut the extra 100 from the budget.
Finally, if you can spend less than 70% of your income on living, that is great! Increase your spending on savings and debt repayment!
The Byzantine Life
Thank you for tuning in to this week of Ekonomia: Home Management Toward Heaven.
Tell me in the comments, if you could save up for any one big thing, what would it be? A trip, a home renovation? Let me know in the comments! If money was no object I could imagine saving up to start a home Montessori preschool-homeschool, with all the beautiful hands on materials and shelves to store all the beautiful things. Although I probably wouldn’t actually want to do all that. So our real life big savings is so that, God-willing, the Badger-Dad will be able to go through seminary while I homeschool the kids.
For the free printable set that goes along with this video series, click here!
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