Biblical Basics of Budgeting

When most people think of budgeting, its usually associated with takin' a tumble thru the brier patch (that's a Texas phrase for doing something uncomfortable). Of the many purposes of budgeting, its primarily used to get financial disarray in order; to help you locate your Ps and Qs; to get the squeak out of your budget; to find where the money's gone, etc. I think you get the drift. Most people don't budget
because they feel it either restricts their spending or its unnecessary. For those folks I use a broader, simpler definition of budgeting: Don't let cash outflows exceed cash inflows.

It really doesn't make any difference what category one fits into; the following scriptural principle applies to everyone: There is precious treasure and oil in the dwelling of the wise, but a foolish man swallows it up, Proverbs 21:20. I'll refer to this treasure and oil as wealth (not to be associated with wealthy). The KJV uses spendeth instead of swallows. Both verbs accurately describe how a foolish man (generic) consumes all his wealth. On the other hand, a wise man does not consume all his wealth. Well, if wealth is not consumed, what happens to it? Also, does it mean there was a surplus? (I believe in surpluses like I believe in coincidences!) Unspent wealth can: be reinvested; serve as a buffer when lean days come; provide for the needy; be given as an offering; etc.

In this discussion, wealth is a strategic planning tool, the ultimate purpose of which is to avoid the "warning" in Proverbs 22:7, ... the borrower becomes the lender's slave. How can wealth be used to keep one's finances in order and help one stay away from financial bondage? Well, I need to preface answering that question with reality: Typically, most families are one to two paychecks from financial chaos and any expense out of the norm usually busts any attempts to get ahead

Undoubtedly, there will always be an unpredictable, unexpected, infrequent or irregular expense(s), which I refer to as OhNoz, that occurs during the year. You know its going to happen! You may not know when its going to happen or the amount, but its going to happen! Its amazing to me how people disregard the inevitable. Allow me to give you some real life examples: Your company loses its contract and you have to find another less paying job; you are laid off; a distant loved one dies and you must go; an accident or sickness
occurs; you're out deductible and coinsurance amounts from a medical problem; engine or transmission blows; annual real estate taxes and insurance; etc. Feel free to add your own personal contribution.

What does one do if the expense is $500, $1500 or $5000 and there is no unspent "wealth" to meet the need? Do you borrow from the bank or pull out the plastic? This only adds to the squeeze. Taking on incremental debt only subjects one to the very thing attempting to be avoided. Acknowledge the first warning sign: If you are going from paycheck to paycheck, consuming everything, you have violated the first principle mentioned above. Scripture describes the perpetrator as a fool! A conversion experience is needed. In order to convert from a fool to a wise person, one needs to 1) increase income or 2) decrease lifestyle.

Previously, I mentioned that wealth can be used as a strategic planning tool. To battle OhNoz, one must acknowledge their existence and budget them. I'm not suggesting that every OhNoz can be budgeted, but the vast majority can. To budget OhNoz, they need to be categorized. One may choose a one size fits all category, e.g., Miscellaneous, or one may choose broad categories, e.g., Medical Misc., Vehicle Misc., Home Misc., etc.

Next, one may choose past experience along with an educated guestimation in estimating a per paycheck contribution into each OhNoz account. Each OhNoz account can be set up by using the "envelope" method. For example, after careful evaluation of past experience, Mr. Wisdom determines that the total of all potential OhNoz occurrences should be $1,040 annually. He takes $20 from each weekly paycheck and deposits it into an 9"x11" manilla envelope titled "Miscellaneous." When an OhNoz occurs, he simply withdraws the needed funds to pay for it. Mr. Wisdom's sister, Ms. Wiser, decided to do the same thing, except through an interest bearing savings account at her bank.

In summary, this principle in Proverbs 21:20 is vast in its application even though I have only touched the tip of the iceberg. This sole application, however, should be implemented as a fundamental benchmark in one's financial planning.