24 Jan 2019

How to Create a Budget for Ultimate Success

Bella Simonetti

The alarm clock goes off. You reach over to turn it off and jump out of bed full of excitement! Arms raised in the air, you shout to the ceiling triumphantly, "Another day to live by a budget!"

How many mornings would you say are like this for you? Probably not many, if any days at all. 

For free-spirits, the thought of creating a budget does NOT stir up excitement. On the other hand, for those who love to plan, budgeting can bring a sense of relief, a breath of fresh air, if you will. 

Free-spirit or planner, when you take the time to create a budget, you’ll see financial growth in your ministry. It’s the first step in managing your organization’s finances. Though it may seem restrictive, preparing a budget and sticking to it will bring you freedom and peace of mind.

Budget for growth

The way we spend our money matters to God. It doesn’t matter if it’s our personal finances or our ministry’s finances, God cares about how we steward the money He has give to us.

Your ministry’s success in carrying out its vision is directly related to how well you manage and steward your church’s finances.

By creating a budget and sticking to it, you strategically use your finances to help your ministry grow. And, you will meet your financial goals much sooner than you expected.

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“Why do I need a budget?”

A. It’s your financial GPS

Establishing a budget lets you know where your ministry stands and where it’s heading. A budget tells us how much money is coming in to the ministry and how much will be spent. With a budget in place, you can see if your finances are are being appropriately used according to your ministry’s mission and it’s goals. 

Let’s say you’re planning to rent a larger facility for your church. You’ll need to save your funds for a down payment, new furnishings, and new equipment. If you have a budget in place, you can better estimate exactly how long you’ll need to save up for a bigger location.

B. It’s a shield for your board of directors

A budget provides protection for your board members. It shows the board of directors are operating in the best interest of the nonprofit organization. Churches and other nonprofits are tax exempt because they operate for public benefit alone. They are not for the private gain of individuals. Having a budget on paper provides proof that the board members are not using the ministry’s income for their personal interests, but for the good of the public.

Let’s say a church’s annual income is $500,000 and the pastor receives a salary of $100,000. You may wonder, can this church can support that kind of salary? But let’s also say this church has a well-planned budget in place. And most of the funds go to facilities, children’s ministry, and outreaches. Suddenly, it makes sense that the pastor could have this kind of salary. 

C. It exposes weak areas of financial administration

Setting a budget in place helps your staff see areas where you may have missed the mark in managing the ministry’s finances. These areas can range from incorrect management of a petty cash fund to extra-budgetary purchases made without the board’s approval.

Also, staff members with access to your organization’s funds should be required on a regular basis to provide paperwork noting their purchases and why their purchases were made. This should be standard policy for all purchases using the ministry’s bank account. By doing so, you and your staff maintain accountability and make sure everyone sticks to the planned budget.

Now, maybe you’re wondering, “How do I create a budget for my ministry?”

6 steps to create a successful budget 

New churches and ministries often struggle in determining how to plan a budget for their operations. Many new church plants face the difficult task of determining, or projecting, a budget even before they hold their first worship service.

The task of raising funds and then determining the best use of those funds can seem overwhelming. But it doesn’t have to be. Here are 6 steps for you and your ministry to consider when creating a budget.

  1. Plan early. Start planning next year’s budget a few months early. This way, you have plenty of time to work out any details before the next fiscal year begins. If it’s too much work for you to do alone, get a team together. Create a budget committee to prepare a budget for the board to approve.
  2. Get a realistic idea of the expected income. Setting realistic expectations will guide you through figuring out how and when you’ll reach your financial goals.
  3. Determine your financial responsibilities. What items for your church or ministry do you absolutely need to function? Allocate funds to those expenses first.
  4. Determine your financial goals. Afterwards, you can determine where you should save and fundraise to meet those goals.
  5. Create “buy-in” to the budget. A budget is an absolute must. But setting up the right procedures to stick to long term takes commitment. Therefore, “buy-in” about the necessity of a budget is important. “Buy-in” is when your staff or volunteers all rally around an idea. In this case, you want your staff and/or volunteers to support the budget. Make sure all the board members have a chance to review the budget and share their concerns.
  6. Make a plan for inner-office management of purchases. Make sure your team uses the necessary forms to track who spends what, when, where, and why. Again, this creates regular accountability regarding the use of the ministry’s funds. It’s also a good idea to make a contingency plan for emergency expenses outside of the budget. Be sure that every department is aware of the protocol.

Ready, set, BUDGET!

Free-spirit or planner, when you take the time to create a budget, you’ll see financial growth in your ministry. It’s the first step in managing your organization’s finances. Though it may seem restrictive, preparing a budget and sticking to it will bring you freedom.

Whether you’re running a church, ministry, or another kind of nonprofit, you need a budget. Creating a budget is important for the function and growth of your ministry. For the free-spirits, this task may seem overwhelming. For the planners, this task might take more time than you can give. But for either group, having the right team in place will make a world of a difference.

Why not use a bookkeeping service? At StartCHURCH, our bookkeepers are ministry-minded. Their mission is to help you organize and categorize income and expenses, making sure your money lines up with your vision. With a StartCHURCH bookkeeper on your team, you can get back to doing what the non-numbers side of ministry.

If you have questions about how our bookkeeping service can help you, give us a call at 877-494-4655.

Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Blessings,
Raul Rivera


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