Bryce Bartruff, senior director and COO of American Missionary Fellowship, leads a personal finance workshop called “Fiscal Fitness.” For more information about attending or hosting a workshop in your area, give him a call at 610-527-4439, ext. 104 or email him through the contact form.
“Do you know how to make God laugh?” my nephew, RJ, asked as we walked to the parking lot.
“I must admit, I don’t know,” was my response.
“Just tell Him what you think you are going to do tomorrow,” he replied.
I just smiled. RJ was so right. We make all kinds of plans and think we know our immediate and long-term future — but only God knows what is really going to happen. In James 4: 13-15 the Bible says,
Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’ Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, ‘If it is the Lord’s will, we will live and do this or that.’” Yes, the future is a mystery.
This conversation led me to consider the ramifications of our uncertain future on the family budget. Sure, it is both a mature and responsible behavior to establish a family budget. Planning for the future is something we find the Apostle Paul doing, as well Daniel, King David, and King Saul. Getting a handle on anticipated events is what a family budget is all about. It is the process of identifying the amount of money we expect to be available during the month or year and then determining where we believe it should be spent. But much of the future is and always will be a mystery.
Doing A Monthly Budget Review
When establishing a budget, some expenses are anticipated, but many events and financial needs are unknown. We plan the best we can and hopefully are able to adjust the budget along the way. Unfortunately for some couples, once they agree on a budget, their commitment is immutable, and they refuse to make any adjustments to their numbers. They believe the amounts they have designated are solid and based upon a realistic understanding of their financial situation. They will not, therefore, adjust these numbers, regardless of the circumstances. If they allow flux, they believe it means they are violating the commitment they have made in good faith to their future.
It is true that a commitment to maintaining a budget gives the budget credibility and value, but refusing to adjust the budget along the way removes the ability to adapt to changes. Generally, a budget, when first established, is about 80% accurate. There are many small things we fail to consider because of unknown factors. Initially, the budget needs to be tested over several months and adjustments adapted as needed. Only then can a couple have confidence in its accuracy. Even then, minor adjustments may need to be made to reflect lifestyle changes and unforeseen circumstances. As the saying goes, “People make plans and then life happens.”
One of the tools I present when leading a Fiscal Fitness seminar is the Monthly Budget Review. This document helps users create an accurate budget by allowing them to list the amount they have in their current budget and comparing it to the amount spent during the current month. They can then decide if this difference is a change that is just a one-time event or if they should adjust the numbers in their budget to reflect ongoing needs.
Most people need to use the Monthly Budget Review form when they are in the process of creating their first budget. The first three months are critical to establishing an accurate account of where money is spent. Then, after a realistic account of where money should be spent is determined, they can reevaluate their budget using this form every six months. Expenses tend to migrate, morph, and mutate. The Monthly Budget Review helps identify trends and allows the user to evaluate the need to adjust spending so a budget that reflects a healthy lifestyle results.
Download the budget review here:
[download#5#size#nohits]Have you ever done a monthly budget review? If so, what did it help you to find? Tell us your story in the comments.
This is a great resource that I can use right now as we are getting our finances in order this year. Thank you!
I have always been against budgeting. And I never used one once during my escape from financial ruin several years back.
Think about it–if you overshoot a budget you’ve established, not many good things can happen. You can get frustrated, you could even give up.
Second, if you’re about to come in under budget, what’s the natural reaction? To spend up to your budget.
Change your mindset and outlook towards money, and a budget becomes irreleveant. Of course, a good dose of discipline is necessary in this approach as well.
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Thanks for sharing that resource! A review of the past month gives excellent direction for the month upcoming.
Great article Bryce and thanks for sharing your budget review form! My monthly budget has a “planned” and an “actual” column for each item. In essence we make the review part of the process. As bills come in or line-items are spent we record the “actual” value. This is also valuable to be able to change direction mid-month if something comes in too high.
Doing a monthly review also ensures you’re being honest about what you’re spending. No kidding yourself into thinking this $200 for groceries is really working :). Here are my tips for budgeting for success.
My wife and I have a review at the beginning of each month looking at birthday parties, trips, sports expenses…higher gas expenses…there are adjustments made all the time.