Return to Table of Contents

Church Budgeting

Sidebars to the article Managing The Church’s Financial Resources: Ten Important Financial Controls For Every Church Recommended Resources Sample Bookkeeper Job Description Employee Or Independent Contractor? Church Budgeting Chart of Accounts Why Documentation In A Church Is Important

A budget is simply how much money you expect to be given to your organization and how you expect to spend it. It answers the questions: "How much will be spent on these items?" and "Where will the money come from?" Budgets provide an orderly flow for what has been entrusted to you. Since trust is often gained or lost on how church finances are handled, it is critical that the budgeting process be deliberate.

Many pastors and churches have an aversion to budgeting for one or more of the following reasons:

1. They think they cannot accurately predict their financial transactions.
2. They think they have nothing to budget for since church finances are so limited.
3. They think it is unspiritual and shows lack of faith.
4. They do not want to tie themselves down to a budget that restricts them later.

All of these concerns are commonplace. However, people must realize that a budget can, and often should, be adjusted based on changes in the church’s fiscal condition. A budget is a mechanism that frees the church to reach financial goals and avoid pitfalls in poor financial planning.

A Budget Is Based on Priorities.

Priority items take precedence in every budget. In fact, if you do not know what your priorities are, look at how you spend and find what is really important to you.

The top priority item in almost every church budget is salaries and benefits. Surveys reveal, depending on the area of the country, that churches spend up to 50 percent of their income on this. To go beyond this is not wise, so 45 percent or less is safer. The second item that usually needs a large allotment is church facilities—rent, mortgage, maintenance, heating, lighting, custodial, etc. The third area is usually programs—youth, children, evangelism, benevolence, etc. Some will find it regrettable that programs take third place. But bear in mind that what salaries and benefits provide are in fact a major part of the programs of the church.

A Budget Is Based on Analysis.

Unless a church is just starting, it has a history that can assist it in setting a reasonable budget for the next fiscal year. Wise stewards analyze past spending patterns. This may even be sobering. Look at how money was disbursed in the past and at the giving patterns. Are there times in the year when expenses are higher and when giving either surges or drops off? The key is to level out these peaks and valleys by being disciplined.

A Budget Is Based on Faith.

The faith aspect of every budget expects blessing, but also realizes that there are negative uncontrollables. The church expects God’s blessing and growth that will enable it to charge ahead with new programs and spending. But natural disasters can destroy a building and scatter a congregation. Caution is the key. We expect God to bless, and we hope to avoid the uncontrollables. However, it is wise to have up to 4 weeks financial resources on hand to meet emergencies. There may be unused dollars in the bank, but you never regret it when the storms come (and Jesus said they would).

Here Are a Few Budget Pointers:

1. Use set-asides.Set aside items are once-a-year expenses budgeted over a 12-month period that money is set aside for each month—district and General Council expenses, annual youth and children’s events, revivals and outreaches, Christmas bonuses, missions conventions, etc. This is hard to start with limited resources, but start small the first year. Then add additional recurring expenses to the account as needed in years to come.
2. Use the 10/10 principle.Make it a goal to give at least 10 percent of the budget to world missions (in addition to what individuals designate as missions giving) and to save 10 percent for future development. Start as soon as possible, even if it hurts. The blessing will immediately bring gratification. Start with one or two percent and work up over a few years.
3. Keep financial records in order. Simple bookkeeping systems like Quicken or Quick Books can be learned quickly and inexpensively. Many churches use costly comprehensive financial and member-tracking systems that are hard to learn. Whatever is used, make sure that a complete system of checks and balances with double-blind accounting techniques is used. This helps avoid the temptation for and the appearance of wrongdoing. Pastors would do well to avoid handling money.
4. If there is a problem, don’t wait to get help. Tackle it early. Help can be found in district leaders and fellow pastors. It is either the income or the spending that is the problem. Usually the spending must be brought under control first. Teaching on biblical stewardship may be needed, but first control spending. It is often difficult to reign in departments and staff who have been accustomed to a certain level of spending, but it must be done. Start by frankly discussing the issue with staff and church leaders. Pray and get counsel. Be wise in what is said publicly. Then act.

Budgeting is not an exact science, but a work in progress intended to free the church to accomplish God’s purposes. Mistakes will be made and revisions will be necessary, but expertise and confidence will grow as leaders work together. Ultimately, this tedious process will enable a church to move forward.

—Peter A. Joudry, senior pastor, Florida’s First Assembly of God, Wauchula, Florida, and founder of Battlefield Ministries.