I’m going to keep this short and practical. I realize budgets will vary from city to city and based on circumstances, but I think we can have a fairly frank talk about the amount of money we are spending. I’m not saying we’ll settle on a ‘Jesus says you should live by this budget’, but we will hopefully have a honest discussion about things. I’ll just throw this out off the top of my head to get the discussion going:
- Rent/Utilities/etc- $500
- Food- $100 (per person)
- Car (insurance/gas)- $100
- Miscellaneous- $100
- Emergency- $100
- Fun Money- $100
That’s a $1000 budget per month. Now let me try and explain each category in my own opinions.
- Rent/Utilities/etc- Some might say this can’t be done, but I strongly believe that if your renting you can find a place (you might need to share it!) that will cost you no more then $500 a month, including the utilities. Sharing is usually the way to go, studios are an option, and being a little flexible with the neighborhood might be a good thing. (Mortgages fit in differently in my opinion, more on that another time).
- Food- I think you can probably do it for less then this (especially if you know how to score free food), but $100 per person ($200 for a couple, I guess) is more then reasonable. Of course, if your eating fair trade, CSA, organic, etc. It might creep above this number, but not much.
- Car- Obviously there might be a circumstance where you travel for work and must drive your car, on your own, all over the place, and rack up many miles. I understand that, but most of us, if we put in some effort, could reduce our trips, car pool, and find other ways to keep well within this budget.
- Miscellaneous- This category covers the occasional expenses that come up unexpectedly. If you need more hand soap or detergent, maybe a new pair of slacks for work, or other similar things.
- Emergency- This is money I would save up, putting $100 a month in an account somewhere, not exhausting it each month. Then, when you have a medical bill, appointment, car maintenance, etc. This money is there to cover it. That’s $1200 a year for emergency medical and car, is that enough?
- Fun Money- This is my favorite category for married couples. My wife and I don’t agree on everything we should spend out money on. So, each month we get an ‘allowance’ of fun money that we can each individual spend however we want. We usually get cash, so it doesn’t show up on our bank statement, for the other to scrutinize and agonize over.
And that’s basically our budget. Now there are a few discrepancies I should point out. School tuition was not on there, nor was school loan repayment, it doesn’t account mortgages, nor large medical expenses or vehicle purchases. I think these fit into a different category other than the regular monthly budget, and rather then complicate things we’ll discuss those in another post.
Financial Lesson #3: Live by your values, not your income.
I’m a little worried about moving on with so little feedback on my last finances post, but we’ll proceed anyways.
I think one of the BIGGEST steps we can make to healthy finances and Christ-like stewardship is to begin to live by our Values, rather then our Income. To make this conversation meaningful let me direct it to three different audiences:
Mr. College Student:
You are the one group I need to clarify something with: Most of you college students do not have an income. What does that mean? It means for a lot of you, you are going into debt to get yourself an education. Most folks would say that is a good thing, and some would say it’s not really debt, it’s an investment. I think I would agree with them, education is something I certainly value and I’m sure you do to, so this is a wise decision.
What does this also mean? It means you are going out to eat on the weekends, and bowling and buying concert tickets on money you don’t have. Going into debt on entertainment, does that align with your values?
Ms. Recent College Grad with the entry level job:
Congrats, you finally have your own income and are paying your own bills. It’s time to make some of those important decisions. There’s a good chance your still in debt for your school loans so some of what I said to the college students still applies. What that means is that you need to decided if it is more wise stewardship to pay off your student loans, or buy those fancy couches on lay-away.
I bet I know what most of you are choosing: your going to pay off the student loans, who needs fancy couches anyways? Especially you college students who had any exposure to global issues like poverty. To you folks it seems silly to buy a big screen TV for your living room when most folks in the world can’t put food on the table for their kids. That is your values speaking.
Mr. and Mrs. Nice job and In the money:
Hopefully your idealistic college days values are still in your mind. You have stepped into the world where the “American Dream” is possible and most would say necessary. You’ve got a better paying job and you darn well want to show it. You’ve been eyeing that BMW SUV and have kept your eyes open for a bigger home. And as far as everyone thinks there is nothing wrong with that: Higher Income = Higher Cost of Living. And suddenly your values are out the door. gone.
To clarify again I’ll leave you with a word picture and somewhat of a paraphrase of Luke 3:11*. Say your at home. A blizzard has just begun outside and you and your brother have to make the trek to school. You get to the closet first and see before you two coats. It’s quite cold outside so you take both the coats, leaving your brother with none. Is that what Christ called us to?
Now another word picture. You recently received a commission from your church to be a full-time missionary in your town. You don’t need to quit your job or anything, but rather just continue living and spend your time sharing the gospel with others. Here’s the neat thing: your church gives you a million dollar annual living stipend to support you. What does your home, car, lifestyle, etc. look like?
Financial Lesson #1: Discerning your Needs and Wants
I told you my financial wisdom would not be overly complicated or deep, and lesson #1 is no exception. You must sit down (and if you are married, you both need to sit down) and draw up a list of your basic NEEDS (That you spend money on). To make this easy, do not start with what you see in and around your house, start with what you will be purchasing from this point forward. As an example person myself, here is an example.
Jack and Jill sit down and start their list of NEEDS. Immediately the basics come to mind: Food and Shelter. They break shelter down into clothes and rent (including heat, electricity etc). Now to get the money to purchase food they would need an income, thus their jobs. And to keep their job they each need transportation to work and occasionally work appropriate clothing. Jill thought back to here psychology days and Maslow’s hierarchy of needs and suggested they did have some ’emotional’ needs that might be hard to countify. In the end they came up with these needs: FOOD, SHELTER, TRANSPORTATION, MISC (Clothing, soap, etc) and EMOTIONAL.
But, that’s not the end of the lesson. Things get a little more complicated at this point. Does “Food” mean eating out three times a week and coffee at Bongo Java every morning? Are those NEEDS? You must discern on your own what part of your “food” is meeting your basic needs and what part is fulfilling your WANTS. The same goes for clothing. You might NEED button down shirts and dressy shoes for on the job, but you don’t NEED name brand clothing to wear out on the town. Getting to work is a Transportation NEED, driving across town to the outlet mall is not. Does that make some sense?
As you think through your needs, be sure to write down the things you’ve discerned are WANTS in another column (eating out, coffee, shopping trips, new sweaters).
Your Assignment for this week: Spend money as you normally have in the past, but be very concious of how much you are spending on Needs and how much on WANTS. Keep track of actual purchases if you’d like. And see if thinking through these lists actually changes what you spend money on through out the week.
…Lesson #2: Giving