7 Church Budget Tips for Church Budget Preparation
First things first! What exactly is a budget? The Merriam Webster dictionary defines a budget as "...a plan for the coordination of resources and expenditures".So a budget is an excellent tool for allocating financial resources and for planning and controlling their uses. See this page for the different types of
budgets and an example of a church budget.
Church Budget Tip #1 Establish a projected level of income. A good place to start is a careful review of your church’s tithing history. Has it increased these last few years or declined? Figure the percentage of increase or decrease.Church Budget Tip #2 Determine expenditures for the budget year. The largest area of expenses is compensation—both salaries and benefits. Figuring you annual budget is a good time to stop and reevaluate compensation packages. Is your pastor getting the best package tax-wise your church can give them? Are you taking full advantage of tax friendly packages such as housing allowances, account reimbursement plans, and health insurance?Church Budget Tip #3 Allocating funds for operations. The second largest area of expenditures usually relates to facilities—mortgage, utilities, maintenance, repairs, and insurance to name a few. Make sure you allocate some funds from operations to be designated for repairs and replacement of major items such as roofs, heaters, air conditioning units, etc.Church Budget Tip #4 Determine variable costs Budgeting for fixed cost such as mortgages is easy. However, determining your variable cost such as utilities can be very challenging. Gas and electric charges have skyrocketed in the last few years. Check now what the going rate is and what your utility provider projects to be the cost by January/February of next year. You may be looking at a 30 to 50 percent increase in what you actually paid last year in some areas of the country.Church Budget Tip #5 Get everyone involved. The Youth minister may have some great fund raisers planned to help with their expenses and the Sunday School committee may know where they can get donated supplies. Make sure everyone knows it is OUR budget not just YOUR budget.Church Budget Tip #6 Build reserves. It is really difficult to get ahead with the challenges our churches face today. One way is to try to build some reserves over time that can help meet those unexpected expenses and significant increases. If you are able to budget a bigger increase and then expenses are not as high as predicted, you can set aside some or all of the unspent amounts to begin the process of building a reserve for those line items.Church Budget Tip #7 Restricted funds. These funds are generally not included in the budget process. However, it is absolutely vital to the integrity of your church, and the legal responsibility of the board, to insure that restricted funds are spent in accordance of the wishes of the donor.In conclusion, we are given an opportunity to use the finances of our church to be witnesses in our communities and worldwide. Preparation of an annual church budget will help your church to reaffirm and focus on its vision to reach the world for Christ. So be good stewards of God’s money and budget wisely. The Church Treasurer's Manual: A Practical Guide for Managing Church Finances Resources include: an easy-to-understand overview of basic accounting principles an extensive explanation of tax regulations options for monthly and annual financial reporting; a general job description for the church treasurer; record keeping form for taxe; accounting ledgers; individual contribution records; budget worksheets; the offering; and more advice for handling payroll; housing allowances; and other compensations for the pastor and staff tips on communicating with the church board; the pastor; and the financial committee ethical guidelines for handling money. Return to FreeChurchAccounting home page from Church Budget Tips
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is a practical tool that provides treasurers everything they need to know about handling church finances. From an overview of duties to helpful guidelines for completing tasks, new and veteran treasurers alike will learn practical tips and time-saving suggestions that will help them carry out their responsibilities in an effective and efficient manner. 