if expenditures go over budget, do you adjust the budget?

We have a VERY successful businessman who INSISTS that if we spend more on a given line item than the amount budgeted, we then MUST immediately increase the amount budgeted for that line item. (While the treasurer may well have to move more money into that "account," he insists that the amount we budgeted at the start of the year must also be increased.)


Why should we pretend that we budgeted correctly when we clearly didn't? And what happens if we planned to spend, say, $2,500 by the end of September, and $3,000 by the end December, but at the end of Sept. we have spent $2,800? If we increase the amount for Sept. by $300 AND the amount by end of Dec. by $300, then the year's budget is $3,300. But if we spend only another $100 during Oct. thru Dec., the year's expenditures totaled $2,900 - and the end-of-year results look like we "saved" $400 when all we "saved" was $100, compared to what we initially expected.

Plus, it then appears that no one has ever overspent his or her budgeted amount (unless you go back and find the original amount that we budgeted at the beginning of the year). At the very least, that would require looking at an “old” document (and finding the right page, the right line item, etc.) instead of looking at the next column on the one in your hand.

Comments for if expenditures go over budget, do you adjust the budget?

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Aug 24, 2015
Church budgets
by: Lewis in NC

Budgeted income and budgeted expenses are only estimates to begin with based on past historical records and the documented pledges for the coming year. My opinion is to wait to the end of the year to see where there were budget expense shortages and decide if increases for that line need to be made for the coming year.

The main thing in budgeting is to focus first on expected income (get that estimate as close as possible) the expenses are easier (there are so many "fixed" expenses for the church--mostly salaries and maintenance.

The big mistake that people tend to forget about church (or any) budget is: you may approve a $300,000 budget for the year, but that doesn't put $300,000 in the church checking account on January 1st to cover all those yearly budgeted expenses. That $300,000 comes in slowly--one week at a time. If you do not have some money on reserve, cash flow can become a bigger problem than your budget.


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