When it comes to budgets, there’s no such thing as “one size fits all.” People have different amounts of income, different essential expenses (housing, transportation, utilities), and different wants (entertainment, vacations). However, certain budgeting principles apply to everyone, and there are certain “outgo” categories that really should be part of every Christian’s budget.
Budgeting principles for all
There are five common uses of money: spending, making debt payments, saving, investing, and giving. And that’s the order our consumer culture encourages, which largely explains why it can seem difficult to come up with the money to give, save, or invest. When lifestyle spending comes first, and what’s left over determines how much can be saved, invested, or given away, there usually isn’t much left over.
Far better to prioritize the five uses of money this way: giving, saving, investing, spending, and no debt payments other than a reasonable mortgage. Designing a budget where you allocate portions of your income for living generously, saving, and investing, before deciding how much you can spend on housing, transportation, clothing, vacations, and all the rest is a really effective way of making sure those first three important priorities get funded.
Three outgo categories for all
Most people have to make trade-offs. Maybe you value travel, so you’re happy to drive an older car that minimizes your transportation costs, allowing you to put more money toward travel. However, the three high-priority outgo categories just mentioned—giving, saving, and investing—really can’t be traded off for other priorities. Why? Very simply, because the Bible teaches us to pursue them.
Giving
God’s Word teaches a “firstfruits” approach to generosity: “Honor the LORD with your possessions, and with the firstfruits of all your increase” (Proverbs 3:9, NKJV). Firstfruits means the first portion or first priority. So, it makes sense to make generosity the first outgo category on your cash flow plan, right under your gross income.
While living generously is partly about obedience, this isn’t just about “following orders.” It’s about living in concert with our design. The Bible says we were made in God’s image, and God is endlessly generous. It’s no wonder, then, that countless secular studies have found living generously to be an essential key to a life of meaning and joy.
In both the Old and New Testaments, the Bible teaches proportionate giving. We are not all expected to give the same dollar amount. Instead, we’re taught to base how much we give on a percentage of our “increase,” or any money that comes into our household. The starting point of biblical generosity is a tithe, or 10% (See Leviticus 27:30).
Saving
In life, things happen. Unexpected things, expensive things—often at the most inconvenient times. That’s why the Bible says it’s wise to maintain a reserve: “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it” (Proverbs 21:20, ESV).
The ideal is to build an emergency fund that contains enough money to cover three to six months’ worth of essential living expenses. (More on how to do this in a minute.) One of the worst financial emergencies you could experience is the loss of your job. Having a well-stocked emergency fund should give you the time to find a new job without having to take on debt.
Investing
The Bible makes it clear that we have a responsibility to provide for our family: “He who does not provide for his family, and especially his immediate relatives, has denied the faith and is worse than an unbeliever” (1 Timothy 5:8). That responsibility exists while we’re working and after we retire. (Even though the modern concept of retirement isn’t found in the Bible, most of us will very likely leave full-time, paid employment at some point, whether because of our own health, the health of a loved one, or because God redirects our path toward more volunteer work.)
In order to provide for our family in our later years, we will very likely need a retirement portfolio. To build it, the Bible encourages a long-term approach: “Steady plodding brings prosperity; hasty speculation brings poverty” (Proverbs 21:5, TLB).
Here’s one way to build an emergency fund and invest for the future. After allocating at least 10 percent of income to generosity, allocate 12-15 percent to the combination of saving and investing. If you don’t have an emergency fund, direct all of that money toward saving. Once you have three months’ worth of essential living expenses saved, reallocate, with 10 percent going to investing while 2 percent continues to go into savings. That money will further build your emergency fund and help enable you to pay cash for the eventual replacement of big-ticket items like your car or the roof of your house.
All of this is made so much easier through the use of a budget—one that’s designed with money allocated to generosity, saving, and investing before you decide how much can be devoted to everything else.
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Matt Bell is the author of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.
