Budget for an Increase in the New Year

Creating a church budget should be more than a barometer of your current feelings about your church’s finances. It should be a reflection of many components:

  • How you performed against last year
  • The strategies you have in place for the coming year
  • Projections regarding current giving trends
  • Your faith that God’s in the middle of your ministry

It’s not easy to balance all of these elements as you look toward the coming year. It’s easy to get too mired in the pragmatic, practical parts and dismiss the faith aspect as inconsequential to the budgeting process. It’s just as easy to ignore critical pieces and base your finances on what you think God is planning to do through your church. For a church, a budget represents both a pragmatic document and a statement of faith. Both areas should be considered when planning for next year.

Generally speaking, your budget should include at least a humble increase from year to year. It should be aspirational, inspiring your congregation to push and stretch itself toward growth.

Here’s how to budget for that increase:

1. Look closely at last year’s budget

The key to budgeting well lies in keeping track of all your expenditures and attributing them to the correct line item. If you’re careless about this, it’s going to be hard to glean anything helpful from last year.

Note: It’s important that your church has a bookkeeper/treasurer who excels at managing the details. This is a position that’s worth investing considerable payroll into because it’s key to making intelligent and informed decisions about your future—and your present.

Go through last year’s budget line item by line item and see how everything performed. Where were the discrepancies? Which line items came in over budget? Which ones were below?

Make line item adjustments

You don’t want to simply go straight through your budget and add a percentage increase to every line item. You’re going to want to do some cleaning up.

Are there areas of the current budget that need to be lowered or removed? This is an important question because it’s going to enable you to boost your funds in some key areas. If there are line items that didn’t use all of their budget for last year, consider basing your increase off the amount they used, as opposed to the amount they were budgeted for.

Example:

Let’s say you had a Hospitality line item that had a $2,000 allocation, but in the last year you only spent $1,350. You don’t want to penalize someone for coming in under budget, but you don’t want to ignore areas that you’ve over-budgeted for either.

So ask yourself:

  • Did it come in under budget because of the hard work and thriftiness of the owner of this line item? If so, publicly thank them. You might even invite them to be part of the budgeting process.
  • What gains could have possibly been made by spending the entire allocation? It’s possible that underspending in this area was actually an act of negligence that undermined this ministry’s effectiveness. If that’s the case, help set expectations in the future.
  • Are there other line items that could be better served by some of the money that’s going into this area? This is the ultimate question you need to answer when looking at various items in the budgeting process.

It’s entirely possible that you will want to base a budget increase off of the $1,350 that was spent as opposed to the $2,000 that was budgeted for last year. So if you wanted to increase your budget by 20 percent, you’d allocate $1,620 for Hospitality next year.

This gives you over $450 for other line items ($380 difference + 20 percent increase)!

Now you can look at the areas that went over budget and ask questions like:

  • Was it mismanagement that caused this to go over budget? It might be time to meet with this line item’s owner and take a hard look at the spending.
  • Did this line item go over budget with permission? There’s a good chance that unsuspecting issues or opportunities pushed this over budget with the board’s approval. If this increase looks like it’s important you might want to bump this line item up with some of the money you’ve saved from other line items. Remember: unplanned increases will need to be offset elsewhere.

2. Decide on your potential increase

You’ve already planned to budget for an increase, and after looking at last year’s performance, it’s time to decide how much that increase should be. If you think you’re on track to increase by 10 percent, you might want to budget for a 5 or 10 percent increase on top of that. Remember, you want to stretch and challenge your church to step up and get involved in the growth process. Your budget represents a measurable document to chart that growth.

Once you decide on an increase percentage, go through your finances and make adjustments taking into account some of the changes in line items that we’ve already discussed.

This might sound obvious and silly, but triple check your math. Any mistakes in the math could jeopardize the whole process. Have it proofed by someone you trust.

3. Communicate regularly with your church

Your church finances belong to the members of the church. It’s important that they’re on board with the outcome—and that the process is transparent. Start the year off with a business meeting that talks about last year’s budget and clearly lays out the allocations for the coming year.

Church members need to understand that—although the budget deals with money—it represents growth and commitment to key areas in the life of the church. It’s a barometer that reveals how aligned the church’s practices are with its strategies and goals.

Throughout the year, you want to communicate how the church is performing in regards to the budget. But it’s not enough to just point out where you might be short in regards to the budget: it’s also important to highlight some changes that can be made to keep the church on track.

Budgeting might not be fun, but it’s important

No one gets into ministry to mess with budgets, but that doesn’t mean that they’re unimportant. If you’re a leader in your church, you have a responsibility to care about the budget insofar as it’s a real-time measurement of your goals.

For other helpful tools, download our FREE ebook, Top 10 Tech Tools for Your Church, where we look at how you can make your operation run more smoothly.

 

Jayson D. Bradley

Jayson D. Bradley is a writer and pastor in Bellingham, WA. He’s a regular contributor to Relevant Magazine, and his blog JaysonDBradley.com has been voted one of the 25 Christian blogs you should be reading.

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