A Guide to Family Budgeting

By: Larry Burkett

It important for a Christian to be able to recognize financial bondage, but it is equally important to know how to achieve freedom. Financial freedom manifests itself in every aspect of the Christian’s life relief from worry and tension about overdue bills, a clear conscience before God and before other men and the absolute assurance that God is in control of his finances.

This is not to say that a Christian’s life will be totally void of any financial difficulties. Often God will allow the consequences of earlier actions to remain in order to reinforce the lesson; also, God does not promise to remove every difficulty. But no matter what circumstances are encountered, God promises peace.

When God manages our finances, we have nothing to worry about. He is the master of the universe. It is His wisdom that we are seeking. We’re still human beings and subject to making mistakes at any moment, for even when we understand God’s principles, it is possible to step out of His will, as we all do from time to time. But as soon as we admit the error and let God take control again, we are back under His guidance.

Once a Christian truly accepts and experiences financial freedom, there will never be a desire to stay outside of God’s will. Perfect peace is what is promised and perfect peace is what God delivers.

In our society, there are some who have found financial freedom, but I have never met a non-Christian who had true freedom from worry, anxiety,
tension, harassment or bitterness about money. Once someone experiences and lives financial freedom (meaning freedom from the bondage of debts, freedom from oppression of others, freedom from envy and covetousness or greed and freedom from resentfulness), that person stands out like a beacon at sea.


How can we achieve financial freedom? What must we do according to God’s plan?

1. Transfer Ownership

A Christian must transfer ownership of every possession to God. This means money, time, family, material possessions, education, even earning potential for the future. This is essential if we are to experience the Spirit-filled life in the area of finances (Psalms 8:6).

A Christian must realize that there is absolutely no substitute for this step. If you believe that you are the owner of even a single possession, then the events affecting that possession are going to affect your attitude. God will not force His will on us. He will not input His perfect will into our lives unless we first surrender our will to Him.

If, however, we make a total transfer of everything to God, He will demonstrate His ability. It is important to understand and accept God’s conditions for His control (Deuteronomy 5:32, 33). God will keep His promise to provide every need we have through physical, material and spiritual means, according to His perfect plan.

It is simple to say, “I make total transfer of everything to God,” but not so simple to do. At first, most people will experience some difficulty in consistently seeking God’s will in the area of material things because we are so accustomed to self-management and control. But financial freedom comes from knowing God is in control.

What a great relief it is to turn our burdens over to Him. Then, if something happens to the car, you can say, “Father, I gave this car to You; I’ve maintained it to the best of my ability, but I don’t own it. It belongs to You, so do with it whatever You would like.” Then look for the blessing that God has in store as a result of this attitude.

2. Freedom from Debt

A Christian must get out of debt altogether. What is debt? Here is a scriptural definition:

* Payment is past due for money, goods or services that are owed to other people.

* The total value of unsecured liabilities exceeds total assets. In other words, if you had to cash out at any time, there would be a negative balance on your account.

* Anxiety is produced in the area of financial responsibility, and the family’s basic needs are not being met either because of past or present buying practices.

A. Written Plan

A written plan is an absolute necessity for everyone who is in financial bondage.

Use a written plan of all expenditures and their order of importance. The order of importance is crucial because we have lost the point of reference between needs, wants and desires. Let’s examine the differences between a need, a want and a desire.

* Needs. These are the purchases necessary to provide your basic requirements, such as food, clothing, a job, home, medical coverage and others. “And if we have food and covering, with these we shall be content” (I Timothy 6:8).

* Wants. These involve choices about the quality of goods to be used: dress clothes vs. work clothes, steak vs. hamburger, a new car vs. a used car, etc. I Peter 3:3,4 gives a point of reference for determining wants in a Christian’s life: “And let not your adornment be external only braiding the hair, and wearing gold jewelry, and putting on dresses but let it be in the hidden person of the heart, with the imperishable quality of a gentle and quiet spirit, which is precious in the sight of God.”

* Desires. These are choices according to God’s plan which can be made only out of surplus funds after all other obligations have been met. I John 2:15, 16 says, “Do not love the world, nor the things in the world. If anyone loves the world, the love of the Father is not in him. For all that is in the world, the lust of the flesh and the lust of the eyes and the boastful pride of life, is not from the Father, but is from the world.”

B. Living Essentials

A Christian in debt must stop any expenditure that is not absolutely essential for living (Proverbs 21:17). Look for services around the home that can be done without outside cost. Also, begin to develop some home skills. By doing this, you can begin to cut down on some of the expenditures that are not really essential.

What I’m expressing is an attitude of conservatism. Begin to eliminate expenditures that are not vital, remembering that many expenditures are assumed to be essential only because of our society. Fifty years ago almost all the labor supplied in the home was through family members – not professionals who charged for it. Christians in financial bondage must begin to assess the things they can do for themselves and stop the frivolities. Once a Christian has begun to do these things, whether in debt or not, it will become fun and will help stabilize family life.

C. Think Before Buying

A Christian in debt (and even those who are not) should think before every purchase (Proverbs 24:3). Every purchase should be evaluated as follows:

* Is it a necessity? Have I assessed whether it is a need, a want or a desire?

* Does the purchase reflect my Christian ethics? (For example a Playboy subscription does not.) Can I continue to take magazines, encyclopedias or book and record subscriptions while I owe others?

* Is this the best possible buy I can get, or am I purchasing only because I have this credit card?

* Is it a highly depreciative item? Am I buying something that will devalue quickly? (Swimming pools, boats and sports cars all fall into this category.)

* Does it require costly upkeep? (Many items fall within this category mobile homes, swimming pools, color television sets.)

D. Discontinue Credit Buying

A Christian in debt should also begin buying on a cash basis only. Often someone in debt, with an asset that can be converted into cash, will ask, “Would it be better to sell this asset and pay off the debts?” That’s a normal mistake to make, but it only treats the symptom rather than the problem.

I remember a couple who were in dire financial bondage from credit card debts. They owed over $20,000 and paid in excess of $4,000 a year in interest alone. In our planning, it seemed reasonable for them to sell their home and apply the money to their debts, which would have paid them off. They did so, but less than a year later they were back in again with about $6,000 in credit card debts and no home this time.

What happened? I had treated a symptom rather than the problem. The problem was their attitude toward credit cards. I had their assurance that they would not use the credit cards, but without working out a plan for them to discontinue the use of those cards, they fell right back into the same trap. As soon as they needed something and lacked the cash to purchase it, out came the card.

The principle to observe is this: If you are in debt from the misuse of credit, stop – totally stop – using it. One of the best things to do with credit cards when in debt is to preheat the oven to 400 degrees and put them in it. Then mail the cards back to their respective companies and ask them to mail you no more. Include in your letter the plan for paying that credit card debt, and then commit yourself to buying solely on a cash basis.

After good habits have been developed and the bondage from the misuse of credit cards has been broken, then evaluate the feasibility of converting assets to pay off the debts. In that way you won’t simply be treating the Symptom. Once someone has overextended his finances, it is necessary to sacrifice some of the wants and desires in life to get current; otherwise, he will continue to borrow and only get deeper into bondage.

E. Avoid Leverage

When in debt, avoid the use of what is called “leverage.” Leverage is the ability to control a large asset with a relatively small amount of invested capital.

For example, if you bought a piece of property that cost $10,000 and required $1,000 down, that represents a nine-to-one lever. You have invested 10 percent of your money and borrowed 90 percent.

Borrowing money to invest is not a scriptural principle. For when a Christian invests and borrows the money from a bank to do so, the repayment of the bank loan is dependent on the investment making a profit. But if a profit is not made and the investor can’t make the payments, he loses the investments and still owes the bank. The result? Financial bondage.

F. Practice Saving

A Christian should practice saving money on a regular basis. This includes those who are in debt. Even if it is only $5 a month, develop a discipline of saving.

This does not mean to store up a large amount of money to the sacrifice of creditors. However, one of the best habits that families can develop is saving a small amount on a regular basis.

Everyone in our society living above the poverty level has the capability to save money, but many fail to do so because they believe that the amount that they can save is so small it’s meaningless. Others believe that God frowns upon a Christian saving anything. Neither of these two reasons is scriptural. “There is precious treasure and oil in the dwelling of the wise, but a foolish man swallows it up” (Proverbs 21:20). The common attitude presented in the Bible is to save on a regular basis, and it is important that Christians develop good habits to replace bad habits.

All told, to get out of debt, a Christian must utilize these points we’ve just discussed; there is no alternative under God’s plan for being debt-free.

3. Establish the Tithe

Every Christian should establish the tithe as the minimum testimony to God’s ownership. How can anyone say that he has given total ownership to God when he has never given testimony to that fact?

It is through sharing that we bring His power in finances into focus. In every case, God wants us to give the first part to Him, but He also wants us to pay our creditors. That requires establishing a plan and probably making sacrifices of wants and desires until all debts are current.

You cannot sacrifice God’s part – that is not your prerogative as a Christian. “Now this I say: he who sows sparingly shall reap sparingly; and he who sows bountifully shall also reap bountifully” (II Corinthians 9:6). So what is the key? If a sacrifice is necessary, and it almost always is, do not sacrifice God’s or your creditor’s share. Choose a portion of your own expenditures to sacrifice.

4. Accept God’s Provision

To obtain financial peace, recognize and accept that God’s provision is used to direct each of our lives. Often Christians lose sight of the fact that God’s will can be accomplished through a withholding of funds; we think that He can direct us only by an abundance of money. But God does not choose for everyone to live in great abundance. This does not imply poverty, but it may mean that God wants us to be more responsive to His day-by-day control.

Each Christian must learn to live on what God provides and resist pressure brought on by driving desires for wealth and material things. This necessitates planning lifestyles around the provision that God has supplied. It can be done!

5. A Clear Conscience

A Christian must have a clear conscience regarding past business practices and personal dealings. Freedom from these may well require restitution as well as a changed attitude.

I recall a friend who had wronged an individual financially before he became a Christian. God convicted him about this and indicated that he should go and make restitution. He contacted this individual, confessed what had been done and offered to make it right. The person refused to forgive and refused to take any money.

For awhile it hurt my friend’s ego and pride; then he realized that it was not for the offended person that he had confessed, but for himself. It was not for the loss that restitution was offered, but for his relationship with God. God had forgiven him, and he had done exactly what God had asked. Nothing further was required.

6. Put Others First

A Christian seeking financial freedom must always be willing to put other people first. This does not imply that a Christian has to be a doormat for others; it simply means that he doesn’t profit at the disadvantage of someone else. The key, again, lies in attitude.

7. Limit Time Involvement

A Christian must also limit time devoted to business affairs when family involvement suffers. “Do not weary yourself to gain riches; cease from your consideration of it. When you set your eyes on it, it is gone. For wealth certainly makes itself wings, like an eagle that flies toward the heavens” (Proverbs 23:4, 5). Many Christians are trapped in this cycle of over commitment to business or money-related pursuits.

It is important to remember that the priorities God sets for us are very clear and that every Christian seeking God’s best must understand them.

The first priority in a Christian’s life is developing his personal relationship with Jesus Christ.

The second priority of a Christian’s commitment is to his family, including teaching them from God’s Word.

This training requires a commitment to the family unit – and that means a specific time commitment, too. Christ deserves the best part of our day. If you study best in the morning, get up early in the morning and give time to the Lord. Sacrifice if necessary to do so. If you find that your family time together can take place best between eight and nine in the evening commit that time to God. Turn off the television, have the children do their homework early, and begin to study the Bible together. It is important for the whole family to understand God and pray together. Pray for others in need, too. And have your children become aware that Christians, as intercessors, can pray for others and expect God to answer.

The third priority in a Christian’s life should be church activities, social groups, work and all the hobbies that he might have.

8. Avoid Indulgence

Every Christian, to achieve financial freedom, must avoid the indulgences of life.

The range in which God’s will can be found is between Luke 9:23, when Christ said, “If anyone wishes to come after Me, let him deny himself, and take up his cross daily, and follow Me,” and John 6:27: “Do not work for the food which perishes, but for the food which endures to eternal life, which the Son of Man shall give to you, for on Him the Father, even God, has set His seal.”
Does your lifestyle fit within this range? Are you willing to trust God and deny yourself some indulgences? As you do, He will supply you even more.

Unfortunately, most of us are self-indulgers, rarely passing up a want or desire, much less a need. But, in light of the needs around us, it is important that Christians assess their standards of living. Most of us can reduce our expenditures substantially without a real reduction in living standard.

9. Christian Counseling

It is important to seek good Christian counseling whenever in doubt. “Without consultation, plans are frustrated, but with many counselors they succeed” (Proverbs 15:22). God admonishes us to seek counsel and not to rely solely on our own resources. In financial planning, many Christians become frustrated because they lack the necessary knowledge, and then give up. God has supplied others with the ability to help in the area of finances. Seek them out.


The information in this section is provided as a practical guide to help you establish a family budget. As you develop and use a financial plan, you should follow several logical steps, each requiring individual effort.

1. List Household Expenditures on a Monthly Basis.

A. Fixed Expenses

* Tithe
* Federal income taxes (if taxes are deducted, ignore this item)
* State income taxes (if taxes are deducted, ignore this item)
* Federal Social Security taxes (if taxes are deducted, ignore this item)
* Housing expense (payment/rent)
* Residence taxes
* Residence insurance
* Other
B. Variable Expenses

* Food
* Outstanding debts
* Utilities
* Insurance (life, health, auto)
* Entertainment, recreation
* Clothing allowance
* Medical/dental
* Savings
* Miscellaneous

NOTE: In order to accurately determine variable expenses, it is suggested that both husband and wife keep an expense diary for 30 days. List every expenditure, even quarter purchases.

2. List Available Income Per Month.

Here is a list of possible income sources. NOTE: If you operate on a non-fixed monthly income, use a yearly average divided into months.

* Salary
* Rents
* Notes
* Interest
* Dividends
* Income tax refund
* Other

3. Compare Income vs. Expenses.

If total income exceeds total expenses, you have only to implement a method of budget control in your home. If, however, expenses exceed income (or more stringent controls in spending are desired), additional steps are necessary. In that case, an analysis of each budget area to reduce expenses is called for.

Let’s examine closely what I call “budget busters.” These are the large potential problem areas that can ruin a budget. Failure to control even one of these problems can result in financial disaster in the home. This area is evaluated by typical budget percentages for a $12,000-$30,000 income. Naturally, these percentages are not absolute and will vary with income and geographical location.

A. Housing (32 percent of net income)

Typically, this is one of the largest home budget problems. Many families buy a home they can’t afford because they are motivated by peer pressure or some other negative influence. It is not necessary for everyone to own a home. The decision to buy or rent should be based on needs and financial ability rather than internal or external pressure.

B. Food (15 percent of net income)

Many families buy too much food. Others buy too little. Typically, the average American family buys the wrong type of food. The reduction of a family’s food bill requires quantity and quality planning.

Grocery-Shopping Hints:

* Always use a written list of needs.
* Try to conserve gas by buying food for a longer time period and in larger quantities.
* Avoid buying when hungry (especially if you’re a “sugarholic”).
* Use a calculator, if possible, to total purchases.
* Reduce or eliminate paper products paper plates, cups, napkins, etc. (Use cloth napkins.)
* Evaluate where to purchase sundry items such as shampoo, mouthwash, etc. (These are normally somewhat cheaper at chain drug-store sales.)
* Avoid processed and sugar-coated cereals. (These are expensive and have little nutritional value.)
* Avoid prepared foods, such as TV dinners, pot pies, cakes, etc. (You are paying for expensive labor that you can provide.)
* Determine good meat cuts that are available from roasts or shoulders, and have the butcher cut these for you. (Buying steaks by the package on sale is fairly inexpensive also.)
* Try house brand canned products. (These are normally cheaper and just as nutritious.)
* Avoid stores that give merchandise stamps if their prices reflect the cost of the stamps. (Not all do some simply substitute stamps for other advertising.)
* Purchase milk, bread, eggs, etc. from specialty outlet stores if available, as prices are usually 10-15 percent lower. (Keep some dry milk on hand to reduce quick trips to the store.)
* Avoid buying non-grocery items in a supermarket, except on sale. (These are normally “high mark-up” items.)
* For baby foods, use normal foods processed through a blender.
* Leave the children at home to avoid unnecessary pressure.
* Check every item as it is being “rung up” at the store and again when you get home.
* Consider canning fresh vegetables whenever possible. Make bulk purchases with other families at farmers’ markets and such. (NOTE: Secure canning supplies during off seasons.)

C. Automobiles (15 percent of net income)

The advertising media refers to us as “consumers,” but that’s not always the best description. I believe that P.T. Barnum had a more apt word: suckers. Often we are unwise in our decision making when it comes to machines – especially cars.

Many families will buy new cars they cannot afford and trade them long before their utility is depleted. Those who buy a new car, keep it for less than four years and then trade it for a new model have wasted the maximum amount of money. Some people, such as salesmen who drive a great deal, need new cars frequently; most of us do not. We swap cars because we want to not because we have to. Many factors enter here such as ego, esteem, maturity, etc.

D. Debts (5 percent of net income)

It would be great if most budgets allocated 7 percent or less for debts. Unfortunately, the norm in American families is far in excess of this amount. As previously discussed, credit cards, bank loans and installment credit have made it possible for families to go deeply into debt. What can you do once this situation exists? Try the following:

* Destroy all of your credit cards as a first step.
* Establish a payment schedule that includes all creditors.
* Contact all creditors, honestly relate your problems and arrange an equitable repayment plan.
* Buy on a cash basis and sacrifice your wants and desires until you are current.

E. Insurance (5 percent of net income)

It is unfortunate to see so many families misled in this area. Few people understand insurance – either how much is needed or what kind is necessary. Almost no one would allow someone to sell him a Rolls Royce when he could afford only a Chevrolet; yet, many purchase high cost insurance when their needs dictate otherwise.

Insurance should be used as supplementary provision for the family, not protection or profit. An insurance plan is not designed for saving money or for retirement. Ask anyone who assumed it was; the ultimate result was disillusionment and disappointment.

In our society, insurance can be used as an inexpensive vehicle to provide future family income and thus release funds today for family use and the Lord’s work. In excess, this same insurance can put a family in debt, steal the Lord’s money and transfer dependence to the world.

One of your best insurance assets is to have a trustworthy agent in charge of your program. A good insurance agent is usually one who can select from several different companies to provide you with the best possible buy and who will create a brief, uncomplicated plan to analyze your exact needs.

F. Recreation/Entertainment (6 percent of net income)

We are a recreation-oriented country. That is not necessarily bad if put in the proper perspective. But those who are in debt cannot use their creditor’s money to entertain themselves. The normal tendency is to escape problems, even if only for a short while-even if the problems then become more acute. Christians must resist this urge and control recreation and entertainment expenses while in debt.

What a terrible witness it is for a Christian who is already in financial bondage to indulge himself at the expense of others. God knows we need rest and relaxation, and He will often provide it from unexpected sources once our attitude is correct. Every believer, whether in debt or not, should seek to reduce entertainment expenses. This can usually be done without sacrificing family quality time.

Recreation Hints:

* Plan vacations during “off seasons” if possible.
* Consider a camping vacation to avoid motel and food expenses. (Christian friends can pool the expenses of camping items.)
* Select vacation areas in your general locale.
* Consider swapping residences with a Christian family in another locale to provide an inexpensive vacation.
* Use some family games in place of movies (like some of those unused games received at Christmas).
* Consider two or more families taking vacation trips together to reduce expense and increase fellowship.
* If flying, use the least expensive coach fare. (Late night or early morning usually saves 10 to 20 percent.)

G. Clothing (5 percent of net income)

Many families in debt sacrifice this area in their budget because of excesses in other areas. And yet, with prudent planning and buying, your family can be clothed neatly without great expense. This requires effort on your part in order to do the following:

1. Save enough money to buy without using credit.
2. Educate family members on care of clothing.
3. Apply discipline with children in order to enforce these habits.
4. Develop skills in making and mending clothing.

Learn to be utilizers of our resources rather than consumers. How many families have closets full of clothes they no longer wear because they are “out of style”?

Many families with large surplus incomes spend excessively in the area of clothes. Assess whether it really matters that you have all of the latest styles. Do your purchases reflect good utility rather than ego? Do you buy clothes to satisfy a need or a desire?

Budget Hints:
* Make as many of the children’s clothes as time will allow. (Average savings is 50 to 60 percent.)
* Make a written list of clothing needs and purchase during the “off” season as often as possible.
* Select outfits that can be mixed and used in multiple combinations rather than as a single set.
* Frequent the discount outlets which carry unmarked “name brand” goods.
* Frequent authentic factory outlet stores for closeout values on top quality merchandise.
* Select home washable fabrics in new clothes.
* Use coin-operated dry cleaning machines instead of commercial cleaners.
* Practice early repair for damaged clothing. Learn to utilize all clothing fully (especially children’s wear).

H. Medical/Dental Expenses (5 percent of net income)

You must anticipate these expenses in your budget and set aside funds regularly; failure to do so will wreck your plans and lead to indebtedness. Do not sacrifice family health due to lack of planning, but at the same time, do not use doctors excessively. Proper prevention is much cheaper than correction. You can avoid many dental bills by teaching children to eat the right food and clean their teeth properly. Your dentist will supply all the information you need on this subject. Many doctor bills can be avoided in the same way. Take proper care of your body through diet, rest and exercise and it will respond with good health. Abuse your body and you must ultimately pay through illnesses and malfunctions. This is not to say that all illnesses or problems are caused by neglect, but a great many are.

Do not be hesitant to question doctors and dentists in advance about costs. Also, educate yourself enough to discern when you are getting good value for your money. Most ethical professional men will not take offense at your questions. If they do, that may be a hint to change services.

In the case of prescriptions, shop around. You will be amazed to discover the wide variance in prices from one store to the next. Ask about cash discounts, too. Many stores will give 5 to 10 percent off for cash purchases.

I. Savings (5 percent of net income)

It is important that some savings be established in the budget. Otherwise, the use of credit becomes a lifelong necessity and being in debt becomes a way of life. Your savings will allow you to purchase items for cash and shop for the best buys, irrespective of the store.

Savings Hints:

* Use a company payroll withdrawal, if possible. This removes the money before you receive it.
* Use an automatic bank withdrawal from your checking account.
* Write your savings account a check just as if it were a creditor.
* When an existing debt is paid off, reallocate that money to savings.

J. Miscellaneous Expenses (6 percent of net income)

These can include a myriad of items. Some of the expenses occur monthly while others occur on an as-needed basis (such as appliances).

One of the most important factors in home expenses is you. If you can perform routine maintenance and repair, considerable expenses can be avoided. Many people rationalize not doing these things on the basis that their time is too valuable; that is nonsense. If every hour of the day is tied up in the pursuit of money then, as previously defined, you’re in bondage. A part of care and maintenance around the home relates to family life, particularly the training of children. When they see Mom and Dad willing to do some physical labor to help around the home, they will learn good habits. But if you refuse to get involved, why should they? Where will they ever learn the skills of self-sufficiency? Some men avoid working on home projects because they say they lack the necessary skills. Well, those skills are learned, not gifted. There are many good books that detail every area of home maintenance. As previously mentioned, at some point in the future many of these skills will be necessities rather than choices.

Living on a budget is not only prudent, but it can be fun. As you have successes in various areas, share them with others. Challenge your children as well.

You now have the necessary tools to establish a budget. The rest is up to you. God’s blessing rests upon those whose lives are lived “decently and in order.”

(The above material was published by Focus on the Family, Colorado Springs, CO.)

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