Creating a church budget can be an overwhelming task. If your church has never had an operating budget in place, it’s one of the most important things you can do to make sure your finances are safe and you’re operating in a way that accomplishes all God has called you to do. But it’s often difficult to know where to start.
That’s why we’ve put together this guide to help you. Follow the steps below and you’ll be well on your way to an effective budget.
Vision & Goals
Before you start telling your money where to go, it’s important to determine your vision and goals. Your budget should reflect your goals.
For example, if you have a goal to send six teams on international missions this year, your budget should reflect that. Or if you’d like to start a backyard Bible club ministry in your community, be sure you allocate some budget for it.
Ultimately, your budget is an extension of the vision of the church, so treat it accordingly by establishing a clear vision and ministry goals before beginning the budgeting process.
Another exercise to undertake prior to beginning work on your budget is to evaluate what expenses you can cut. Almost all churches have unnecessary expenses.
For example, did you sign up for a subscription service you’re no longer using? Do you have an expense item for the church bus but your students now take a charter bus to camp?
Often there are items from days gone by you can cut to free up money for new goals.
Audit Last Year’s Budget
Do an audit of the previous year’s income and expense budget to determine what adjustments need to be made for this year. Pull all of your receipts from the previous year to determine if you need to bolster any particular areas or reduce other line items.
Pick Your Methodology
Determine how you’re going to adjust budgets from year to year:
- Will you use an incremental budgeting approach where you increase a percentage over previous years?
- Will you use a zero-based budgeting system where you start from scratch on every category?
- Perhaps you’ll use a merit-based system where you allocate budget percentages on the successes and/or failures of programs from the previous year and reward what worked.
There’s no right or wrong methodology, but you’ll certainly want to find the approach you’re going to use for ongoing budgeting and make plans accordingly based on that philosophy.
As you’re thinking through the budget, consider these common categories that churches use:
- Debt reduction
- Building & expansion
- Equipment & facilities (including utilities)
- Communication & marketing
- Ministry categories (children, students, Sunday programming, senior adults, etc.)
Budgeting Isn’t So Hard
Creating a budget, while one of the most important yearly activities of a church, doesn’t have to be difficult. Taking the time to think ahead about the big picture vision, goals, and philosophical approach can make the actual numbers-to-spreadsheet process much more efficient.