3 Tips for Creating Your Church's Budget for 2020

By Kenice Patterson

Creating a budget can be one of the hardest tasks for a church to do, but I want you to know that it is possible to do it stress-free. While you may dread the process of creating an annual budget, it’s both a requirement of the job and an extremely important part of planning the year for your congregation. 

Proverbs 27:23 reminds us, “Be sure you know the condition of your flocks, give careful attention to your herds.” Having a clear idea of what your budget is as you go into a new year is one of the best ways to set your organization up for success. 

Setting up a new budget may seem daunting, especially to someone like a pastor who’s main focus is on ministry and who may not have experience in the financial aspect, like budgeting, for a church or ministry. 

In today’s blog, you’ll learn three tips to create the best budget for your organization as you approach the new year. 

Creating a budget

Defining what a budget is for your church is rather simple. 

In basic terms, a budget is a forecast of the income and expenses of the church. It all comes down to keeping track of the money coming in and the money going out. When you don’t have a plan for your money, you’ll be more likely to spend it on unnecessary items. 

A budget is intended to keep a church from going down a path of financial failure. Unless you have the safeguard of a budget, you could suddenly find your church in big money trouble. A tip that I would recommend is to begin planning next year’s budget at least one month before the new year so that any details can be worked out before the next fiscal year begins. The truth is that your budget is only going to be as good as your financial awareness. Here are three tips for creating a great budget for your church or ministry.

1. Determine your expected income

The first step when trying to figure out your income for the new year is to look at the previous year’s income. Also, when you are looking at your income, you want to make sure you are taking into consideration income coming in from all facets. Common sources of income for churches include:

• Offerings
• Tithes
• Charitable donations
• Building fund 
• Vision funds

There are also less common facets, but these are still important to account for. Such facets include:

• Investments
• Sale of products
• Event registration
• Designated gifts

These are the areas that have the possibility of change, so you will want to consider these areas when factoring your income for your up-and-coming budget.

2. Focus on your budget expenses

Now that you know where your income is coming from and you have a good expected income number for the new year, it’s time to focus on your expenses. The best place to start is to look at where you spent your money last year. Here are some common expense categories you can start with to see how much was spent last year and what you will spend in these categories in the new year: 

• Administration
• Facilities
• Ministry
• Outreach 
• Personnel

Each of these main categories will have other subcategories in which you will spend money, but having the numbers of what you spent will give you an overall idea of what you need to keep track of and how you should budget for those categories for next year. 

Once you have your totals on what you spent in each category, you need to make some decisions about things like, 

• In which categories do we need to spend less money? 
• What should we cut back on this year? 
• Can we raise the budget for this category? 
• What categories do we anticipate spending less money in? 

Be sure to consider growth for your ministry. For example, do you plan to start any new ministries or departments? What events do you want to plan for in the new year? Begin plugging numbers into these categories for these items until the expenses match your budgeted income. If the numbers aren’t working for you, you will either need to cut out some of the expenses or make a final decision to raise your budgeted amount in the different categories. 

3. Put the budget into action

In reality, you can spend months on creating a budget and putting the final touches on it. But, once the budget is complete and finalized by the pastor and the board, then the real work can begin. The implementation of the budget can be as difficult or as time-consuming as actually putting the budget together. Once the budget is in place, and everyone is aware of its framework, then safeguards must be put in place to make sure that all responsible parties stay within the confines of the budget.

Typically, if someone goes over in a category in the budget, it most likely occurred when there was no direct responsibility for that item. To prevent something like this from happening, I recommend assigning a staff member to be responsible for every line-item in the budget. This staff member may already be on staff, or you could ask a member of the church or ministry to help with this task. Be sure the person is trustworthy. 

By having a person responsible for implementing the budget, the church council knows who to go to if budget items are ever out of balance. The simple act of placing a staff person over a budget item gives them the responsibility of making sure that budget item stays in order. Generally, the person in charge of this will take that responsibility very seriously.

If you don’t have someone who handles these tasks for you, check out our Bookkeeping Service to see how adding a ministry-minded bookkeeper to your staff can greatly benefit your organization!

Help your church thrive financially

There is nothing more fulfilling for a team that has worked hard on making a budget that works for their organization than to see that budget implemented. Especially when they see it actually work! 

Creating a budget is essential for your church to thrive finically. A church budget is more than spreadsheets, predictions, and numbers. It’s a pathway into the heart of your church, illuminating the values and priorities of God’s people. If you care about your church, you will care about its budget because a budget reveals, facilitates, and sometimes clarifies how a church does its work. 

At StartCHURCH, we want you to lead your ministry with confidence. If you have any questions about creating a budget, categorizing your expenses, or our bookkeeping service, please call our specialists at 877-494-4655, or click the link below to schedule a call. 

May God bless you in your budget planning!

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