My wife and I recently went on a road trip up the entire coast of California. Our trek took us along the famed PCH (Pacific Coast Highway), also known as Highway 1. As we rounded the curves near Big Sur, looking at the Pacific Ocean, I told my wife I felt joy, an emotion not typically experienced while driving in California. There were many reasons to be joyful, being with my wife, the scenic beauty of the trip, and time away from the usual routine of life. But add to that list knowing we had budgeted for the trip and had enough money to enjoy ourselves. Budgeting removes the stress and anxiety accompanying expenses that span multiple categories. Yup, I’m that guy. About a year before our trip, I started building the budget for our trip. I calculated the number of miles each day, the average miles per gallon of our vehicle, and estimated the cost per gallon of gas to budget for travel. I budgeted the cost of each hotel and cabin along the way and how much food we would need for such a long trip, including breaking down snacks in the car, groceries for when we were in cabins, and restaurants. Our road trip is an example of a church budget in its most simplistic form.
Essential Steps to Building a Church Budget
Let’s use the road trip as an example of how to build a church budget:
- Define Goals and Objectives: Using the church’s mission, vision, and values, define the goals and objectives for the upcoming fiscal year. Road Trip: Experience the California Coastal Redwoods through a road trip that consists of camping and hiking.
- Estimate Income: Determine the Church Budget Target – using data, determine the income for the upcoming fiscal year. Road Trip: Determine how much we can save for the trip within the time frame given.
- Estimate Costs: Use historical data and research to determine the cost to accomplish the goals and objectives for each church area. Categorize these expenses in a Chart of Accounts (COA). Road Trip: Calculate gas consumption based on travel miles, MPG, and cost of gas. Estimate the cost of cabins and hotels. Determine the cost of food, including snacks, groceries, and restaurants.
- Compare Income to Costs: Determine the variance between the submitted budget from the operation and ministry teams against the budget target. Road Trip: We were able to put $300 per month into the vacation fund for ten months, giving us a road trip budget of $3,000. Our estimated costs totaled $4,500.
- Adjust the Budget: This is where the mission, vision, and values, along with the specific goals and objectives, come into play. Most churches are going to have bigger dreams than budgets. Clearly identifying what’s essential at the beginning of the budget process provides a framework to determine what to adjust or eliminate. Road Trip: When comparing the estimated costs to the actual budget amount, it was short by $1,500. We had to make tough decisions about the places we planned to stay and the length of time we stayed there. But, the objective was to experience the Redwoods, allowing us to downgrade hotels and shift food money around to hit our budget.
Church Budget Categories and Percentages
Regardless of your experience or expertise in church budgeting, churches should continue to monitor their financial health. The best way to do that is by comparing your church to healthy church percentages. Use the following list as a starting point to see how your church budget compares to healthy church norms.
Compensation (45%-55%)
- Salaries
- Housing Allowance (for ordained or licensed pastors)
- FICA
- Benefits (health, vision, dental, retirement, life insurance, etc.)
Operations (20%-40%)
- Facilities
- Mortgage
- Repair & Maintenance
- Utilities
- Mechanical (HVAC)
- Custodial
- Commercial Insurance
- Finance
- Office
- IT
- Marketing
Ministry (20%-35%)
- Outreach (local and global)
- Missionary Support
- Weekend Experience
- Care (Counseling, Divorce Care, Grief Care
- Children & Students
- Young Adults
- Adult Ministries
John Maxell said, “A budget is telling your money where to go, instead of wondering where it went.” As managers (stewards) of God’s resources, the church budget is the best way to show accountability to the donors and remain focused on the church’s mission, vision, and values.
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