As Christians, we believe that every good thing has come from God. We are only stewards of these things, as we try to wisely use them for God’s kingdom. This Budgeting 101 Guide will help you to assess where you are, budget by paycheck, and reach your money goals.
S4E6 – What Does the Bible Say About Money? | 20+ Scriptures on Finances & Biblical Stewardship – A More Beautiful Life Collective Podcast
- S4E6 – What Does the Bible Say About Money? | 20+ Scriptures on Finances & Biblical Stewardship
- S4E5 – What Do Jerusalem, Athens & Rome Have to Do With Your Faith?
- S4E4 – You Don't Have to Agree With Them to Learn From Them: Why You Should Study Church History
- S4E3 – Bible Alone? Can We Really Just Follow the Bible?
- S4E2 – What If Questioning Your Faith Isn’t a Bad Thing?
Hey everyone! Welcome to A More Beautiful Life Collective. I’m Cayce Fletcher, and I’m here to walk hand in hand with you as we grow in grace, build with purpose, and live beautifully.
We are currently in the middle of a mini-series on Christian money principles. We’ve talked about what the Bible says about money, and then we’ve talked about why we should view ourselves as stewards of our (God’s) money. In this episode, we are going to be talking about how to practically start budgeting so that we can reach some of our money goals and deal rightly with what God has entrusted us with.
Biblical Stewardship
In the last post, we talked about why it is so important to view ourselves as stewards of our money.
Stewardship means:
- Your money is not your own.
- Your money should be used to glorify God.
- You should know what your money is being used for.
- You should use your money in wise ways.
When we are stewards, we are focused on how to use our money wisely for God’s glory. We are diligent in our work and in our budgeting. We bring excellence to our financial dealings, just like we want to pursue excellence in the other parts of our lives.
We need to make our budget with these principles of stewardship in mind. When we choose to follow Christ, we are also choosing to submit our bank account to him as well. We are wise to read the story of the rich young ruler in Matthew 19:16-22 and ask ourselves if we are following in the footsteps of the ruler or the disciples. Will we go away sad because we have great wealth? Or will we leave everything to follow Christ? What are we willing to sacrifice for Jesus?
Budgeting often does require sacrifice. When we budget, we set long-term goals, which means we have to forgo frivolous spending in the meantime. When we budget, we have to think about the implications of our spending. Does our spending reflect our values? Are we wasting our money on debt interest or things that don’t result in much long-term gain? And, we have to evaluate our lives as well. Are we spending the bulk of our days working to pay for things that we don’t want in order to impress others we don’t care about?
When we budget, we have to be honest with ourselves. Budgeting in this way can illuminate heart issues that we have to confront in order to live righteously. The Bible often warns of the dangers of wealth and riches. We need to heed the warnings and change our focus accordingly.
This post will walk you through how to budget by paycheck so you can reach your money goals.
8 Steps to Get Your Budget In Order
To steward our money well means that we need to get our budget in order. We need to have a healthy, wise relationship with money. Here are some steps you can follow to begin.
Get a copy of our budget kickstart guide on the shop. You can also get the FULL Spend With Purpose Budget Planner here.
Simple Paycheck Budget Template (Printable PDF) | One-Page Budget Tracker
Manage your money with clarity and confidence using this one-page printable paycheck budget template. Perfect for families, busy moms, and anyone ready to take control of their finances—one paycheck at a time.
You’ll find that you may already have completed some of these steps depending on your current life situation. If so, just skip it and move on to the next step. If you are starting at the very beginning, don’t worry – with some hard work and sacrifice, you can do it!
Step 1. Figure out the “WHY” behind your spending and set a vision and goal for your money.
To begin, we may be tempted to just jump in and start budget by paycheck – but if we do, we may miss out on what will actually make our budget stick.
When we begin looking at our budget, we need to step back first and analyze our hearts. If you jump into budgeting without understanding your relationship with money, you are much more likely to create a budget that doesn’t meet your needs, which is a surefire way to fail at sticking with it.
Money and finances are a charged topic. There’s the ever-present temptation of making the pursuit of money our God. There is also the baggage of your past. We all received money messages growing up from our parents and friends. We also may have picked up bad habits as we set out on our own. What are some of the beliefs that you have about money?
If you grew up with the message that there was never enough money to get the things that you need, you may find that you are overspending to amass more and more stuff so that you feel secure. (Or you may find that you are hyper-controlling and refuse to spend a penny on anything but necessities.) These money messages that you received, whether explicitly taught or just implied, can have long-lasting impacts.
Related: Biblical Stewardship: A Christian’s Money Goals
The messages contribute to our Financial Style, or how we relate to money. I find that people fall somewhere on 3 spectrums that determine their relationship with money.
- The first is the Acquisition Spectrum: Do you have avoidance and apathy about your income, or do you insatiably pursue more money?
- The second is the Spending Spectrum: Do you compulsively spend or do you want to hoard your money?
- The last is the Management Spectrum: Do you have a ‘head in the sand’ approach to your money and just hope it ‘all works out’ or are you hyper-organized and very controlling (even to the last penny)?
Knowing your Financial Style is one of the first steps to understanding the ‘Why’ behind your budgeting and spending. You then need to get down to the hard work of looking at the way you are currently living and how that measures up to the goals that you have for your life.
It’s helpful to write a vision of what you want your life to look like in the next 5, 10, and 20-30 years. Do you want a house? Do you want a family? What kind of opportunities and supports do you want to give your kids? What kind of trips do you want to take? What do you want your retirement to look like? What kingdom work would you like to do? All of these questions can help you to make a vision for your finances. This vision should become the why behind your budgeting. The decisions you make should reflect the ultimate vision you have.
Step 2. Write out ALL your debts and assets, and determine your net worth. Assess your money habits by tracking spending for the previous 2-3 months.
Once you set your vision, you have to assess where you are. This is a two-fold process. First, you need to look at your current financial situation. You need to write down all of your debts and assets. This can help you to measure your net worth. This is a good number to track as you work on getting your finances in order.
Second, you need to track your spending for the previous 2-3 months. You can’t know how to budget by paycheck if you don’t have a guide for what you usually spend.
Often, we just don’t know where our money is going. We may have an idea that we are spending ‘a bit’ on subscriptions or coffee, but seeing the numbers in black and white can be a wake-up call to get us to change our habits.
The Spend with Purpose Budget Planner walks you through steps 1 and 2 with thoughtful questions and a tracking system to know where your heart (and your money) is at.
Step 3. Create a budget calendar for the upcoming 12 months with fixed expenses, events, and other regular expenses that need to be saved for with sinking funds.
Once you’ve assessed your current money habits, you need to look at upcoming expenses to get an idea of the upcoming, fixed, recurring expenses. Follow these steps to create your budget by paycheck roadmap:
- Print out monthly calendars.
- First, write down all fixed expenses like utilities, subscriptions, house rent, debt, or car payments. It can be helpful to make a list of these payments with their payment date and amount.
- Then, write down any planned events or annual expenses with a projected amount. These could include birthdays, holidays, and vacations. It could also include taxes, annual subscriptions, and other larger expenses.
These budget calendars will be used to create your budget by paycheck. Budget Calendars are included in the Spend with Purpose Budget Planner. Get it on the shop here.
Step 4. Create a realistic budget for variable expenses and use cash envelopes to get a handle on spending. Include a Miscellaneous category for random expenses.
Then, you have to work on creating a realistic budget that includes fixed and variable expenses. Keep these reminders in mind:
- Your budget needs to be realistic and reflect your current circumstances, your values, and vision.
- Your budget will change with each paycheck. It’s not a one-and-done event, but a regular habit.
- Your budget should reflect the mantra: “Give, Save, Spend.” Tithe first. Then, set aside some for your emergency fund and sinking funds. The rest can be used for your expenses.
Budget By Paycheck
I use a zero-based, budget by paycheck method. This means that every dollar is accounted for in your budget. At the end of the budget, the total should be zero. It also means that I don’t budget by month. I budget by each paycheck.
To do this, grab your monthly budget calendars and a simple budget by paycheck template (like the one found in our Spend with Purpose Budget Planner – or get the standalone version here). Then, mark which paycheck will be used to pay for which fixed expenses. Your variable expenses can be estimated based on the tracking that you did in Step 2.
You’ll probably find that your previous spending may need to be curbed, but be sure to give yourself a realistic spending budget. You don’t want to underestimate because (1) you’ll feel discouraged and (2) you may end up with an out-of-whack budget.
Variable categories include:
- Food – Groceries
- Food – Restaurants and Takeout
- Gas
- Household expenses
- Miscellaneous funds
You may have additional categories depending on your life situation.
The Spend with Purpose Budget Planner breaks down how to budget by paycheck while using cash envelopes and sinking funds.
Step 5. Set up Emergency Savings Fund. (3x Min. Expenses) and Checking Account Cushion ($1,000).
Once you have created your budget by paycheck, you’ve done the bulk of the work that can be accomplished at one time. Now, you have to do the work over the next several months or even years to reach your budget goals.
First, you want to build a cushion in your checking account. This isn’t money that you are spending. Instead, it’s money that protects you from overdrafts when unexpected expenses come through. I’d recommend at least $1,000.
Then, you should build up an emergency fund. Your first goal should be to save up $1,000. But with the rising cost of living due to inflation, ultimately, you’ll want to save more. The recommendation is to save three to six times your minimum monthly expenses. You can put this money in a high-yield savings account, but you want to make sure it’s accessible if something comes up.
When you use the budget by paycheck method, it means that you are stating that every dollar is accounted for. If you have a few extra in your bank account because of curbing your spending, that’s not just ‘extra.’ That becomes your tool, your shovel, to dig yourself out of reckless spending and reach your money goals.
You need to make a line item for ‘extra emergency fund savings’ in your budget by paycheck template. Don’t just wait until you feel like you have enough. You need to make enough in your budget to account for it.
Visit A More Beautiful Life Collective Shop for bible studies, planners, and other resources.
Step 6. Pay down debt with the Avalanche or Snowball Method.
Debt – particularly consumer debt like Credit Cards and Car Loans – is one of the key areas that cripples your financial health, causes stress, and ultimately drives your life decisions. The borrower is truly a slave to the lender. If you are spending hundreds of dollars in interest each month due to debt, then you need to start paying it off as soon as possible.
You should already have a list of all your debts from step 2. Be sure to write down the interest rate, minimum payment, due date, and total amount on your list of debt. Calculating your total debt and the total amount of interest you are paying each month can be very motivating for making a commitment to pay down debt once and for all.
Like your emergency fund, you need to make a line item to pay it down using one of the following methods below. Again, don’t wait until you feel like you have enough. You need to make enough room in your budget by paycheck to pay down your debt.
At the same time, it can be overwhelming to see what you have to do to become debt-free. To help make the process of paying down debt more manageable, choose one of the following methods: the Avalanche method or the Snowball method.
- The Avalanche Method: Pays the debt with the highest interest rate first. Then, you roll the minimum payment into the debt with the next highest payment and so on until all debt is paid off.
- The Snowball Method: Pays the debt with the lowest amount first. Then, you roll the minimum payment into the debt with the next lowest amount and so on until all debt is paid off.
Both methods work. With the Avalanche Method, you may be saving money in the long run by limiting the amount of interest you are paying. With the Snowball Method, you get some quick wins early that can help lead to more motivation. You also eliminate the small minimum payments going out of your bank account.
What about student loans and mortgages? These larger loans generally have lower interest rates. It can still be worthwhile to pay them off early, but do so while also saving for retirement.
The Spend with Purpose Budget Planner walks you through the process of assessing your debt and making a plan to overcome it.
Spend with Purpose Budget Planner | Printable & Spiral-Bound Money Management System
Take control of your finances with the Spend with Purpose Budget Planner — a beautifully designed, faith-rooted system to help you align your spending with what matters most. Available as a printable download or spiral-bound workbook, with bonus printable cash envelope templates included.
Step 7. Determine retirement goals by the rule of ‘25x’ what you want to live on. Start saving using a 401K, Roth IRA, HSA, etc. Explore Investment Options.
Once you’ve built up a savings fund, fully funded your sinking funds, and paid down (almost) all debt, begin to explore investment options. It’s never too early to begin to think about the future. Your retirement goal should be at least a rule of 25x what you want to live on.
Dave Ramsey recommends waiting until your emergency fund is funded and your debt is paid off before beginning to invest. Others recommend investing while you go.
Like your emergency fund and debt payoff, your investment options will become a line item in your budget by paycheck template.
Retirement Savings:
- 401k – A Retirement Savings Plan where employees can choose to defer a portion of their salary, which means they’ll receive less in their paycheck. The deferred money is then invested in the 401(k) plan. Employers may match a certain amount each month. You can’t withdraw the money until you are 59 ½ years old. 401 (k) contributions are made pre-tax (and are taxed upon withdrawal). (403b, 457 (b), and pension plans operate in a similar way.)
- Roth 401k – Like a regular 401k, this is a Retirement savings plan where employees put a portion of their salary into an investment account. Employers may match their contribution. With this plan, the contribution is taxed. However, withdrawals from the account are not taxed in retirement.
- IRA – An Individual Retirement Account is an investment account that you open, contribute to, and manage independently from your employer. You can open one in addition to your 401 (k), or you can use this as your sole retirement account if self-employed. This account is contributed to pre-tax, but requires taxes upon withdrawal. Funds can’t be accessed until the 59 ½ year old (with the exception of certain expenses).
- Roth IRA – A Roth IRA is like a traditional IRA except the contributions are taxed and withdrawals are not.
Other Savings:
- HSA – A Health Savings Account is a tax-advantaged savings account that allows you to set aside money to pay for qualified medical expenses. You can use HSA funds to pay for deductibles, copayments, coinsurance, and other qualified medical expenses. You are eligible for these accounts if you have a high-deductible insurance plan.
- 529 plan – A College Savings Account that is tax-advantaged. Contributions are made post-tax, but no taxes are required on returns and withdrawals if the money is used for education.
Other Investment Options:
- Stocks
- Bonds
- Funds (including mutual funds and exchange-traded funds)
- Investment Trusts
- Alternative Investments, like hedge funds and private equity
- Options and Other Derivatives
- Commodities
You could have a do-it-yourself approach to investing, or you could hire someone to professionally manage your investments. The end goal is that you are trying to wisely steward your money, not just waste it without a care for the future.
Related: What does the Bible say about finances?
Step 8. Keep a handle on spending by continuing the steps. Beware of budget inflation.
Your finances are never a ‘one-and-done thing.’ It’s a process that requires commitment over the long haul. You may find that you complete all of these steps, but in a few months or years, you have some issues in your finances that you have to go back and fix. It’s not uncommon for someone to pay off all their credit card debt and then spend it all back. Just like issues with weight, this is something that requires diligence and consistency.
One key reminder is that you have to beware of budget inflation. When you pay down debt and begin to make more money, you may find that your budget inflates to the new max amount you can spend.
Your Budget by Paycheck should keep this in check. Remind yourself of your main goals as a Christian.
And, remember, the goal isn’t to ‘keep up with the Joneses’ or to create the most luxurious life for ourselves. The Goal is to honor God with our finances.
***If you have enjoyed visiting A More Beautiful Life Collective, please like, comment, share, and subscribe. Let’s make the world more beautiful together. This post contains affiliate links. If you purchase something through this link, I earn a small commission at no cost to you. It’s a win-win!***
Leave a Reply