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Practical Tips for Managing Church Finances: A Guide to Budgeting

Managing church finances can be a challenge, but it doesn't have to be. 

With some planning and organization, you can create a budget that will help your church stay on track financially. Let’s go over some practical tips for managing church finances, including how to create a budget, track your spending and stay on budget.

Why Churches Need a Budget

Churches — like every organization — need a budget to track their income and expenses, plan for the future and make wise financial decisions. Here are some steps for creating a church budget.

5 Steps for Creating a Church Budget

1. Determine Your Income Sources

Identify all of the ways that you earn money. 

This includes your primary source of income, as well as any secondary sources of income, such as investments or rental properties. 

Once you know all of your income sources, you can start to track how much money you earn from each source each month. This will help you see how much money you have coming in each month and make it easier to create a budget that works for you.

2. Identify Your Expenses

Track your spending for a month or two. 

This will help you see where your money is going and what your biggest expenses are. 

Once you know what your expenses are, you can start to categorize them into different categories. This will help you see how much you're spending in each category and make it easier to create a budget that works for you.

3. Categorize Your Expenses

There are many different ways to categorize your expenses when creating a budget. 

For churches specifically, some common categories include:

    • Rent, mortgage, property taxes and renters insurance
    • Mileage reimbursement, rental cars, gas and car insurance
    • Food delivery, catering, snacks, and eating out
    • Electricity, gas, water and trash services
    • Credit card payments and other loans
    • Travel expenses
    • Entertainment expenses
    • Charity partnerships
    • Retirement and emergency fund savings

4. Allocate Funds to Each Category

There are a few different ways to allocate funds to each category when creating a budget. One popular method is the 50/30/20 rule. This rule suggests that you allocate 50% of your income to needs, 30% to wants and 20% to savings and debt repayment.

Another popular method is to use the zero-based budget. This method requires you to allocate every dollar of your income to a specific category. This can help you stay on track with your spending and make sure that you are not overspending.

There is no one-size-fits-all answer to this question, as the best way to allocate funds to each category will vary depending on your financial situation.

5. Set Realistic Goals

When creating a budget, it is important to set realistic goals. If your goals are too ambitious, you are likely to become discouraged and give up. However, if your goals are too easy, you may not be motivated to stick to your budget.

    • Start small. Set small, achievable goals. This will help you build momentum and make it more likely that you will stick to your budget in the long run.
    • Be specific. Be as specific as possible. For example, instead of saying, ‘I want to save more money,’ say, ‘I want to save $500 per month.’ This will make it easier to track your progress and stay on track.
    • Be realistic. Be realistic about income and expenses. Don't try to save more money than you can realistically afford. Don't try to do too much with too little money. Start with a realistic assessment of your church's income and expenses.
    • Be flexible. Your financial situation may change over time, so it is important to be flexible with your goals. If you find that you are not able to meet your goals, make adjustments as needed. Things will change, so be prepared to adjust your budget as needed.
    • Be patient. It takes time to create a budget that works for you. Don't expect to get it right the first time. Be patient and keep working at it until you find a budget that you can stick to.

Essential Church Budget Categories

Staff Salaries and Benefits

The average salary for a church staff member is $44,783 per year, but this can vary depending on the size of the church, the position and the experience of the staff member. In addition to salary, church staff members may also receive benefits such as health insurance, retirement savings plans, and paid time off.

Facility Maintenance and Upkeep

Facility maintenance and upkeep for a church involves tasks such as cleaning, repairing, and replacing equipment, as well as ensuring that the building is safe and accessible. This can be a costly and time-consuming endeavor, but it is important to keep the church's facilities in good condition so that they can be used for their intended purpose.

Outreach and Evangelism

Outreach and evangelism are two important aspects of church ministry. Outreach involves reaching out to the community with the love of Christ, while evangelism involves sharing the gospel message with others. Both outreach and evangelism are important ways for churches to fulfill their mission.

Education and Discipleship

Both education and discipleship are important ways for churches to equip their members to live out their faith in the world. And both often require an investment of time and money from the church.

Administrative Expenses

Administrative expenses are the costs associated with running the day-to-day operations of a church. These costs can include things like office supplies, utilities, insurance and accounting fees. Administrative expenses are an important part of church budgeting, and it is important to make sure that these costs are kept in check.

Miscellaneous Expenses

Miscellaneous expenses are those that do not fit neatly into any other category. These expenses can include things like travel costs, equipment rentals, and professional fees. It is important to track miscellaneous expenses so that you can budget for them and make sure that they do not get out of hand.

Here are some examples of miscellaneous expenses that a church might incur:

    • Travel costs for staff members who travel to attend conferences or training events
    • Equipment rentals for things like sound systems or projectors
    • Professional fees for things like accounting or legal services
    • Supplies for church events, such as food, decorations, or printing costs
    • Donations to other charities or ministries

What a Healthy Church Budget Looks Like

Percentage Guidelines for Church Budget Categories

There are no hard and fast rules for percentage guidelines for church budget categories, but here are some general ranges that can be helpful:

    • Personnel: 40-50%
    • Operational: 20-30%
    • Discipleship: 10-20%
    • Evangelism/Missions: 10-25%

These percentages are just a starting point, and each church will need to adjust them based on its unique circumstances. For example, a new church plant may need to allocate a larger percentage of its budget to personnel, while a larger, more established church may be able to allocate more of its budget to missions.

It is important to remember that the goal of a church budget is to support the church's mission and ministry. The budget should be a tool that helps the church achieve its goals, not an end in itself.

How to Adjust Your Budget Over Time

Review your budget regularly. At least once a month, review your budget to see how you're doing. Make sure you're sticking to your spending plan and that you're on track to reach your financial goals.

Adjust your budget as needed. If you find that you're not sticking to your budget, or if your income or expenses change, adjust your budget accordingly.

Be flexible. Things will come up that require you to adjust your budget. Be prepared to make changes as needed.

Don't get discouraged. If you make a mistake, don't get discouraged. Just adjust your budget and keep going.

Consider Consulting an Accountant for Your Church Budget

How to Find an Accountant

Ask for recommendations from other churches in your area. Word-of-mouth is often the best way to find a good accountant. Talk to other church leaders in your community and see if they have any recommendations.

Check with your state's board of accountancy to see if there are any certified public accountants (CPAs) who specialize in working with churches. The National Association of Church Business Administrators (NACBA) also has a directory of CPAs who specialize in working with churches.

Interview several accountants before making a decision. Once you have a few names, schedule interviews with each accountant to see if they are a good fit for your church. Be sure to ask about their experience with churches, their fees, and their availability.

Be sure to get references from previous clients. Ask each accountant for a list of references from previous church clients. Contact these references and ask them about their experience with the accountant.

BELAY can be a valuable tool for churches that are looking to save money. By automating tasks, negotiating discounts, tracking expenses, and generating reports, BELAY can help churches save money and improve their financial management.

BELAY's Accounting Services can help a church with its budget in many ways. Here are a few.

  • Help you create a budget. BELAY can help you create a budget that is realistic and achievable. They will work with you to identify your income and expenses, and then help you create a budget that will help you reach your financial goals.
  • Help you track your spending. BELAY can help you track your spending so that you can see where your money is going. This will help you identify areas where you can cut back.
  • Help you stay on budget. BELAY can help you stay on budget by providing you with reports and alerts. They will also work with you to make adjustments to your budget as needed.
  • Help you prepare for audits. BELAY can help you prepare for audits by keeping your financial records organized and up-to-date. They will also work with you to understand the audit process and what to expect.
  • Provide financial advice. BELAY can provide you with financial advice on a variety of topics, such as investing, retirement planning, and tax planning. They will work with you to create a financial plan that meets your individual needs.

BELAY's Accounting Services can be a valuable asset to any church that is looking to improve its financial management. By helping you create a budget, track your spending, stay on budget, and prepare for audits, BELAY can help you save money and reach your financial goals.