Famous investor Warren Buffett once said, “It is not necessary to do extraordinary things to get extraordinary results.” For churches, creating a church budget is a small step that can lead to big rewards, like freeing up more resources for ministry and building trust with your congregation.
However, some teams may not be sure how to set up a church budget. The good news is that church budgeting doesn't have to be complicated. This simple checklist will walk you through each step in the process of building your budget from scratch.
A well-planned and effective budget starts with your church’s vision. Your financial practices should always be rooted in your community’s calling, goals, and activities. Knowing your church’s vision for the year ahead will help plan how to create a church budget for income and expenses. This entails the following:
“Budgeting comes from vision which is developed into ministry plans—not the reverse. Vision and ministry drive the budget.” Karen Heppner, Pastor of Discipleship, The Bridget Markham
To avoid a budgetary shortfall, it’s crucial to start with forecasting income, then bring expenses into line with those forecasts. You’ll want to create annual and monthly estimates for various types of income, including:
“Budget your income, and bring expenses into line. While that may seem obvious for some, I’ve seen lots of churches that budget their expenses, and then bring their income into line.” Colin Cameron, Pastor, Holy Cross Burlington
Learning exactly how much money is currently being spent on each type of expense is the first step to establishing how your funds may need to be used in the coming year. Auditing your expenses will also help you identify potential misuse of funds, including unnecessary expenditures as well as theft and fraud.
“Increasing at an annual rate of more than six percent, researchers expect fraud committed against the church worldwide to reach the $80 billion mark by 2025. That’s still not the whole picture. Most cases of church fraud go unreported and therefore are not included in statistics.” Brotherhood Mutual
Estimate how much of your church’s annual budget you’ll spend for each of the following categories of expenses in the coming year. Below are approximate church budget percentages to help you start this process:
“Churches are great at planning and managing their expenses but are horrible at planning and managing their revenue. You have to do both.” Henry Brown, Discipleship Pastor, First Baptist Church Nederland
Church financial planning can only take so much into account. If your church outgrows its original budget, you’ll want to make preparations for how expenses will change—and plan ahead how to set up your church’s budget to change with them. As part of this planning, answer the following questions:
“Never let a budget overtake faith. Make the need known to the congregation and encourage people to step out in faith. Too often church leaders keep the information back and miss the lesson that God may have for His people.” Scott Bissell, Outreach Admissions Pastor, Scarborough Chinese Baptist Church
Financial transparency will help demonstrate that your church’s leaders are good stewards of the resources entrusted to them. But it’s not all about the numbers—when sharing the finished budget, make sure you also communicate the following to encourage generosity:
“Tell the story, then tell the numbers. Budgeting is helping people see where their time and work are going to help the church’s ministry.” Richard Bott, 43rd Moderator, The United Church of Canada
After creating a church budget, it’s important to track whether or not actual income and expenses fell in line with your projections—you may need to make some mid-year adjustments! Decide exactly when you’ll check in on budget performance, then create calendar reminders and meeting times for this purpose.
“Just as a farmer needs to plant their crop, so too does a congregation need to plan their mission. Invite your congregation to see a budget as a moral document.” Kevin Bates, Pastor, Magnolia Lutheran Church
There’s a lot more church budgeting advice where this came from! To get all of the knowledge and resources you need to be a good steward of your church’s finances, download a free copy of the Church Budgeting Guide! You’ll receive:
Over 14,000 churches and organizations trust Subsplash for the best digital tools to engage their communities through The Ultimate Engagement Platform™. Our team is dedicated to bringing you the best engagement tools and practical church resources.
If you would like to know more about Subsplash’s award-winning digital tools, let’s chat!