How to create a church budget

February 4, 2021

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.


1. Identify your church’s vision

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:

  1. Work with church leadership to establish your annual vision. What are your goals and priorities?
  2. Share your vision with your community, then survey them about what else they would like to prioritize as a church. Do they want to expand the youth ministry, invest more in benevolence, or fund an international mission trip? Asking them directly is the only way to find out! This two-way communication will also increase your community’s generosity and their buy-in to your church’s vision.
  3. Reconvene with your leadership team to create a plan for accomplishing the combined vision of the pastoral team and the broader church community.
  4. Estimate the costs associated with achieving your church’s annual vision and incorporate these costs into the following steps.

 “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

2. Forecast donations and other income

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:

  • Offerings & tithes: Cash, stocks/bonds, and other gifts to your church. On average, expect at least $15–20 in gifts per week per adult who attends your church. 10–25% of churchgoers tithe, with most giving 11–20% of their incomes. (Source)
  • Events: Income from fundraisers and ticket sales.
  • Miscellaneous: Book and merchandise sales, investment income, renting church facilities, etc.

 “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

3. Audit current expenses

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

4. Budget for all of next year’s expenses

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:

  • Personnel expenses (50–60%): Salaries for pastoral and administrative staff, wages for part-time and temporary workers, health and other benefits, payroll taxes, etc.
  • Facility expenses (15–30%): Rent or mortgage payments, utilities, maintenance and upkeep, insurance, etc.
  • Ministry expenses (10–30%): Children and youth programs, adult programs, evangelism and outreach efforts, missions trips, etc.
  • Benevolence & mission giving (5–15%): Gifts to charities, people in need, church plants, and other ministries.
  • Administrative expenses (1–5%): Engagement tools (your church’s website, mobile and TV apps, live streaming and other media delivery/hosting tools, digital giving solution, and group communication tools), A/V equipment, administrative software, postage and printing, office supplies, vehicle costs, etc. 
  • Cash reserves (1–5%): It’s important to build cash reserves to use as a “rainy day fund” or for future investments in your church. It’s recommended for churches to have enough cash reserves to cover 3–6 months of expenses.

 “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

5. Plan ahead for how church growth may impact your budget

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:

  • Will more space be required, necessitating add-ons or relocation to a larger building?
  • Will your church need to hire additional pastoral or administrative staff members?
  • Are there improvements to how donations are accepted—such as adopting online giving to encourage generosity through increased convenience—that you could implement to facilitate church growth?
  • Does your church need to invest in church engagement tools (a custom mobile app, church website, live streaming, and related tools) or other technologies to help you make more and better disciples?

 “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

6. Share the finished budget with your church members

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:

  • Educate on the importance of giving: Explain how the church’s ability to do ministry, offer benevolence, pay staff, etc. will be impacted by budgetary shortfalls. Touch on the biblical significance of giving in these conversations.
  • Show the impact of their generosity: Provide inspiring examples of how your community’s generosity has enabled the church to fulfill its mission in the past.
  • Demonstrate how to give: A refresher on the various ways your church accepts donations will make it that much easier for your community to give.

 “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

7. Keep an eye on church budget performance

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

Get the Church Budgeting Guide

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:

  • Church budget templates
  • Step-by-step budget creation guide
  • Top budgeting tips from real pastors
  • How to avoid church financial disasters
  • And much more!

Download now

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Jeff Harvey, Guest Author

Jeff lives in Austin, TX and is a husband, father, and bonsai enthusiast. He’s served churches for over 20 years as a pastor, teacher, and missionary. He also holds a MBA from George Fox University and is fluent in Portuguese and Spanish.

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