When it comes to creating a budget , a lot of church leaders feel like they have been thrown in the deep end. Even if you understand the significance of your church budget (or perhaps because you understand its significance), you may not feel comfortable making important financial documents like this.
Becoming a church leader usually does not come with extensive training in accounting. When so much of your role focuses on people and ministry, it is easy to see creating a budget as just another task or a box to check. Because of its arduous nature, churches make mistakes with their budgets.
Here are some common church budget problems you should watch out for.
1. Overlooking your budget’s importance
Budgeting is not fun. It is, however, essential to the health and growth of your church. This strategic document will play a vital role in the coming year, and the attention you pour into it will spill over into every area of church ministry.
If you do not take the budgeting process seriously, you are bound to run into problems down the road. Just like your mission and vision statements, this is a time to look down the road and think about what your church is called to be. But unlike those documents, this is where you have to think about what you can actually accomplish this year with the resources you have right now and what you believe you will have in the future.
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2. Simply adjusting last year’s budget
Your church’s income and expenses are going to look a little different every year. If there are no major changes in the foreseeable future, you may feel like you can just get by with a few small tweaks here and there on last year’s budget.
Maybe you have some major equipment that is quickly becoming outdated, but it was not a problem last year. Perhaps your facility is not meeting your needs anymore, and you have been letting your financial situation prevent you from finding a new solution. Or there is a new hire or a new ministry that you would like to have but do not have money for right now.
Creating a budget is an opportunity to course correct and steer your church in a better direction—even if the current direction seems to be doing OK.
Budgeting is not just a matter of considering what will be different this year, either. You need to think about what you wish had been different last year, too.
Are there things that did not work well last year that could be trimmed out of the budget or reduced? Were there ideas or projects that had potential but just did not have the money they needed?
Budgeting is where last year’s hindsight becomes next year’s foresight.
3. Letting your church get too comfortable
Maybe your church has had some really hard times in the past, and recently, you have felt like you finally have some financial breathing room. Maybe it feels like things are not difficult right now, so you can be more conservative with your budget.
Your budget, however, is not just about working with your current trajectory and keeping up the status quo. It is an important area for you and your congregation to exhibit faith. It should feel like you are going to have to work hard, and God is going to have to grow your church’s generosity in order for you to meet your budget.
If your budget does not stretch your congregation and pushes you to get more of them invested in your mission, many of them will continue standing on the sidelines. Many others might also miss a valuable opportunity to grow spiritually through financial generosity.
4. Not re-evaluating your budget
You do not simply create a budget and never look at it again. It is not an annual task. It is a plan, and you need to do follow up throughout the year to see how that plan is going. Where are you falling short? Do you need to encourage more giving? Are there places where you have more room than you thought you did?
You need to periodically review your budget to make sure everything is still on track. You should also reexamine your budget whenever you learn new information that affects your finances.
Maybe there was an unexpected purchase (or hire) that ate up most of your budget in an area, or you need to adjust to compensate for it. You cannot account for every conceivable change when you create your budget, and so you need to have the flexibility to make changes throughout the year.
The key is that while your budget does not have to be set in stone, every major decision you make throughout the year should be influenced by or weighed against your budget. You should ask: “Does this choice fit with the plan? If not, are we OK with that? Why?”
4. Not getting your church on board
While they may have an important role in approving or creating it, your budget does not exist for the elder board. It belongs to every church member.
Your budget is a rallying cry and a call to arms. It says, “This is what we plan to do this year, and this is how we plan to do it.” People should be excited about what the budget represents, and they should be invested in meeting it.
Not all churches, however, make their budget transparent. They treat their budget as if it is on a “need to know” basis and keep their congregations in the dark.
That is a huge, missed opportunity to build trust, unity, and passion within your church.
Not sharing your budget can even show the opposite in your members.
People are more hesitant to give money when they do not understand what it will be used for. Even if you do a good job promoting the importance of generosity, being vague about your budget may lead people to believe that God could use their resources better somewhere else.
5. Not using your budget to evaluate ministries
Every ministry-based line item in the budget should have thought put into it. Every person who makes purchases for your church and impacts the budget should be able to clearly answer, “Why do we need this?” and “How does this fit into our mission and vision?”
That is why your church budget is a great tool for evaluating leaders and volunteers. How well are they stewarding the resources you have given them? Keep in mind: you are not just making sure that they do not go over budget. Your budget is a strategy for that ministry, and they should be using that budget, not just sitting on it.
In fact, budgetary tension is good. If you budget your youth group $5,000 for the year and they have only used $200 by August, your youth leader might not have a large enough vision for ministry and outreach. Their vision for your church’s youth group is probably smaller than yours—and most likely, they will need some help connecting that budget to a greater strategy.
Avoid these mistakes with our free church budgeting handbook
We know that creating a healthy church budget is an essential part of growing your church. That is why we created a free resource to help you do just that. Our church budgeting handbook has everything you need to get your church on track to financial health.
Get your free copy of The CDF Capital Church Budgeting Handbook today.