When it comes to creating a budget, many church leaders feel overwhelmed.
Most church leaders do not have extensive training in accounting, so creating a budget feels arduous. Since elders and pastors are focused on people and ministry, the budget can even become an afterthought.
Here are some common budget problems that churches commit.
1. Overlooking the budget’s importance.
For many, budgeting is not fun. It is, however, essential to the health and growth of your church. This strategic document plays a vital role in the church, spilling over into every aspect of ministry.
Not taking the budgeting process seriously creates problems down the road. Just like a church’s mission and vision statements, a budget is a forward thinking statement about what the church is called to be. But unlike those documents, a budget reveals what can actually be accomplished in the coming year.
2. Simply adjusting last year’s budget.
A church’s income and expenses are going to look a little different every year. If there are no major changes in the foreseeable future, the finance team may plan to get by with a few small tweaks on last year’s budget.
But creating a budget is an opportunity to course correct and steer the 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. Leaders need to reflect on what they wish had been different last year too.
Budgeting is where last year’s hindsight becomes next year’s foresight.
3. Missing opportunities for spiritual growth.
The budget is not just about working with the current trajectory and keeping up the status quo. It is an opportunity to exhibit faith. It should feel a little bit challenging so that people can choose to trust God to grow the church’s generosity.
If the budget does not push the congregation to get more invested in the church’s mission, people may be content standing on the sidelines. The congregation might miss a valuable opportunity to grow spiritually through financial generosity.
4. Failing to continually evaluate the budget.
A church budget is a plan, and it should be evaluated throughout the year. How is the plan going? Where is the plan falling short? Does leadership need to encourage more giving? Are there places in the budget where there’s more room than initially planned? Is there new information or trends that affect the church’s finances?
While the budget does not have to be set in stone, every major decision made throughout the year should be influenced by or weighed against the budget. Leaders should ask, “Does this choice fit with the plan? If not, are we OK with that? Why?”
5. Not using the 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 a church budget is a great tool for evaluating leaders and volunteers. How well are they stewarding the resources given to them? The budget is a strategy for each ministry in the church, and departments should be using that budget, not just sitting on it.
Budgetary tension can be a good thing. If the youth ministry has $5,000 allocated for the year and they have only used $200 by August, the youth leader might not have a large enough vision for ministry and outreach. Their departmental priorities might not match that of the larger church. In an instance like this, they might need some help connecting their vision to the greater strategy.
Make the most of your budget.
Creating a healthy budget is an essential part of growing your church. You can use these tips to pivot from seeing the budget as drudgery or as overwhelming and confusing. Instead, you can help your church use the budget to its full potential and recognize it for what it can be: An exciting roadmap for ministry in the coming year.
Let’s journey together.
You don’t need to do ministry alone. You can find opportunities to connect, plus more content and conversations about church administration, at XP Summit: xpsummit.org.
