Church Budgets are not something we would classify as "fun" and "exciting". Unless you're the type of person that loves using spreadsheets on a regular basis, budgets can be boring or even overwhelming! Like a well-balanced diet, budgets are necessary when it comes to the health of our church.
If you find yourself struggling to make a church budget, or feel like there's "an easier way"... this article is for you. Let's get started!
1. Create a Baseline
The makings of a great church budget start with a baseline. You need an accurate baseline to know what you can actually budget for. Your baseline starts with the income your ministry has brought in from the previous year. Income includes all tithes, payments, and any money that has been donated to your ministry. If you're a church plant with no previous year's income, you'll want to start a pledge campaign to forecast a Budget Baseline. Learn more about pledges HERE.
Once you have your income total, subtract all of your expenses from the previous year. This includes things like pastor salaries, utilities, ministry expenses, and basically anything you've spent. The total of last year's income minus last year's expenses will give you your Net Position. This number can be positive, negative, or equal to zero. Your goal should always be for this number to be positive. If your Net Position is negative, it means you've spent more than you brought in.
Once you have your Net Position, go ahead and add Last Year's Income with the Net Position to calculate your Budget Baseline. This budget baseline is going to be the income for the new year. If you're running a pledge campaign in addition to your budget, make sure that the pledge campaign is added to your budget in the Income section. If you used ChurchTrac to record all of your Giving, you can quickly generate your giving totals by date with the Giving Reports.
2. Get the team involved
A church budget is based on multiple ministries and often needs to be voted on. Encourage your ministry heads to take the time to really think through what they need. Tell them not to be afraid to add items if it's something they think will really benefit their ministry. To make sure you meet your Budget Deadline, have them submit their budget to you well in advance. The more heads up you can give, the better.
If you have a previous year's budget, provide it to each of your ministry leaders so that they can use it as a guide to help them create their budget. If you do not have a previous year's budget, provide them with the categories you have already created for their ministry. For example, your Children's Ministry may have a music camp and VBS that need to be accounted for.
Pro Tip: If you have ChurchTrac User accounts for each ministry leader, create a task for all of them with a due date.
3. Make your Budget
Once your ministry leaders have each provided their individual budget, it's time to add their expenses to the master budget. If you used ChurchTrac to create a budget last year, you can easily clone last year's budget so that you don't have to "recreate the wheel". This enables you to create a new budget in seconds using last year's budget details. At most you'll end up adding/removing a couple sub-categories and adjusting the numbers accordingly.
If you did not use ChurchTrac for a prior budget, you can create a new budget by navigating to ACCOUNTING > BUDGETS > >NEW BUDGET.
Making a budget requires that you have your Income and Expense Categories setup ahead of time. Go to ACCOUNTING > CATEGORIES to designate your Income and Expense Categories. Learn more about Categories HERE.*
*The Accounting Screen is included with all ChurchTrac Plus Subscriptions. For only a few extra dollars, ChurchTrac Plus includes Accounting, Worship Planning, Volunteer Scheduling & more! See how the Plus Plan compares on our pricing page HERE.
4. Revise Revise Revise...
Though we serve an abundant God, we still have to delegate and decide what areas of ministry we allocate funds to for the year. As you add each ministry's expenses, the total expenses will likely be more than the total income. If you're new to budgets...don't worry. This happens almost 100% of the time. It just means you have to use "creative accounting" and figure out what categories you need to increase/decrease. Remember, the goal is to have a budget with the income total being higher than your expenses.
5. Submit Your Budget
Once you have your budget where you want it, it's time to generate your report and submit it. If you're using ChurchTrac to create your budget, you can generate a Simple Yearly Budget from the Budget Reports section. ChurchTrac also includes other types of Budget Reports to help you plan out your finances.
Needing some additional help?
Whether you're doing a budget for the first time or the 10th time, it's always good to have an extra pair of eyes take a look at it. Don't hesitate to reach out to us and create a support ticket for help on creating your church budget. Your ministry is our ministry!
Till next time 👋
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