Simply stated…budgeting is deciding how much you will spend each year or month in advance. Do you remember how I said that prosperous people don’t make emotionally based financial decisions and this is why they don’t generally respond to emotional appeals to give money? Well, if you decide in advance what you are going to spend by setting a budget, then you won’t make impulsive, emotionally driven purchases. Instead your purchases will be smart, faith-filled purchases.
Every business is expected to control their costs. Why? The more they minimize costs the better the profit margin will be and the greater the reward to the owners or stockholders. So if we are able personally to budget and control our expenses, it will allow us to save, give and invest money which will make us more prosperous. There is a saying in the business world, “No margin, no mission,” simply meaning that if there is no profit then there is no incentive to function as a business. Consider your personal profit to be what income you do not spend on your living expenses. This margin then goes toward your mission.
Why is so important to know how much you are spending and where? Consider the guy who usually buys two to three dollars worth of snack food each day on his job. This doesn’t seem like very much money, however over the course of a year this adds up to $700-800. Is this wrong? Not necessarily if this is what you are planning to spend on snack food, however it is a problem if you are spending this money on impulse buying every day.