# Budget Calculator

## Budget and Goals

A budget is a spending plan. It is your best estimate of resources—time, talents and money—you are likely to need during a specific future period, to do specific goals. A budget is a freeing tool, not a straitjacket. Without a budget, you will stumble along, and advertisements will dictate how you spend.

A budget starts with goals, ideally God's goals, followed by plans—steps to do these goals. The budget quantifies the plan, and helps identify potential gaps and opportunities during the budget period. This allows you to plan to remove gaps, and seize opportunities. Effectively, the budget represents the cost of doing the goals. A budget is the most basic tool to help with managing God's money.

### Budget Calculator

A budget calculator merely is the tool to help you compute estimated income, and estimated expenses—it does the math for you. The budget calculator has two parts, the income section (jump to Incomes Form), and the expenses section (Jump to Expenses Form). Both parts are essential. The income budget calculator stresses the need to calculate the amount available to spend after you have agreed your goals. Only when you decide this amount will you be ready to allocate amounts to spend in the expenses section. This is vital.

You do not need to complete the budget calculator exercise in one session. Save the budget computation form data to the file generated automatically: expenses.mgm. You can view this file only by clicking the Restore Saved Work button below. Develop the habit of saving the result of the budget calculator—budget computation forms—before clicking the Create Worksheet.

### Budgeting

Budgeting is preparing the budget— setting specific goals and completing the final income and expenses budget calculator forms. This is an iterative process. However, to manage God's money effectively, we can't end the process here. We must complete the cycle of controlling our actions correcting deviations from plan. That's why we developed PEACE Budgetary Control.

### Budgeting Process: PEACE Budgetary Control

PLAN for a specific period to do specific goals ESTIMATE and record expenses needed to do these goals
ACT on the plan and record results as you progress to your goals
COMPARE actual spending with estimated expenses and progress toward doing your goals
EXECUTE needed changes to remain on course to do the goals

Budgeting is the Planning and Estimating phase of PEACE; the counting the cost before acting stage that Jesus mentions in Luke 14:28. After doing the budget, we must Act - do what you planned, Compare results against the plan and the budget, and then, Execute needed changes. Doing the budget without the control part of PEACE—Act, Compare action with budget, Execute changes—is useless

For more on PEACE Budget Control, refer to The New Managing God's Money-The Basics chapters 8-10.

### Envelope Budgeting

Envelope budgeting simply places amounts computed in the budget calculator expenses form for each category, in a separate physical envelopes. Envelope budgeting is a tool that allows you to spend cash available in envelopes. By clicking the button below, you can track spending on each category manually using a worksheet. Alternatively, you could choose to transfer worksheet data to a spreadsheet by clicking the "Save to Spreadsheet File" button at the foot of the worksheet form. If you use this budgeting tool diligently, with or without envelopes, you will lower spending.

Our envelope budgeting system involves these steps:
1. Deciding the total amount available to spend—the upper limit you should not exceed
2. Deciding amounts to spend on each category for the period, usually one month, using the budget calculator
3. Creating a worksheet
4. Creating envelope images showing amounts for each category on the worksheet
5. Saveing budget amounts in the spreadsheet for editing and updating
6. Saving worksheet categories to a spreadsheet to track spending against budget
7. Placing cash for each category in an envelope labeled with the name of that category
8. Spending only when funds are available in the specific envelope—no funds mean, no spending
9. Refilling each envelope with its budget amount shown on the budget calculator form at the start of each month

### Budget Calculator: Income Section

The income budget calculator sets the stage for your expense allocation; it sets the upper limit of proposed spending. As you complete the income and expenses budget calculators, use suitable frequencies for budget categories. If you get income weekly, enter amounts under the weekly section--the system calculates amounts for other columns automatically. If you entered 10 in the weekly column, it divides 10 by seven days and multiplies that result by 365 days to get 521 for the year. After, it divides 521 by 12 to get 43 for the month. This procedure applies to both income and expenses budgeting calculators.

Calculate and enter estimated income from all sources. Develop the mind-set all income goes to God's bank account. Your goal is to let Him guide amounts He keeps and amounts available to spend. That's why giving is the first deduction item, even before taxes. Since it's all God's, ask Him to tell you the amount to enter in this row.

Before completing other entries, review this Cost of debt Quarterly Letter, and the Capital Fund.

### Budget Calculator: Expenses Section

This is the expenses budget calculator that you complete only after calculating the amount available to spend. Likely you will not know your spending pattern, so you will need to use your best estimates to allocate spending to the Budget Computation Expenses Form. What do you think likely income and expenses will be? Tough question, but you can answer it using information available. As you record spending over the next three to six months, you will learn your spending pattern and you can modify the budget (best estimates) on the spreadsheet file or on the expenses computation form. A spending fast will help during this challenging period.

As you prepare your budget, try to identify units you wish to monitor. Don't try to"manage" dollar amounts—money isn't manageable, it the units behind money that's manageable. Instead of budgeting \$250 for clothing without identifying what's included, specify clothing items (units) you wish to buy, then cost each (price). Show the cost on the expenses form. Keep details of these calculations to help with your budget review—the "C" in PEACE. I repeat, the key control unit isn't dollars, but what's behind the dollars. For meals, decide how many times you will eat out monthly and use a cost for each; monitor the number of times you eat out and the budgeted prices. If you focus on dollars only, you won't deal with real control variables, which your behaviour influences.

After you enter your expenses on the form, "Save Your Work," then click "Create Worksheet." The name of the file saved will be "expenses.mgm." You can open it only by clicking, "Restore Saved Work"—unlike other files, clicking on it won't open it. The worksheet form will give options to "Create Envelopes" for each category on the budget computation form, and save to "Spreadsheet File." More guidelines are on the worksheet form.

### Budget Worksheet: Money Map

The Money May is a key budget worksheet. It is a portion of your budget that you travel with, not a complete budget. If you plan to do a full budget, go to the Incomes Form.

Have you ever wanted to take parts of your budget with you when you go on your spending trips? Over the next week, you want to go to the mall to buy clothes, birthday and Christmas gifts, and bulk toiletries, which you budgeted. Then again, you plan to go on vacation and do not want to overspend your budget for transport, food, shelter, and recreation.

The Money Map will help you spend for specific planned items at pre-determined prices. The Money Map system will give you a separate worksheet (your map) with expense categories and budgets to help track spending on the road. Don't leave home without it.

To activate the Money Map budget worksheet, enter amounts in the Budget Computation Expenses Form's weekly section only and ignore amounts the system calculates for other periods. For the Money Map calculations only, you do not need to enter amounts in the Income Form.

If you are going away for a week and plan to spend "gas" \$100, "dining out" \$350, "accommodation" \$400, and "movies and shows" \$50, enter these amounts in the weekly section of the Expenses Form, then click "Create Money Map." You will go to the "Money Map Worksheet" screen where you will see these amounts under "Weekly Budget." There you will be able to change amounts if needed.

The Money Map Worksheet does not replace the budget, it represents items included in the budget, which you want to isolate and track over a period shorter than the budget period.

### Budget Calculator

You can move between the fields with the keyboard, using either Tab and Shift+Tab or using CTRL+arrow key.

## Incomes Form

Frequency of Expenses
BUDGET CATEGORIES Weekly Monthly Yearly Monthly
Budget
Salary and Other Income \$ \$ \$
Less Giving \$ \$ \$
Less Taxes \$ \$ \$
Less Savings \$ \$ \$
Less Capital Fund \$ \$ \$
TOTAL MONTHLY BUDGET AMOUNT (available to spend)

## Expenses Form

TOTAL MONTHLY BUDGET AMOUNT REMAINING AVAILABLE TO SPEND Frequency of Expenses \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$