GPS Envelope Budgeting System
- Budgets & Budgeting
- Deciding Amounts Available To Spend
- Allocating Available Funds To Categories
- GPS Money Map (Specific Trip Budget)
- Budget Computation Form: Income
- Budget Computation Form: Expenses
Introduction
Our updated, free, simple, complete envelope budget system does the following:
- Calculates income available to spend
- Allocates available amounts to categories
- Creates a worksheet
- Creates envelope images showing amounts for each category on the worksheet
- Saves Budget Computation Form amounts in the spreadsheet for editing and updating
- Saves worksheet categories to a spreadsheet to track spending against budget
You don't need to finish the budget creation process in one session. Save expenses 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 computation form's data before "creating a worksheet."
Budgets & Budgeting
A budget is a spending plan; 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 without which you stumble along and advertisements dictate how you spend. A budget starts with God's goal(s), followed by His plan(s)--steps to do His goal(s). It quantifies this plan, and helps identify potential gaps and opportunities during the budget period, so you might plan to remove gaps, and seize opportunities. Many people fear the word budget, that's why we refer to it often as a spending plan, a guide, not a straitjacket but a key part
of PEACE Budgetary Control that begins with goal setting.
After doing the budget, Act - do what you planned, Compare results against the plan and the budget, and then, Execute needed changes:
PLAN
for a specific period to do specific goals
ESTIMATE
and record expenses needed to do these goalsACT 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 preparing the budget--methodical allotment and recording of what you need to do to get to specific goals. It is iterative--the Planning and Estimating phase of PEACE; the counting the cost before acting stage. In Luke 14:28 (NIV), Jesus told His disciples about the cost of discipleship: Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?
The GPS budgeting system (Goals, Plans, Spending Plans) we propose is the simple, tried and proven "envelope" system. Ideally, spend cash only. Mechanically, it involves five steps:
- 1. Deciding the amount available to spend; the upper limit you should not exceed
- 2. Deciding amounts to spend on specific categories for the period (usually, one month)
- 3. Placing cash for each category in an envelope
- 4. Spending only when funds are available in the specific envelope--no funds mean, no spending
- 5. Refilling each envelope with its budget at the start of each month
The system allows you to spend cash available in envelopes and, or, by clicking the button below, track spending on each category manually on 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 system diligently, with or without envelopes, you will lower spending.
For more on PEACE Budget Control, refer to The New Managing God's Money-The Basics chapters 8-10.
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Deciding Amounts Available to Spend
As you complete budget computation income and expenses forms, 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.
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.
Allocating Available Funds To Categories
After calculating the amount available to spend, because you don't know your spending pattern, you might think you are not ready to fill-in the Budget Computation Expenses Form. Probably you are right, still, use best estimates. 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) in the spreadsheet file or on this 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.
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GPS Money Map
The Money May is a portion of your budget you travel with, not a complete budget. If you plan to do a full budget, go to the Incomes Form.
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 GPS Money Map section, 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 "GPS Money Map" screen where you will see these amounts under "Weekly Budget." There you will be able to change amounts if needed.
The Money Map 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.
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