2. Set aside money every month for annual bills
Most bills come monthly. But every church has annual bills (like insurance) that we have to stop being surprised by.
Any healthy church anticipates these bills and plans for them by laying some money aside every month so it’s there when the bill inevitably arrives.
3. Underestimate your income
As I wrote in a previous post, a small church budget process is less likely to start with a question like “what is our vision and how will our budget reflect that?” than “how much money came in last year?” and “are we on an upward or downward trend going into next year?” Then we set up next year’s budget from that baseline.
This very idea is sending shivers of horror through the hearts of every financial planner – especially if you’re used to working in midsize to larger churches. But that’s reality in smaller congregations. So what do we do with that as our starting line?
We need to set up a budget based on a lower-than-expected income. This makes it easier to live within our means.
4. Overestimate your outgo
Churches need to do our best to anticipate annual increases in costs we can’t control.
Some examples include health insurance premiums, energy rates, and so on. It’s better to set funds aside for an increase that doesn’t occur than to be surprised by an increase yet again this year.
5. Anticipate seasonal fluctuations
In many, maybe most churches, there’s a regular ebb and flow to attendance and giving.
If, for instance, you know that your church is going to receive more money in December, but less income in the summer, factor that in to your planning. Lay money aside during the high income months so it’s there for the low income seasons.
6. Start an emergency fund
Heaters break. Roofs leak. Regular givers lose their jobs and move away. Wise church leaders plan for such eventualities.
No matter how little we have coming in, we need to create a line item to create a fund to cover such emergencies. Especially if we own assets that need to be maintained, like a church building.
At minimum, if we’ve underestimated our income and overestimated our outgo, and we end up with a small amount of unspent money because of that, it should go into the emergency fund.
According to most financial experts, an ideal amount in that fund would be six months’ worth of income. (Yes, I can hear you laughing from here. Our church doesn’t have that either).