Church Budgeting Best Practices

Category | Budgeting

Let’s just admit it. Preparing a church budget for the upcoming year is probably not on your list of favorite things to do. While we can’t promise to make budgeting fun, the following guidelines will help simplify the process so you can feel confident you’re on the right track.

State your goals and objectives.

Although church leadership is ultimately responsible for approving and following a balanced budget that supports the church’s God-given vision, you want everyone to be pulling in the same direction. Allow adequate time in the budgeting process to talk with staff and lay leaders about their departmental goals and how they fit with the overall mission and vision of the church, including plans for expansion.

Start at zero.

Rather than basing your budget on numbers from the previous year, it’s recommended to start fresh with a zero-based budget. In this approach, each line item is evaluated independently based on need and the overall vision of your church. While time consuming, it lets you have more control over how and when funds should be used and helps you eliminate unnecessary spending so you can better utilize your resources where they’re needed most.

Stabilize cash flow.

When building your budget, cash flow should be a top priority. Variations in both income and expenses throughout the year have a direct impact on cash flow for ministry. For this reason, consider individual revenue and expense line items on a monthly basis so the information can reflect those expected variations. For instance, you may experience a drop in attendance along with higher utilities in the summer months. Planning ahead for these times will help you stabilize your cash flow month to month. 

Stay accountable.

Once the budget is established, you need to stick to it. To do this, meet regularly with staff and ministry leaders to compare budgeted amounts with actual numbers. This will allow for any necessary reallocation of funds and reduce overspending. Even if projected amounts don’t match up with actual amounts every month, the most essential thing is to maintain positive cash flow overall. If you’re able to do that, you’re on the right track.

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