Organize Your Estate

 

    When it comes to planning your estate it is all about being prepared and keeping all your important documents together in a safe place.  Dying without a will is cruel to the people who you leave behind.  They have to figure out what you wanted to do with all that they had worked their lives for. It can lead to family division and broken relationships.

    You need a will or the state could take some of your money instead of your loved ones.  This happens because they will dictate who gets what taking some off the top for their service.  If you leave it up to the state, then the wrong people could get your assets. Your heirs will have to go to court costing them legal fees to get things sorted out.  It can a very long time and is taxing on them.  

    If you don't handle your estate while you are alive, then the state will tax the estate.  It is a high tax too.  If you do the planning now, then lawyers or financial advisors can direct you to paths that will keep your assets from being taxed again.  You are taxed enough while alive, no need to add to the taxes.  Trust are a great way to avoid the inheritance tax.

    If you do not name a person to be the executor of your will, then the courts may assign someone that will look out for themselves and not take care of your loved ones.  That is why you need to take care of them now.  

    A Christian has a solemn duty to take care of their family.  Losing a loved one is hard and stressful enough without adding more sorrow and burdens on them.  Do not avoid making a will because you don't want to think about your death or procrastination.  You don't know when the day will come.  Do not down play the value of a will because you may not be rich.  

    Do not use the expense as an excuse.  Death is expensive.  The more you take care of now, the less expensive it is after your death.  Preparing for death is a priceless gift for your family especially emotionally.  Remember you are only the manager of what God has given you.  Manage it well.

    Over 35% of people die before retirement.  Your time is now.  Prepare and live now.  Do not horde, live in denial, or use youth as an excuse.  No one is promised a tomorrow.  You can set up a living trust that will benefit you while you are alive.  Seek legal counsel for the state you live in to find the best option for you.  You can always change or update your will as life changes.  

2 Kings 20:1, Psalm 24:1-2, 90:10-12, Proverbs 11:14-15, 13:22-23, 15:22, 22:7-11, Luke 16:10-12, 1 Corinthians 4:1-4, 1 Timothy 5:8, & Hebrew 9:16-17

Organize Your Budget

 

    You have an estimated budget.  You are balancing your checking register.  You have outlined your budget and start using it.  What else is there?  There is room to look at your savings, retirement growth, giving, and other equity like your house.

    Homes are expensive.  It may be the biggest investment you will ever have.  That is why you do need to look at what you pay in escrow.  Find out if you can pay your annual taxes and insurance yourself or if the loan place insist on having it a part of your payment.  Look at the interest you pay compared to your principal.  Let it motivate you to find a way to pay more toward the principal.  It is the only way your your will pay less on your mortgage.

    Your mortgage is the number one thing that can mess up your beautiful budget.  If the home is more than 1.7 times than your annual gross income, then you can't afford it.  Let say your gross income is 106,560 a year, then you should not borrow more than 181,000 and not worry about your budget.  The reason is that insurance, taxes, utilities, and maintenance will be pushing up the total amount of your home  If your mortgage is higher, then you will be forced to lower your budget in other areas like eating out, clothes, and other comforts.

    It is important to budget for gifts.  If you do not, then you will overspend and it will mess up your budget especially in December when you can finish the year strong.  People typically under estimate how much they will actually spend, so be prepared.  There is power in learning to control your spending.  Put a limit on who and how much you spend gifts on.  Budget in for Christmas, birthdays, anniversaries, weddings, graduations, and office gifts.  Some banks have a Christmas savings.  Take advantage of that if they do.  If not, may open a separate savings just for Christmas or all gifts.

    Automatic banking is a wonderful financial tool, but it can mess you up if you are not staying on top of your finances.  If you are able to pay off your credit card every month, then I recommend that all auto payments go on the credit card.  If you are not able to have a credit card, then take the money out of your bank register on the first.  That way you will not forget about the payment and end up paying overdraft fees.  Also look for checking accounts that have no fees and if possible earn interest.  Interest will be small, but it can be a motivator to save money.

    Almost everyone does automatic deposits into their account, so that normally helps the budget.  Just make sure you look at each and every pay stub to make sure that nothing is taken out incorrectly.  Budget your bills according to when you get paid: once a month, twice, every 2 weeks, or weekly.  If you get paid weekly, you never want your mortgage to take more than one paycheck. 

    If you are married, choose one person to be over the bookkeeping.  You can discuss it at whatever detail you choose is best for your relationship, but to avoid confusion only one person needs to be in charge.  Keep it simple.  Do not make bookkeeping more difficult than needed.  It should not take more than 30 minutes out of your week.  If it does, then there is something wrong.  If you use cash, it doesn't go into the register, but it does go into your budget.

Proverbs 13:11-16, 21:20, Luke 12:13-21, Hebrews 13:5-6, & James 5:1-6

Financial Checkup

 

    When you know how to budget all you have to do is get started.  Getting started is the hardest part.  Allowing what you discover to motivate you into change is worth the financial freedom.  The simplest way to check up and make sure you are staying on track is to look at your checking account.

    It is important to regularly balance your check book.  It is much easier on you and quicker if you do not do it only once a month or less.  I recommend looking at it daily to make sure everything showing makes sense.  You will catch fraud a lot quicker this way.  I think balancing once a week is good enough.  It is a very short process that will not be difficult for the average household.  However, if you are a big spender, then maybe more often.  By the end of the month, you are just comparing it to your bank statement.

    Balancing your checkbook starts with the register.  You can use the paper or excel/google spreadsheet.  The balance at the top should be what you had at the beginning of the month.  It should match your bank statement unless you have outstanding checks or other charges.  If you are wanting a fresh start and got a new bank, then the beginning balance is what you put into the bank account.

    After the beginning balance, you start subtracting what you spent and adding deposits.  You record things as you spend.  Do not wait for them to clear or you will eventually over draw your account.  Banks love that because they get a healthy fee for you over drawing, but you are just giving away money that you can use toward something important.      

    In the registry you enter items starting with the the date of purchase or deposit on the far left.  Next the check number or type of item: ATM, OLB, Cash, Deposit.  Make it as details as you need to keep things straight.  Next is the description: Cash for birthday, Payroll, Bill Company, Groceries, Gas, and more.  The first money column is for deposits, then debits, then the total.  If you have google or excel, then you can switch the deposits and debits columns.  Whatever helps you keep things straight.  That is what matters.  You will want to keep the balance to the far right because it makes it a quick glance to confirm the balance.

    If the balance does not match up, then you are going to have to do a little investigation.  If you are using a spreadsheet, then I recommend highlighting the check amount or anything else that does not clear right away.  Most of the time the discrepancy is that something has not cleared yet.  Another common one is money came out that should not.  If you are doing the registry the traditional way on paper, then you will need to check your math.  That can become a little time consuming.

    Once the check book is balanced at the end of the month, you can print that page and put it with your banking records or keep an ongoing registry.  Just make sure you mark where you left off or it will become more work than needed.  If you print and start over, remember to carry everything over that did not clear the month before.  You do this and your balance should always be in balance.

Psalm 24:1-2, Proverbs 21:5-20, Matthew 25:21, Luke 14:28-30, 1 Corinthians 4:6-7, & 1 Timothy 5:8

Begin Budgeting

 

    Why should you budget?  Budgeting is the road map to financial freedom.  It simplifies your life.  It gives you control over your money instead of your money controlling you.  Budgeting starts with an estimated budget and then working out what your month should look like on paper.  Remember to keep it simple.

    If you have software or already created an excel or google spreadsheet, then enter in the numbers that you have calculated for your monthly income and expenses in the top row that does not change for the year.  the first column should be 1-31 for the days of the week.  From there you will put in the cells what you spend on what day.  For an example:  Mortgage would go under Housing and the day you paid it.  It is kind of like battleship.  The very row after 31 should be all the totals for each column.  The row after that should calculate if you went over or under.

    Under Income, you should enter your gross income.  The Column after income should be taxes, then 401K, medical insurance that comes out of your pay check, tithe/giving, then housing, food, transportation, other insurance, debts, entertainment/recreation, clothing, savings, medical, miscellaneous, other investments, school/childcare.  You can add or take away as needed for your personalized budget.

    When you are done with entering all the numbers, look at what your gross income is.  Then, highlight all the other numbers beside it to make sure that it comes to the same number.  If not, then something needs to be adjusted.  

    Once you start entering your spending, the calculations should do all the work.  Remember to keep an eye on the bottom to not overspend.  If you have spent your budget in that area, then anything else needs to wait until next month in that area.  For an example clothing.  If you budget $25, then you may only be able to buy one article of clothing a month.

    Spending is done through bill pay, apps (Venmo, velle, cashapp), google pay, wire, check, debit card, or credit card.  Using a credit card is okay if you are able to pay it off every month.  You are not the type that can do that, then you need to cut up your credit cards before they get you into any more trouble.  The important thing is that you can account for your spending and hold your self accountable.  

    You enter the day you spent them money, not the day it cleared your account.  You use your check registry.  If you do not keep up with on, then I recommend making it the first tab in your budget.  In the beginning of budgeting, go in every day for the first few months to enter payments.  As you get to really understand your spending habits and start getting rid of debt, you can start focusing on your budget about once a week.  I recommend looking at your bank account(s) daily.

     Use your credit card statement to enter in items each month into your budget.  The third tab is recommend to enter your totals for each month.  Have it calculate your annual total and your averages.  It will help with the big picture and setting the budget for next year.

Deuteronomy 15:7-11, Proverbs 3:9-12, 13:11, 22:7-8, Ecclesiastes 5:10-12, Malachi 3:8-12, Luke 14:28-30, & Hebrews 13:5-6

Budget Adjusting

 

    Once you have your estimated budget, you are able to see more clearly how you spend the money God has given you.  You are able to see if you are overspending or saving.  You have a visual on the areas that need to be adjusted in your life.  However, the estimated budget is not perfect.  Every month it will need to be tweaked for life happening.

    Adjusting your budget every month for life is more like balancing your budget, like balancing your check book.  Look at the budget you created for your household and take money from some areas to put them in other areas like are maintenance this month.  If you just need to spend less, then go category by category asking yourself "do I ready need this" and "can I get this cheaper somewhere else".  

    Adjusting your budget can be simple, but sometimes it can be very difficult.  Sometimes reducing your spending is not a simple solution.  You may have to consider moving, changing vehicles, insurance, or even going from private school to home or public school.  Maybe you need to get a second job for a season of your life.  

    Once you make the necessary changes, you are able to find freedom in your budget.  The freedom comes with getting out of debt, giving more generously, or funding your goals without a loan.  The point is to get your income to balance with what you spend.  You don't want to be house or car poor.  That only puts stress on you and makes you a slave to the lender.

    The percentages of a budget help you stay in a healthy range, but are not absolutes.  Different incomes and households have different needs for survival and comfort in life.  On average you don't want your household expense to go over 32% of your net income.  If you are house poor (more than 35% of your net income), then that means you have to give up other areas in your budget like entertainment, clothes, or other.

    Child care or child expenses on average should not go over 7% of your net income.  However, if you do not have children, then what do you do with that money?  Change it to pets, put it toward business, entertainment, or somewhere else?  There are always exceptions to the general rule.  The most important thing is that your budget balances and works for your lifestyle.

Proverbs 13:18, 21:20-21, 22:6-9, 24:27, Luke 14:28-30, 1 Corinthians 16:1-4, & 1 Timothy 6:17-19

Financial Integrity

 

    A big part of having financial integrity is creating and living by a budget.  However, if you don't know where to start, then list what you make and all your debt.  This will help you see if you are over spending causing a deficit for yourself or if you have money to save for emergencies.

    Your living expenses are based on your net income.  If your income is greater than your expenses, then you have a surplus.  This is good.  It means you control your spending.  Your next decision is what to do with the surplus.  Your personalized budget will help you see where you need to put that money.  

    If you have a deficit, then you need to do a thorough review of your spending.  It is time to decide what needs to go, what needs to wait, and where you need to pay off debt get get in the surplus.  This process can be painful because it will require lifestyle changes; however, once you get on the other side you can really enjoy what you have: financial freedom.

    Your budge needs to account for variable expenses.  There are some expenses that vary every month.  You need to be prepared for that.  Irregular monthly expenses can be utilities and food.  Then there are the expenses that don't occur every month like auto and house maintenance, medical expenses, clothing, and vacations.  Look at what you have spend in these areas over the last 12 months.  Add them up and then divide by 12.  That will give you a good estimate for your monthly budget. 

    Just like all monthly expenses are not predictable, not all income is predictable.  That does not change the fact that you need to budget.  It just makes it a little trickier.  You have to be more flexible and adjust appropriately each month.  You need to plan ahead on your spending.  

    Just like with the variable expenses, add up what you made in the last year and divide by 12.  It will give you an average of what you have to work with each month.  It is important to put the money in savings on the months that you make over the budgeted income amount.  That way you have the money on the short months.  

Proverbs 11:1-25, 22:7-9, Matthew 6:24, Luke 16:10-12, & Colossians 3:22-25

Financial Stewardship

 

        To be a good financial steward, you have to look at how you are spending the money that God has given you.  Are you throwing it away on meaningless things?  Are you hording it for all the what-ifs in life?  Are you giving and spending responsibly?  How you spend your money will directly reveal the kind of relationship you have with God.

    Housing is a necessity.  You should be paying for that on time.  This includes the rent, mortgage, taxes, insurance, maintenance, utilities, and furnishing of the home.  All together this should not surpass 35% of your net income.  There will be months where maintenance will go well over that percentage.  If you save for that every month, then you are still living within your income.

    Food is something else you can't live without.  This includes groceries, eating out, and necessities that you buy at that grocery store (toilet paper, hygiene products, and similar).  I personally recommend separating your groceries from eating out.  It gives you a more clear picture of your lifestyle.  Food should be 10-12% of your net income.

    Transportation is something that most people can't live without and keep a job.  This includes car payments, gas, oil, maintenance, tolls, parking, licenses, taxes, repairs, buses, or rentals.  Like the house, you need to save for the big items that do not occur every month.  If they do, then you may need to consider a new vehicle.  Transportation should not exceed 13% of your income.

    Something that society pushes on you is insurance.  You should never pay over 5% of your net income for insurance.  This includes health, life, death and disability, dental, or eye. That way you can focus on what you have in front of you instead of the what ifs that may never happen.  The right now focus should be on your debt.  Debt consist of credit card and student loans.  Basically if you are paying someone interest, it is a debt that needs to go.  Mortgage and car payments are different. Once you get out of dept, use 5% of your net income to pay those off.  

    Entertainment and recreation is something you need to budget so that it does not take over.  This includes sporting equipment, camping, day trips, vacations, hobby expenses, events, concerts, and similar things.  Pets technically go into this, but I separate my pets from myself.  You can budget up to 7% of your net income for these things.  

    Clothing should only get 5% of your net income.  That way you can put more into savings.  Your budget should provide 5% of your net income for savings, but you can go higher if you are saving for something important.  Savings is meant for emergencies or planning for something that is coming up.  It is not meant to horde and put God in the back seat to your money.

    Medical includes insurance deductibles, medical bills, glasses, dental work, and prescriptions.  You should budget 4% of your net income for this.  Miscellaneous is everything that does not fit into any of the other categories. This category should get budgeted 5% of your net income.  Education, business, and child care anything where you invest into yourself or your child.  You should allot yourself 5% of your budget for theses items.

    Investments is what you do to prepare for retirement.  This consist of 401K, stocks, bonds, anything that is a long-term investment.  If you start young, then you can retire younger.  If you start today, then you are a step closer to your future goals.  You should invest at least 2-10% of your net income.  That can change things up in your budgeting.  You may have to cut in one or two areas to accomplish this.  

Proverbs 13:10-11, 21:20-21, 22:6-8, Luke 16:1-13, 2 Corinthians 9:6-10, 1 Timothy 6:6-10, & Hebrews 13:5-6