When it comes to creating a budget, many church leaders feel overwhelmed.
Not all church leades have extensive training in accounting. While elders and pastors are focused on people and ministry, creating the budget can become an afterhought. Because of its arduous nature, churches make mistakes with their budgets.
Here are some common budget problems that churches commit
1. Overlooking the budget’s importance
For many, budgeting is not fun. It is, however, essential to the health and growth of your church. This strategic document plays a vital role in the church, spilling over into every aspect of ministry.
Not taking the budgeting process seriously creates problems down the road. Just like a church’s mission and vision statements, a budget is a “forward thinking” statement about what the church is called to be. But unlike those documents, a budget reveals what can actually accomplished in the coming year.
2. Simply adjusting last year’s budget
A church’s income and expenses are going to look a little different every year. If there are no major changes in the foreseeable future, the finance team they can get by with a few small tweaks on last year’s budget.
Creating a budget is an opportunity to course correct and steer the church in a better direction—even if the current direction seems to be doing OK.
Budgeting is not just a matter of considering what will be different this year, either. Leaders need to reflect on what they wish had been different last year, too.
Budgeting is where last year’s hindsight becomes next year’s foresight.
3. Letting the church get too comfortable
Perhaps the church had some hard times in the past, and was finally able to secure some financial breathing room. The budget is not just about working with the current trajectory and keeping up the status quo. It is an opportunity to exhibit faith. It should feel a bit challenging, so that people trust God to grow the church’s generosity in order for you to meet budget.
If the budget does not stretch your congregation, pushing them to get more invested in your mission, people may continue to be content standing on the sidelines. A church might miss a valuable opportunity to grow spiritually through financial generosity.
4. Not reevaluating the budget
A church budget is a plan that should be evaluated throughout the year. How is the plan is going? Where is the church falling short? Does leadership need to encourage more giving? Are there places where there’s more room than initially planned?
A periodic review of the budget is needed to make sure everything is still on track. A church should also reexamine the budget whenever new information or trends affects finances.
While the budget does not have to be set in stone, every major decision made throughout the year should be influenced by or weighed against the budget. Leaders should ask, “does this choice fit with the plan? If not, are we OK with that? Why?”
5. Not using the budget to evaluate ministries
Every ministry-based line item in the budget should have thought put into it. Every person who makes purchases for your church and impacts the budget should be able to clearly answer, “Why do we need this?” and “How does this fit into our mission and vision?”
That is why a church budget is a great tool for evaluating leaders and volunteers. How well are they stewarding the resources given to them? The budget is a strategy for each ministry in the church, and departments should be using that budget, not just sitting on it.
Budgetary tension can be a good thing. If the youth ministry has $5,000 allocated for the year and they have only used $200 by August, the youth leader might not have a large enough vision for ministry and outreach. Their departmental priorities might not match that of the larger church. In an instance like this, they might need some help connecting their vision to the greater strategy.
Avoid these mistakes with our free church budgeting handbook
We know that creating a healthy church budget is an essential part of growing the church. That is why we created a free resource to assist church leaders. Our church budgeting handbook provides what churches need to get on the track to financial health.Get your free copy of The CDF CapitalChurch Budgeting Handbook today.
