Free Budgeting Course

Master your finances with our comprehensive video guide.

Introduction

Part 1

Part 2

Part 3

Part 4

Part 5

Personal Budgeting Principles: How Much is Enough?

To answer the crucial question, “how much is enough?”, we must begin by defining the boundaries around the money we use for personal consumption. This creates a clear structure, unlike an “open circle” mentality where any financial increase simply expands consumption without limit.

A person with a “closed circle” mindset, on the other hand, approaches finances with purpose. When their income increases, they seek God’s direction on how to use it, rather than assuming it should be used to expand personal spending.

Open Circle vs Closed Circle

  • Open Circle: Ever-increasing spending with no boundaries.
  • Closed Circle: Fixed spending with clear boundaries.

What should this “circle” include? Obligations, necessities, and possibly even wants. But how do we balance this? While God delights in providing for our desires, the key is to pray and seek His will before including wants in our budget. It’s about discerning the right timing and purpose.

Creating a Budget: Defining Your Circle

To answer “how much is enough?”, you need to clearly identify your obligations, necessities, and wants. This process can be summed up in a budget. Although the word “budget” often evokes feelings of restriction, in reality, it’s a tool that helps you master your money and direct it with purpose.

Steps to build a budget that honors God:

Step 1: Track Your Expenses

Record every expense for three months. No leakage! Write down everything, sorting it into categories.

Step 2: Analyze Your Spending

At the end of each month, total your expenses. After three months, you’ll have a clear picture of where your money goes.

Step 3: List Your Wants

Make a list of material wants. These are things beyond necessities and obligations that must be prayerfully considered.

Step 4: Close the Circle

Seek guidance on each line item. Pray, asking if each expense is too high, too low, or just right.

Obligations, Necessities, and Wants

  • Obligations: Fixed costs like rent, mortgage, or car payments. These are non-negotiable.
  • Necessities: Items you need but can adjust, like groceries or utilities.
  • Wants: Added only after prayer and consideration. Buy them only when funds are available.

Comparing Income and Expenses

Once created, compare your income with your expenses. You will find yourself in one of three situations:

  1. Income is less than expenses: Don’t be discouraged—trust for an increase and stick to your closed circle.
  2. Income equals expenses: A good place to be, but aim for a place of overflow.
  3. Income is more than expenses: Use this surplus for higher purposes, not just expanding personal consumption.

Reviewing and Adjusting Your Budget

Your financial circle will change as your life evolves. Review your budget at least once a year or whenever there are significant life changes.

A Flow of Blessing

Imagine a hosepipe—some are plugged and nothing flows through, while others leak because of an open circle. By closing the circle, you become a conduit for blessing, ensuring money flows where it’s needed most.

Final Thoughts

A closed circle is liberating—it gives you clarity and control. With a closed circle, you are the master, and money is your servant.