The Personal Budget
In his published business report, dated January 5, 1931, Mr. Roger W. Babson, the well-known economist and financial adviser, gave the following pertinent counsel and warning:
"Businessmen should realize that, whether in the home, the office, or the factory, income should be apportioned most carefully. Progress will come faster by setting a goal than by sitting back and taking what comes your way. The way to make business pay today is to stretch every dollar of your income to the limit. Budget in 1931!"
"To get ahead in this period, every concern must tell the dollar where to go instead of asking it where it went."
"Just as successful business is operated according to a budget plan, every home should be so conducted in order to get the most out of your personal income."
The same sound advice given by Mr. Babson in 1931 is just as applicable in 1935. Budget now! A budget is, for most people, a terrible thing to contemplate. The future is so uncertain! And yet we expect to live, and most of us will have a fairly stable income—thanks to our heavenly Father's care—upon which to subsist. Why should we not then go a step further, and adopt the Bible principle laid down by our Saviour while on earth,—"first sit down and count the cost, whether" we shall be able to do this or that which is deemed needful or desirable, so that after we have started we will not be brought into an embarrassing situation by not being able to finish without debt or discouragement?
Many people make budgets, and do not realize it; for a budget is simply a plan laid in advance for the spending of the money which will come into our possession for any stated period, as a week, a month, or a year. The benefit of a budget is not so much in the form which it takes, as in the help that comes from a careful study beforehand of the factors entering into one's business or personal finances, and the opportunity that it gives to compare and control the outgo by a previously arranged program. The more thorough the study, however, and the more concrete the form, the more likely we will be to obtain satisfactory results.
It is of course impossible to formulate a standard budget which will exactly fit any considerable number of people, nor probably a budget that will meet every condition for any particular person or family. For this reason, many have felt that any attempt to build a home or personal budget is of no value. That this is an erroneous line of reasoning is amply evidenced by the experience of many individuals and families, as well as business concerns, that have saved themselves from financial ruin by a well-considered plan of expenditure before the money was actually to be paid out. We shudder to think what might have come to our own denominational work in its institutions, conferences, and mission fields during the last few years, had not this period of perplexity been preceded by a strenuous campaign for budgetary control.
Many plans have been devised to help the uninitiated into an understanding of the factors involved in a home budget. Because of the variety of conditions under which the applications must be made, not a few of these systems have fallen short of their purpose. This should not, however, be a cause for discouragement; as even a crude plan, consistently followed and improved by experience, is better than no plan at all.
Living conditions vary. In one locality, rents may be high, food may be cheaper, or clothes not so expensive. In another place, the reverse or other conditions may obtain. Families differ in size, age, and temperament. But whatever the circumstances, each individual or family must adjust back and forth among the actual necessities until the balance is satisfactory.
The basis for a working budget may be secured by listing the principal lines of household and personal expenditures, such as food, clothing, rent, etc., in an effort to determine what proportion of the available income should go to each. Circumstances will alter these lists in different families; but it may be helpful to give here a simple suggestion of what a fairly well-balanced schedule for a Seventh-day Adventist home might contain, with approximate percentages, which can be increased or decreased in the particular items as the needs may demand. The following list and percentages are merely suggestive:
(See PDF for table)
On the basis of a yearly income of $1,400, which is a little less than $27 a week, this schedule would average, for the different groups, about as follows: Tithe, $140; offerings, $100; savings, $70; food, $380; rent, $210; fuel, etc., $110; clothing, $180; education, $110: miscellaneous, $100. For a larger or smaller annual income, the various amounts would be greater or less.
It will be recognized that maximum percentages as noted above could not be used in every case. In some items of household or personal expense, minimum percentages or even less may be sufficient, which would serve to even up the total expenditure. For example, food in small towns and rural districts may be bought for less than is here indicated. In cities. where everything must be purchased from the markets, it may cost more. Rents in cities may run up to 20 per cent of the income, which is the maximum set in the General Conference wage policy before assistance may be given to workers. Adequate housing facilities cost much less in many localities. In several division conferences outside of North America, workers' rents stand regularly at 10 to 12 per cent of the income. In many sections of the country the need of fuel for heating purposes is almost negligible, while in other places it may be necessary to draw on the miscellaneous allowance to help in this provision, or to adjust other percentages. Such adjustments would conform to the conditions.
Schooling for the children may be anticipated by effecting economies through the years, and laying up something even in addition to the regular savings to supplement the education allowance. Each family must study its own situation and determine its capabilities. This much is certain: If a careful plan has been worked out in advance, the adjustments can be made much more intelligently and the income stretched considerably farther than if the expenditures are made in an uncertain and haphazard way, without a clear vision of what the outcome should be, or an effort made to keep the expenses within prescribed limits. In his book, "Successful Control of Profits," Mr—Walter Rantenstrauch—prolessor of industrial engineering at Columbia University, says: "An expense item that is watched, somehow seems to stay within bounds and frequently grows smaller."
However limited the income, under all normal conditions something, even if only a small amount, should be laid aside for emergencies and for future contingencies. No individual or family that continually spends for current purposes all that it secures in income, is playing safe for itself or fair with its employing conference or institution.
To make a budget of the most value, some plan should be devised to compare the actual payments for each group of expenses with the allowance provided. Many systems for this purpose have been placed on the market, among the most satisfactory of which is the Personal Cash Record and Budget published several years ago by the Southern Publishing Association. It has been arranged with the needs of Seventh-day Adventist workers and students in mind, and provides space for detailed budgets, income and expenditure records, and comparisons of the budget with the actual performance.
The Spirit of prophecy makes this statement:
"Our laborers must learn to exercise economy, not only in their efforts to advance the cause of truth, but in their home expenses.. . .
"All should learn how to keep accounts. Some neglect this work as nonessential; but this is wrong. All expenses should be accurately stated. This is something that many of our laborers will have to learn."—"Gospel Workers," pp. 459, 460.
The management of personal finances is often a perplexing procedure. Economy is not a popular pastime, and we are inclined to foster in our hearts a little resentment that we must think of such unlovely things. The practice of economy is a source of annoyance, and is liable to be relaxed at the first vague suggestion of promised prosperity,—if indeed it has not been abandoned altogether long before there is any hint of changed conditions,—as if it were meant only for days of depression. In all times, carefulness in that which the Lord has entrusted to their keeping is enjoined upon Christian workers; and the blessing of Heaven is assured if this is carried on in the spirit of loving service for our Master. The admonition of the word is, "Be ... not slothful in business; fervent in spirit; serving the Lord." Rom. 12:10, 11.
Washington, D. C.
