Many young adults have no strategy when it comes to finances. In college, meals, utilities, lodging, transportation, school expenses etc, were often covered by tuition and student loans. However, in the real world, finances often do not work like this. Lodging, food, gas, internet, cell phone,cable, etc. all cost money that is not all paid to just one place like your tuition bill. So, how do we get everything in order? The answer is simple, develop a budget.
1) Record Your Monthly Expenses and Develop a Budget
Proverbs 21:5 The plans of the diligent end in profit, but those of the hasty end in loss
To get the financial house in order we first need a plan. Jesus says in Luke 14:28-30
“Which of you wishing to construct a tower does not first sit down and calculate the cost to see if there is enough for its completion? Otherwise, after laying the foundation and finding himself unable to finish the work the onlookers should laugh at him and say, ‘This one began to build but did not have the resources to finish.’“
To begin that financial plan we need a budget. Before setting up a budget, you should record all of your expenses for a month. Keep every receipt from every purchase you make and record all expenses for which you may not have a receipt.. If you prefer a more high-tech form of storage, use your smartphone to take a picture of your receipt and save it in a receipts folder and discard the paper copy.
At the end of the month, tally up your receipts to calculate your expenses from the previous month. At the same time, calculate your income from your paychecks and any other side gigs. Evaluate your income versus your expenses. Did you spend more or less than you made last month? This will help you adjust your budget according to your income.
Now, take your total income from the previous month, and allocate it to your expenses for the next month until you have spent every dollar for the next month. Examples of expenses may include: charitable giving, savings, food, rent, utilities, eating out, car payment, student loans, gym membership, etc. If you have left over money after your allocation of funds boost your budgeted savings amount or create a miscellaneous fund for the expenses that do not fit into any of your categories.
Save your receipts again next month and see how well you did compared to your budgeted amount for each expense. Do not become discouraged if you don’t hit your budget goals in the first month. You may need to tweak your budget a bit to get everything in line. After a few months, you should develop a good rhythm in your financial life.
Steps 2 and 3 will deal with the charitable contributions (tithing) and savings aspects of your budget. For a more in-depth discussion on budgeting please check this article out.
2) Donate a fixed amount of every paycheck to God.
Proverbs 3:9 Honor the Lord with your wealth with first fruits of all your produce
I place this as the first financial expense in your budget because God needs to be the Lord of every part of your life, including finances. As the Gospel from this past Sunday (Mk:12:38-44) illustrates, it’s not the amount of money that you give to God that’s important, it is the spirit in which you give it to God. Some people believe in the traditional tithing approach of giving exactly 10% of their income to support God’s work in various charities (Gen 28:20-22, Lev 27:30-32).
I believe that this is a great goal for everyone to try to achieve in their financial life, but I recommend that you not become too legalistic about this and transform into the Other Cafteria Catholic. Maybe you can’t give 10% now, but you can set aside a few bucks every week to put in the offering at Mass. It is better to give 1% of your income to God in great joy and thanksgiving than to give 10% to God begrudgingly or looking for people to pat you on the back for your heroic generosity (Lk: 18:12).
As you begin to give, challenge yourself to give a little more and see how God blesses you throughout this process. Recall that CCC 2462 says, “Giving alms to the poor is a witness to fraternal charity: it is also a work of justice pleasing to God.”
Let’s resolve to use a portion of our money to bless God for his generosity to us. Again, I remind you not to get up caught up in the amount of your gift but the spirit in which you give that gift because God wants your heart more than He wants your dollar.
3) Set up an emergency savings fund of $1000
Proverbs 21:20 The wise man saves for the future but the foolish man spends whatever he gets.
The story of Joseph and Pharaoh found in Genesis 41 gives us a great example of the benefits of saving. Because of Joseph’s prudence and foresight, as given to him by God, the Egyptians survived a harsh famine. Joseph had them save up their grain during times of great abundance so that they could eat during the famine and sell their excess to those other people who ran out of food during the famine.
In our consumer-driven culture, many of us have forgotten or never learned about the story of Joseph in Egypt. They spend all that they earn and forget to even think about saving for the tough times ahead. In fact, a recent survey by CNN found that 28% of Americans have no emergency savings fund at all. Unexpected life events such as a major car repair, an unexpected bill, a costly medical procedure, etc will happen to you, the question is, how will you handle them?
An easy answer is to say that you will just put the expense on your credit card. However, with average interest rates at 16.89%, you will end up spending a lot more paying back the credit card company than you would have had you saved for that emergency all along.
Resolve to park some of your cash in a savings account that will be easily accessible to you when an emergency happens. Just like your tithing, set aside a portion of your income each week to place in your savings account. This way you will build self-control and avoid paying those exorbitant credit card rates when life deals you some tough cards.
This is just a brief overview when it comes to finances. I hope to delve more deeply into this area in future articles. However, above everything else I have written about finances, I urge you to trust God in this part of your life. No amount of financial planning can give you true security, which only comes from God.
Life can change in an instant. That “secure” job you had today could be gone to tomorrow. The home you worked diligently to own could be gone in the blink of an eye through a natural disaster.
As we approach thanksgiving, let’s be thankful to God for the ways that He has provided for us in the past, present and the ways He will do so in the future keeping in mind the words of the Psalmist “The eyes of all look to you and you give them their food in due time. You open wide your hand and satisfy the desire of every living thing.” (Psalm 145:15)