What Do Budgets and Worthiness Interviews Have to Do With Each Other?
by Richard P. Halverson

In truth, budgeting is a boring guilt-ridden subject for lots of folks, and I am shameless in looking for some kind of hook. I might note that we have been commanded by the Lord to live by certain laws.  If we do, we will enjoy spiritual happiness in the future and wind up where we and the Lord want us to be.  A worthiness interview with a priesthood leader is part of reviewing where we are and helping us stay on the proper spiritual path.

We have been counseled by our Church leaders to be frugal, avoid debt and spend wisely.  If we do, we will enjoy financial happiness in the future and wind up where we and I think even the Lord, wants us to be.  A budget is part of reviewing where we are financially and helping us stay on the proper financial path.

The first time I wrote about budgeting I was talking about a system of special codes in checkbooks for tracking budget categories and using pieces of ledger paper wide enough to cover a meetinghouse banquet table. Today technology has made it so easy most of us are running out of excuses.  This is especially true if a person is computer literate, which almost certainly describes Meridian readers.

I am not here to recommend any particular software package.  However, the most popular home products are Quicken and Microsoft Money.  Both will handle the basics admirably.  Readers who are capable users of spreadsheet software can create budgets in Excel or Lotus.

Sometimes it is useful to look at a successful role model for inspiration.  In this regard I would like to recommend the Church. Most members may not think much about the financial management of the Church.  We pay our tithing as a principle of faith and leave it at that.  In practice, The Church of Jesus Christ of Latter-day Saints is managed in a very conservative and prudent fashion.  If you run in the right financial circles you will find that the Church has a financial reputation in the secular world that is superb. There are many things the Church does to earn that reputation. For example, today the Church does not go into debt. Consider this statement made by President Hinckley in the opening session of the April 2003 General Conference of the Church. 

“Faith in the payment of tithes and offerings increases despite the straitened economic circumstances in which we find ourselves. We are able to go forward with the building of meetinghouses and temples, with our vast education program, with the very many activities which are conditioned upon the tithing income of the Church. I promise you that we will not put the Church in debt. We will strictly tailor the program to the tithing income and use these sacred funds for the purposes designated by the Lord.” (Emphasis added.)

You would have to be comatose not to be aware of the budget battles raging all over the country at all levels of government, school districts, universities, charitable organizations, corporations, etc.  Can you imagine any of these saying we will tailor our activities to match our income, or we will not go into debt, or we won’t raise your taxes (tithing) and not having a fight on their hands from one interest group or another?

In order to achieve what President Hinckley promised, the Church engages in careful budgeting.  Then the Church closely follows and lives by that budget.  Most members are probably unaware of the Church’s budgeting and spending practices.  But if you happen to be in the right place at the right time, you will find that when the Church has spent what is in the budget in a certain area they quit spending.  For example, building remodeling.  If there is no money left in the budget for remodeling a particular building, the project is put on hold until there is money, even if the high priests and the nursery kids are sharing the foyer for class.

Church members would do well to not only follow the counsel of the Brethren to live providently but to follow the example of the Brethren in their financial management of the Church.  That would include creating a good budget and sticking to it. 

Of course, many people do budget well – but many intelligent and highly capable people do not. In my experience there are three major stumbling blocks.

Knowing what was spent last year. For people who have not been using a budget, getting started is a daunting task.  Budgeting requires estimating what will or should be spent on various items in the future.  In most cases that starts with the question of what was spent in that area last year?  Some areas are easy, for example, the amount spent for rent or mortgage. However, it is more difficult to know what was spent for electricity.  Then when it comes to expenditures for maintenance and decorating, frequently people do not have an accurate idea what has been spent.  There are many of these hard-to-know categories.  Some are basic.  Most non-budgeters can not estimate within 20% what is being spent for food and clothing.  And when it comes to things like entertainment, hobbies and vacations, estimates to reality can be off by more than 100%.  (Incidentally, the estimates are nearly always well below what is actually being spent.)

For most of us estimating what we can afford to spend in an area begins with knowing what we have been spending in the area.  The only way to truly establish a history of spending by category is to go through previous expenditures and separate them.  This means pouring over old credit card slips and cancelled checks. This can be such a daunting and time consuming task that it easy to give up before getting started.  And if the records have been thrown away, the history is lost.

If a person can reconstruct the history and is willing to do it, that record will greatly aid in establishing a current budget.  But if the history cannot reasonably be reconstructed, then the best thing to do is start now.  Electronic financial software will help immensely. Make the best budget estimates possible and plan to review and adjust frequently.

Tracking what is being spent this year. Even when the budgeter starts with good history, it is necessary to track current expenditures. Here technology is making a huge difference.  It use to be that on a regular basis a person had to sit down, pour over all their checks, credit card purchases and cash outlays for the last month or so.  These transactions had to be separated, assigned to categories and recorded on paper.  Frankly, many people don’t get around to balancing their checkbook on a timely basis let alone doing all this extra work. This meant many budgeters simply didn’t find time and lost interest in actually tracking what they were spending and even the best budget became useless.

Today most banks, credit card companies and other financial institutions allow electronic downloads of transactions right into your financial software.  This makes everything from reconciling your checkbook to tracking your budget much easier.  You download the checks you’ve written and your credit card purchases.  You then tell the computer what budget account they are for and the computer does the rest. In fact, the program learns.  If it sees a check to your manicurist, it will suggest the expense be added to your “Personal Grooming” budget category.  You just have to accept the suggestion.  It couldn’t be much easier.

A small hint for tightwads like me that hate paying bank fees.  Banks love to charge fees.  Most of the popular financial software packages allow you to program your bank’s information into the software’s database.  Then with a click of a mouse the software will open the Internet, contact your bank and download your recent transactions.  For this the bank (which, as far as I can tell, has done nothing here) may charge you a fee of $5 to $10 a month.  If you are relatively comfortable navigating the Internet you can probably get the same download for free.  Go to your bank’s web-site, go to your account and most institutions will then allow you to download your transactions without paying a fee.  You will need to specify the file type and where it should go on your computer. Your financial software can then read the file. All of this is a little more hassle than a direct download but it certainly isn’t difficult.  Incidentally, if your bank, credit card company or other financial institution does not provide these services, seriously consider moving your account.  Today most good financial institutions do.

Reviewing the budget against actual expenditures. The final hurdle for many budgeters comes in actually reviewing the budget on a regular basis.  Historically, accumulating all the statistics and comparing them to the budget was a chore that only someone who liked bookkeeping as a hobby enjoyed doing.  It was pretty easy to let the project slide into a dark hole in space. There are probably a lot of reasons why people fail to review what they have spent and compare it to what they budgeted to spend.  These included the psychological desire we all have to avoid bad news.  Financial software can’t make the news any better but it can make getting the news easier.  Now when you call up your budget report, the computer does the math for you.  It will provide a report showing what your budget is and how much you have already spent in an area.  You can save the budget, print the budget or adjust the budget if necessary, all with ease.

There is a downside to these software programs.  Like any piece of software you must learn how to use it.  Some people insist learning the software is more difficult than doing the budgets by hand.  I doubt it.  And once you have mastered the program, your financial skills multiply tremendously.

Discipline.  You may note that I did not include as a major hurdle to budgeting the discipline to stick to a budget.  In my experience people fail to budget because it has been so much work.  Many people, perhaps a large majority of people, do not like this kind of bookwork.  However, it has also been my experience that when people have the information in front of them, their discipline improves substantially.  It is easy to forget how much you are spending when you don’t track it.  But when you do know the numbers it is easier to say “No” to yourself.

O.K. there may not be a direct connection between a worthiness interview and a budget.  But they both involve an important review of where we stand relative to where we want to be.  And there is another connection.  Tithing.  When you budget, you should put tithing at the top of the list.  And when you do that, you will discover that actually achieving the budget will become easier.  And, of course, you will be able to respond positively to that important question in a worthiness interview.