The Mustard Seed
Economics by The Book
Since the first day of our marriage, my wife and I began doing with our family finances what every business does. We record every financial transaction. At first we did this with a notebook that had a separate ledger page for each budget category (food, mortgage, insurance, etc.), the same as we would do if we were setting aside cash in envelopes for upcoming expenses. We never need to quarrel about money because this system forces us to be accountable to each other for every dime we spend. Whenever I am tempted to buy anything on impulse, I remember that I must have the money available in the budget for it, that I will have to write it down when I get home, and that my wife will see the record. This system forces us to communicate about our finances and to make our financial decision together.*
One single woman who regularly attended our church was always living on the edge of financial disaster. She, like so many, had too much month left at the end of her money. My wife sensed that part of her problem may have been her failure to plan carefully how she spent her money.
Rather than teach her our complicated ledger system, we encouraged her to take one baby-step in personal financial accountability. We gave her one piece of paper and told her that during the next two weeks she should write down everything she bought, record every bill she paid, and write the amount. When I visited her two weeks later, she was excited. "For years I have been frustrated that I haven't been able to buy new shoes. I finally figured out where my shoes are -- in the candy machine at work! If I just stop snacking, I will have enough to buy those shoes!"
Most folks take much longer for the light to turn on. Some people choose rather to be "free" from accountability, and in their freedom they enslave themselves to stress and conflict.
One young couple had serious conflict on several issues -- money, child discipline, and in-laws. But money seemed the most visible, most contentious, and the most fixable problem. As my wife and I listened to their complaints against each other, it was obvious that a simple system of financial accountability by keeping a record of expenses would help resolve some of their conflict. Their response was to shift their anger away from each other and toward us. They both wanted to throw us out of their house. Their root problem became obvious: "Independence." They both refused to be accountable to each other. A few months later they were divorced.
Many folks "freak out" at the word "budget." But a budget is nothing more than a spending plan. Know what you earn, and then decide what you can buy. Write it down. And stick to it.
If we add these steps to our first six principles for financial freedom, they look like this:
(7) Keep a record of what you spend.
(8) Be accountable for what you spend.
(9) Plan your spending and saving, then diligently follow the plan.
~~ Pastor Ron
* Our original ledger notebook eventually migrated to the computer. Online personal finance programs which I recommend are youneedabudget.com [YNAB] and mint.com. (YNAB is the better system; however Mint offers a free service.)continued...
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Pastor Ron Friedrich