Treasurers, Finance Committees, and other church leaders put in a lot of work to create a realistic budget. This is the plan for the ministry of the church in the language of accounting. Dividing your plan/budget by 12 to gauge your progress doesn’t make sense.
Let me illustrate. The average high temperate in Mitchell, SD is 58°. That doesn’t mean that you should expect it to always be 58° year round. When it’s 25° in January, you wouldn’t freak out because that’s normal for the year. In the same way, there are certain months that you would expect income and expenses to be higher in some months and lower in other months.
By adjusting your budget for expected monthly variations, your excellent annual budget will turn into excellent monthly reports. Here’s how you can do this:
- OFFERINGS: Use a tool like my spreadsheet. There are seasonal variations in giving as well as some months have more Sundays than others. This can complicate the calculation so I encourage you to try out this spreadsheet.
- OTHER INCOME: You may have some endowment or other income that comes in annually or quarterly. Those can easily be budgeted accordingly. Other income can probably just be divided by twelve.
- ANNUAL/QUARTERLY EXPENSES: You may have some bigger expenses like insurance or elevator contracts or subscriptions that come due at the same time each year. Budget those accordingly.
- SEASONAL: Snow removal, lawncare, VBS, and Sunday School curriculum are all ones that have a regular season when you would budget expenses for part of the year and not the rest of the year. Other expenses, such as utilities, may be higher during some months but lower in other months. Do your best to approximate these accordingly.
- EVERYTHING ELSE: I know some are sporadic, but if there is no identifiable pattern or if the expenses are insignificant or fairly regular month to month, don’t waste too much time. Just divide it by twelve.
In the video, I show you how to use my spreadsheet.
Useful Links
- Trend Analysis Spreadsheet: https://jctaccounting.files.wordpress.com/2022/10/trend_analysis.xlsx
- Playlist for Budgeting Series: https://www.youtube.com/playlist?list=PLy3_Fkz8_LMqNE_pFwHxcnvr9uzvirb-T
- DWU: https://www.dwu.edu/
JCT Accounting Co 