Budgeting With A Low, Unpredictable Income? Go Figure!
- Written by Michel A. Bell
"Are you kidding? How do you expect me to budget when I don't know my income? Some months, my cash flow is zero. How do I budget?"
I hear these comments often. Certainly, many folks' incomes are unpredictable. Several corporations, ministries, churches too, have uncertain cash flow. Should they forget about budgets, spend only in periods when they receive funds, don't spend when they get no funds? Would this be good stewardship? I don't think so.
Certain costs are fixed for a time, and like a freight train, they keep coming at you. If you have a mortgage, it doesn't pause when you have no income. Your challenge? Accept reality, learn to handle unpredictable cash flows and adjust your lifestyle to fund needed expenses, orderly. That's what Pharaoh appointed Joseph to do in Egypt--smooth the supply of grain over 14 years, so Egypt would have grain during seven years of famine (Genesis 41).
From this event, we can learn at least three practical lessons to apply to our circumstances. First, accept the reality of your circumstance. Second, your circumstance is unique to you, and third, plan for the reality, until God changes it.
Accept The Reality of Your Circumstance
Pharaoh and Joseph accepted their circumstance--they accepted there would be a feast followed by a famine.
If you surrendered your life to Messiah, He has promised to provide for your basic needs, when you seek first His Kingdom and His righteousness. Indeed, six times in Matthew 6:24-34, He assures you not to worry, but you do? Don't you believe He will do as He says? Alternatively, do you think you haven't adjusted your lifestyle to fit His requirements to provide for you?
When you think your prayers are not being answered, look at your lifestyle to see whether you need to adjust it in line with His way. Remember, He will answer your prayers according to His character, His values, His way, not yours!
Your Circumstance Is Unique To You
Often, we try to adapt a solution someone followed to a similar problem to ours. But it doesn't work because we don't look holistically at the other person's situation. Though our friend might have a low unpredictable income, she might be starting with a solid financial base. Her debt load, while high, might be manageable because of help from her parents. Our debt load is similar, but our financial base is unstable, and we do not have friends or relatives to help temporarily! So, following our friend's path to renegotiate debt, lengthen its maturity, and lower payments, might be futile, and costly.
Plan For The Reality Until God Changes It
Is it defeatism to accept your circumstances as a base? Absolutely not! You are where you are, nowhere else; so you need to move from there, not where you would prefer to be--be realistic! We see another excellent Bible example of budgeting with uncertain cash flow in Proverbs 6:6-8:
Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.
Your income will be erratic! Accept it; plan to work with it, and adjust your lifestyle, accordingly. That's what the Proverb tells us. What are you trying to achieve by budgeting? Precisely what Joseph did in Genesis 41, and the writer tells us in Proverbs 6:6-8. After accepting your volatile income, estimate expenses that might be required in the specific future period to achieve known goals. Here is a rough outline of a simple approach to budgeting with an erratic income:
- Joseph knew he had to build barns, store grain, and set up distribution systems. Your income will be limited! Estimate likely income over a fixed period--monthly for the next 12 months. Don't know? Look at the past. Reflect on the present and future. Estimate the worst it could be, the best, and most likely.
- You know you need to pay rent or mortgage, buy groceries, and so on. Will any of your estimates be sufficient to meet your view of the bare essentials? You might need to reassess essentials, especially as some of today's essentials weren't invented 20 years ago! Still, you must choose an income level to work with--the worst, most likely, or an average of the two--stay away from the best.
- Now your challenge is to answer this question: With your current lifestyle, realistically, will your likely estimated income be enough? If not, you must adjust your lifestyle, probably by a combination of these: Stop eating out, eliminate junk from your diet (that's a health bonus), cut satellite, cable, cell phone (subject to penalty), and other frills. You can complain, but this is reality. You might want to seek help from your church. Still, it's a lifestyle matter.
- Joseph's estimate was wrong. He didn't build enough barns. That's fine because part of budgeting is adapting to present realities.
- As you enter your budget period, regularly, initially weekly, look at your estimates of income and expenses, and where feasible, adjust your lifestyle. Longer term, look at lowering fixed expenses, cost efficiently.
- Like Joseph, you need to formalize a system to save funds during surplus periods, for spending when famines arise. How folks view annual tax refunds is a classic example of the abuse of surpluses. Rather than seeing these funds as a base to save for famines, folks spend them before they get them!
Please understand, a budget is your best estimate of how much time, talents, and other resources you will need in a given future period to do specific tasks. And you budget based on limited resources available. Start by accepting these resources and understanding God will provide for your needs. Joseph had to estimate what he needed to do to prevent Egypt from being wiped out by famine. Ants know they need to store food in summer so they have food in winter. Are you prepared to accept your circumstance as the basis to plan to get out of it? Are you prepared to turn over your life fully to Messiah Jesus? He has promised you the abundant life when you seek Him first. Contrary to popular TV evangelists, He has not promised you to be healthy, wealthy, and wise.
Copyright (c) 2011, Michel A. Bell
To learn a simple, electronic envelope budgeting system, visit: http://www.managinggodsmoney.com/essentialtools/gpsmoneyguide.php.
Michel A. Bell is an author, speaker, founder and president of Managing God's Money, and a former senior business executive devoted to help folks live a debt free life style. Visit: Managing God's Money for more on Michel.