MASTERING YOUR PERSONAL FINANCES:

DEVELOPING AND IMPLEMENTING A HOUSEHOLD BUDGET,

GETTING OUT OF DEBT, AND RECOGNIZING SUCCESS
Prepared by: Julian Griffin
Retired Business Executive and Missions Pastor

INTRODUCTION
This document contains three sections in which you will learn how to manage your household financial
resources from a biblical perspective. Section 1 establishes a Scriptural foundation for managing your
household financial resources and gives a step-by-step explanation of how to develop and implement a
household budget. Section 2 provides some powerful Scriptures about debt and explains how to become
debt-free. Section 3 presents three ways by which you can recognize, even measure, how you are
succeeding in your household financial management, including some biblical advice.
SECTION 1: DEVELOPING AND IMPLEMENTING A HOUSEHOLD BUDGET
WHAT DOES GOD SAY?
We should always look to God for guidance in our lives, including how to handle money.
Psalm 24:1 The earth is the LORD’s, and everything in it, the world, and all who live in it…
(Note: Psalm 23:1 in the Russian Bible)
Deuteronomy 10:14 To the LORD your God belong the heavens, even the highest heavens, the earth and
everything in it.
The first, and most important, thing we need to learn is that everything we have belongs to God. He entrusts
us to take care of things, including money, which do not belong to us. A trustee is someone who is given
responsibility for managing the affairs and assets of another party. If that person is found to be negligent,
he or she can be punished according to our laws. In view of Psalm 24:1 and Deuteronomy 10:14, we are
in effect trustees of God’s estate. This is a very serious responsibility. We may find ourselves often
referring to “my money” or “our money.” We now understand that it is really God’s money.
Proverbs 27:23-24 23Be sure you know the condition of your flocks, give careful attention to your herds;
24for riches do not endure forever, and a crown is not secure for all generations.

Luke 14:28-30 28“Suppose one of you wants to build a tower. Will he not first sit down and estimate the

cost to see if he has enough money to complete it? 29For if he lays the foundation and is
not able to finish it, everyone who sees it will ridicule him, 30saying, ‘This fellow began
to build and was not able to finish.’”
God expects us to be good caretakers – to “know the condition of your flocks” and “give careful attention
to your herds.” We should live not just in the present, but also be thinking about how we will plan for the
future. Many people for any number of reasons get deeply in debt because they do not “estimate the cost.”
In many instances, they simply do not think ahead and are totally unprepared for future events, especially
those that they know will occur, such as retirement.
Philippians 4:10-13 10I rejoice greatly in the Lord that at last you have renewed your concern for me.
Indeed, you have been concerned, but you had no opportunity to show it. 11I am not
saying this because I am in need, for I have learned to be content whatever the
circumstances. 12I know what it is to be in need, and I know what it is to have plenty. I
have learned the secret of being content in any and every situation, whether well fed or
hungry, whether living in plenty or in want. 13I can do everything through him who gives
me strength. (emphasis added)
We can probably assume Paul did not have a steady income, certainly not a fixed salary. After all, he was
a tentmaker and was probably paid for each tent rather than a fixed salary every week. In any event there
is an implication in this Scripture that perhaps he had a budget. He probably knew that when his income
was up, he should set aside some for those times when his income would be down. Then, when his income
was down, he could draw upon this reserve to maintain a reasonably consistent lifestyle with minimal or

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no financial suffering. In other words, he learned to live within his financial resources. We, too, must live
within our resources.
To be successful financially, we also have to change how we think about money. We have already seen
that we really are trustees of God’s estate – a major change in how we think. Vision is another area where
we need to change our thinking.
Proverbs 29:18 Where there is no revelation [vision], the people cast off restraint…
Without vision, anything goes. There is no order, no discipline. It is important for you to have a financial
vision for your family. What would you like to accomplish over the next year, or the next three years, for
example? Visions do three things: (1) They guide us. (2) They inspire us. (3) They move us to action.
When you have a vision of where you want your family to be and when, you can start taking steps to
achieve that vision. When your vision starts to become reality, you are experiencing success. This gives
you confidence to plan and achieve a greater vision. From time to time you need to review and revise your
vision as you realize success and as your circumstances change.
It is important to recognize that a vision of success may be different for every person or family. One
family’s vision may simply be to get out of debt. Another family’s vision may be to provide a better
education for their children than the parents received. Another person’s vision may be to give more to God.
The only vision that is important is your vision.
Finally, let us look at Jeremiah 29:11-13:
11“For I know the plans I have for you,” declares the LORD, “plans to prosper you and not to harm

you, plans to give you hope and a future. 12Then you will call upon me and come and pray to me, and I
will listen to you. 13You will seek me and find me when you seek me with all your heart.”
We do not serve God in order to improve our financial well-being. We choose to serve God simply because
God created us for that purpose. Now, the Lord wants to bless our efforts, and we should ask Him for
wisdom and guidance in managing our household finances. However, God requires a spiritual commitment
from us. We must seek Him. In return He blesses us as He determines. His blessings may take many
forms, and financial success may be one of them. It is important to choose to serve God because it is the
right thing to do. If we attempt to serve God with the expectation that He will give us financial prosperity,
we are approaching Him with the wrong motive.
WHY IS A HOUSEHOLD BUDGET NECESSARY?
Scripturally, a household budget helps you to know the condition of your finances. It helps you to count
the cost before proceeding with a plan for the future. It also helps you to learn to be content with your
circumstances (until you can improve them). A budget provides a specific plan for using the income God
has entrusted to you. It helps you to be accountable – to God and to each other as husbands and wives. It
may help you to be able to take advantage of an opportunity that comes along. It may also prevent a
financial surprise or crisis, or at least reduce its impact.
People have often expressed this concern to me: “I do not make enough money to worry about a budget.”
If you feel this way about your situation, I encourage you that it is even more important for you to develop
and implement a budget in your household. It will help make the funds you have last longer and purchase
more.
I also hear another common concern: “I am too old to do this.” Again, I encourage you that it is never too
late to begin budgeting. The earlier in life you begin, the greater the opportunity for a budget to benefit
you. However, you can still benefit from effective budgeting regardless of your age.
So, do you have a household budget? If not, why not? If you do, have you written it down? When you
write something down, such as budget, you are more likely to be committed to it.
If you do not have a budget, you may be wasting much of your income. You may not know where you
stand financially. You are probably not in control of the money God has entrusted to you.
A WORD OF ADVICE FOR HUSBANDS AND WIVES
If you are married, both spouses should participate in and agree to the development of the budget. This
idea of cooperation between spouses may present a change in how you think about financial matters in your
household. Working together helps the two of you have a common understanding of three things about

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your budget: (1) what you are doing, (2) why you are doing it, and (3) how you are doing it. For these
same reasons, you should also review your results together. Then, with two sets of eyes seeing the same
facts, both of you will see where you are financially and how you got there. Also, you can more easily
determine and agree to any changes you may need to make for the future. By working this together, you
can eliminate many arguments over money.
It may be helpful to include the children. This is important if you are reducing or eliminating purchases
that have benefited them in the past. They need to understand the importance of having your finances on
a good foundation. Such a situation helps you to teach them. First, they begin to learn the meaning of
sacrifice for the greater good. Second, you begin shaping their thought process about finances so that as
they grow older, they will work to manage their finances properly.
A LIFE-CHANGING HOMEWORK ASSIGNMENT
I want to call you to action in a very urgent manner. Starting right now and for the next 30-60 days, keep
a record of every leu (MDL), Euro, ruble, or dollar you spend, regardless of how much or how little the
amount. Both spouses should do this. Put your expenses in categories, for example, food, school expenses,
clothing, and so on. You will probably be surprised later when you analyze your spending habits. You
will probably identify areas where you are wasting money or at least making poor spending decisions. I
believe you will find this spending inventory to be a life-changing experience. This exercise is yet another
change in how we think because it forces us to look at how we spend the funds God has entrusted to us.
DEVELOPING A HOUSEHOLD BUDGET
Your financial success will depend to a large extent upon how well you develop and implement your
household budget. The better you plan, the more likely you are to implement the plan well. Good
implementation leads to greater financial success. Remember, however, that financial success is measured
differently for each person or household. You should measure your success against your vision.
To develop your household spending plan, follow these eight steps:
Step 1: Stop creating debt and pay back the debts you have now
Step 2: Determine how much income you have available
Step 3: Determine the items for your household budget
Step 4: Determine the costs of the items and compare to your available income
Step 5: Make necessary adjustments
Step 6: Develop an emergency fund
Step 7: Implement, monitor results regularly, and make adjustments as circumstances change
Step 8: Follow the budget consistently
You will need discipline and self-control to be successful with your budget. It absolutely requires that you
be able to put money for a specific purpose in the bank, an envelope, or whatever safe place you choose
and leave it there until you need it for that purpose. If you do not have that kind of discipline, you simply
must develop it. You can do this. Be encouraged. Philippians 4:6 instructs to take everything to Him in
prayer:
Do not be anxious about anything, but in everything, by prayer and petition, with thanksgiving, present
your requests to God.
Commit your household finances to God (they belong to Him anyway) and invite Him to assist you in your
decision-making.
Step 1: Stop Creating Debt and Pay Back the Debts You Have Now
Debt is the single biggest obstacle to a good financial plan. Determine right now to stop creating debt of
any kind. If you have debts outstanding, you should work hard to pay them in full as quickly as possible.
Step 2: Determine How Much Income You Have Available
Determine the sources and amounts of income you (and your spouse) have. Make a list of them and the
period of time they involve. For example, do you receive the income weekly, every two weeks, or monthly?
If your income changes from period to period, estimate the level of income you believe to be most reliable.
Is the income before or after income taxes? If your income is before taxes, you will need to estimate how
much income tax you will owe to the government and set that amount aside until it is due.

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Determine the period of time for your spending plan. If you receive your income every two weeks, you
may want a bi-weekly budget. If you receive your income monthly, you should probably develop a monthly
budget.
For example, let us say a Moldovan family has income of 2,000 MDL per month after taxes. (This and
other amounts in this document are for illustration only. If you believe the example amounts are unrealistic,
then concentrate on learning the principle. You can always use the correct amounts for your situation as
you develop and implement your household budget.) The Moldovan family decided to make a monthly
budget.
Step 3: Determine the Items for Your Household Budget
Remember, this is your budget. You can include anything, but start with your needs first and prioritize
them. The parents of the Moldovan family understand that they must keep their household expenses under
2,000 MDL per month so they can save money for the future. For example, if they do not save, they may
not have anything for retirement or emergencies.
They have identified the following items for their budget. They also prioritized them. If they are able, they
will add more items. In your plan, you may identify more or different items.
1. Tithes and Offerings 3. Land/Home 5. Utilities 7. Clothes
2. Savings 4. Food 6. Telephone 8. Debts
Notice what this list is saying about their values and priorities. They are saying that giving back to God
through Tithes and Offerings to their church is the most important thing. Then, they are saying that giving
to themselves by saving for the future is also very important.
It Is Important To Save. Why?
Savings is your connection to the future, perhaps another change in how we think. The
future from time to time will present you with opportunities (perhaps an opportunity to
expand your farm or invest to start your own business) and challenges (such as an emergency
of some kind). Savings helps you to be prepared to take advantage of an opportunity and to
deal more effectively with an emergency. In these instances, savings can help you avoid
debt.
Proverbs 22:3 provides Scriptural support for saving for the future:
A prudent man sees danger and takes refuge, but the simple keep going and suffer for it.
Savings helps you to prepare for major situations in the future that you know are going to
occur. For example, things you can reasonably expect to occur include: a vehicle to replace
the one you have when it is no longer operable, a university or technical education for your
children. Retirement is also a very important reason to save, especially if you are self-
employed, or your employer or the government does not provide a pension. Even if a
pension is available, it may not be enough.
Savings also helps you to prepare for situations that may catch you by surprise. Examples
of situations you may not expect to occur include: a serious medical situation, loss of job,
vehicle accident. Each of these examples presents an emergency situation. See step 6 below
for more information about an Emergency Fund.
You may decide to have two or more items in your budget related to savings so that you can
keep track of your progress more easily. For example, you may choose to have “Savings –
Emergency”, Savings – Education”, and “Savings – General Purpose”.
Later you will learn about making adjustments in your budget. When you make adjustments,
make every effort to treat savings as a non-negotiable item. Increasing the amount you save
is excellent. You should go to great lengths, however, to avoid reducing the amount you are
able to save.
The Moldovan family put certain expenses together for convenience. For example, their Clothes item
includes all members of the family. As a practical matter, most of that budget item will go for clothing for
the children.
Think for a moment about the budget items they have selected. Did they miss some items? What about

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transportation, such as bus or taxi fares or a vehicle of their own? What about medical expenses? What
will they do if an emergency happens? (Are you beginning to understand why saving for the future is
important?) What about ordinary expenses that do not fit into the categories they selected? Do they need
a Miscellaneous item for these expenses? If you decide to include a Miscellaneous item, be careful to not
put too much into it. It may cause many problems with your budget.
Step 4: Determine the Costs of the Items and Compare to Your Available Income
The best way to determine costs is to look at a long period of time, such as the last twelve months. The
recent past will often be a good predictor of the future. Also, it will help you to see the monthly fluctuations
in certain expenses, such as school expenses. (By the way, the Moldovan family did not plan for school
expenses, did they?) You want to develop a budget that you can apply over and over during the year – not
an individual budget for each month. However, in the month when school expenses are due, for example,
it will be important to have saved some money during the preceding months to pay those expenses. In this
manner, you are able to pay the large one-time expense without suffering financially during that month.
Effective budgeting requires good recordkeeping. If you tend to throw away receipts, please stop. Many
times the receipts for expenses of the past will help you develop your budget for the future. In some cases
you may have a good idea in your mind about certain expenses. For example, the mother of the Moldovan
family probably already knows how much food will cost each month without keeping every receipt from
the market.
What do you do if you do not have good records? Remember the homework assignment – the spending
inventory you have been keeping? This information will help you to get started. You may already have 1-
2 months of spending details available.
The Moldovan family reviewed their expenses over the past 12 months. They grouped them into the
categories they selected. They added the expenses together for each category. They made some
adjustments for changes they expect to occur, such as inflation. Next, they divided each total by 12 to get
a monthly average. Their results are shown in the following chart.
Moldovan Family Monthly Household Budget – First Attempt
Income (After Taxes) 2,000
Tithes and Offerings 200
Savings 150
Land/Home 300
Food 550
Utilities 500
Telephone 100
Clothes 200
Debt A 100
Debt B 20
Debt C 30
Debt D 10
Total Expenses 2,160
Surplus / (Deficit) (160)
Step 5: Make Necessary Adjustments
The Moldovan family has a monthly deficit of 160 MDL.
Let us assume, however, that they had a monthly surplus of 160 MDL instead. This is an easy circumstance
to address. They can take one or more of the following actions: (1) give more to God; (2) increase their
savings; (3) make adjustments to items already in their budget; and (4) include additional items in the
budget.
The truth of the matter is that the Moldovan family must look very seriously at their lifestyle. Their
expenses are 160 MDL more than their income each month. They are attempting to give 200 MDL to God
and save 150 MDL, neither of which they have ever done before. This deficit of 160 MDL is not sustainable
and, therefore, not acceptable. They must look at two things: (1) can they make more income, and (2) can
they reduce their expenses?

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They will look for ways to make additional income. Questions they need to ask themselves include: Does
either spouse have a skill or hobby that can be turned into an income-producing business? Is there a
possibility of working additional hours or expanding the family farm to produce more income? Is there an
opportunity of some kind to produce additional income? In this situation, the wife determines that she can
use her sewing machine to mend and make clothes for others and produce an additional 200 MDL per
month after expenses.
Now they are going to examine their expenses, item by item, and determine whether they can reduce them.
When you start making adjustments to your spending habits, remember that balancing a budget does not
always mean you have to stop something. Many times you just need to change how you go about it –
perhaps a cheaper alternative or shopping at a different market. For example, in our household my wife
cuts my hair. We saved enough barber expenses in three months to pay for the clippers.
Tithes and Offerings: The Moldovan family want to give 200 MDL to their church. They understand that
everything they have belongs to God anyway. They want to give tithes and offerings back to God to help
His Kingdom grow. They have faith that God will be with them and help them to be able to give this
amount every month. They do not want to change this amount. In fact, they plan to pay tithes and offerings
from the additional income the wife expects to produce and bring their total giving to 235 MDL.
A Note about Tithes And Offerings
Remember Psalm 24:1 and Deuteronomy 10:14 from page 1? Nothing really belongs to us.
Everything belongs to God, and He has entrusted us with it. When we give our tithes and
offerings to God, we are really just returning a small portion of what He has entrusted to us.
A tithe of 10% means that He has still entrusted us with nine times that amount for our needs
and wants. I urge you to strive to give at least 10% back to God and trust Him to enable
you to live on the remainder. Trust Him to bless you as He determines. Make tithes and
offerings your number one financial priority. Treat them as a non-negotiable items just as
you would treat your savings. Increasing the amount you give is excellent. You should go
to great lengths, however, to avoid reducing that amount. If you absolutely cannot give 10%,
give what you can and increase it at every opportunity.
Savings: The Moldovan family have not been saving anything. They understand now that they must start
setting something aside each month for the future. A good rule to follow is to give God at least 10% and
give yourself the same amount (Savings). The Moldovan family are not able to save 220 MDL (10%) at
this time. They are going to start with 150 MDL and try to increase the amount at every opportunity.
Land/Home: The Moldovan family own their home and farm. Their mortgage payment is a fixed amount
every month, so they cannot reduce it.
Food: The Moldovan parents examined their family’s eating habits. They believe they can change their
diets and spending habits and reduce their spending by about 100 MDL monthly. Sometimes, when you
are in a tough financial situation, you have to re-evaluate your values and make different judgments. The
wife believes she can grow vegetables in her garden to help feed her family. Also, she plans to pool her
funds with her neighbors and purchase food in bulk at the market to get a cheaper price.
Utilities: The Moldovan family try to be very conservative with their use of power, natural gas, and water.
They do not feel they can economize any further with their utility usage.
Telephone: The Moldovan parents have been paying 100 MDL per month for cellular telephone service.
This is the cheapest service they can find. This budget item will remain the same.
Clothes: The Moldovan parents do not feel they can reduce their Clothes budget. In fact, they need to
make it bigger since they have three fast-growing children. They will keep it at 200 MDL at this time.
Debts: The Moldovan family owe four debts to the local bank, computer store, and other parties. These
monthly payments are fixed according to the terms of their loan contracts. As a result, no reduction in the
payments is possible. They want to pay these debts in full as soon as they can.
As we have seen, the Moldovan family examined their household spending habits very carefully. They
made some changes as shown in the following chart. However, they did not change their lifestyle
significantly.

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 Moldovan Family Monthly Household Budget – Two Attempts
First Second
Income (After Taxes) 2,000 2,200
Tithes and Offerings 200 235
Savings 150 150
Land/Home 300 300
Food 550 450
Utilities 500 500
Telephone 100 100
Clothes 200 200
Debt A 100 100
Debt B 20 20
Debt C 30 30
Debt D 10 10
Total Expenses 2,160 2,095
Surplus / (Deficit) (160) 105
Look at the progress they have made! In just one round of adjustments they went from a deficit to a surplus.
Now they have another decision to make. What should they do with the surplus of 105 MDL? They need
to look at four things: (1) giving more to God; (2) increasing their savings; (3) making adjustments to items
already in their budget; and (4) including additional items in the budget.
They had not been giving their full tithes before this budget process began, so it is a real step of faith to not
only give the full 10%, but also to give an offering of 15 MDL each month. They have determined to place
their faith and finances totally in God’s hands as indicated by this giving commitment.
They have never saved anything for the future before now. They now understand and appreciate the need
to plan ahead and save for the future. They are committed to saving 150 MDL each month even though it
may require sacrifice on their part.
At this time they do not feel any changes are in order to the remaining budget items.
They realize that they had failed to plan for school expenses. They are now going to try to alleviate that
burden by including these expenses in their budget and setting aside 105 MDL each month. These funds
can now accumulate, perhaps in a bank account that pays interest. The budgeted amounts and interest will
then be available when school expenses are due in late summer.
The Moldovan family budget is now “balanced.” This means that the Surplus or Deficit is “0”. However,
they will need to be strict in their spending habits to make it work. If not, they may not be able to save
enough (maybe not anything) for the future. Saving to prepare for the future, as we have seen, is very
important.
The Moldovan family example demonstrates how to develop a household budget. The following chart
summarizes their budget development. When you develop your plan, you may discover that you need to
repeat step 5 three, four, five, or even more times to get a balanced budget that makes sense. Do not be
discouraged. Stay with it. You can do this! Always pray and ask God to help you. Remember Philippians
4:6.

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 Moldovan Family Monthly Household Budget – Three Attempts
First Second Final
Income (After Taxes) 2,000 2,200 2,200
Tithes and Offerings 200 235 235
Savings 150 150 150
Land/Home 300 300 300
Food 550 450 450
Utilities 500 500 500
Telephone 100 100 100
Clothes 200 200 200
Debt A 100 100 100
Debt B 20 20 20
Debt C 30 30 30
Debt D 10 10 10
School Expenses --- --- 105
Total Expenses 2,160 2,095 2,200
Surplus / (Deficit) (160) 105 0
Step 6: Develop an Emergency Fund
An emergency fund is important to a sound financial plan for your household. It provides a cushion when
unexpected expenses occur. It helps, for example, when a family member experiences a loss of
employment or a medical emergency.
How much should you have in your emergency refund? This is hard to estimate. The amount depends on
how secure you feel about the source(s) of income you have. If you feel comfortable about the stability of
your income, you may want to accumulate emergency funds equal to three months of your income. If your
source of income is unstable, you may want to try to accumulate six months of income in your emergency
fund.
Determine the amount of the emergency fund for your situation and begin accumulating it as you implement
your budget. It may take a long time to save this amount. Three to six months of income is a lot of money,
no doubt. Just do the best you can until you can do better. Put these funds in a secure place and do not
touch them unless you need them for a true emergency.
A Note about an Emergency Fund
You may choose to establish your emergency fund, for example, in the form of land, cattle,
or trees for timber, which you can sell to raise cash for an emergency. This is fine,
particularly if the value of these assets appreciate over time. However, consider this
possibility: You have an emergency, and you need cash within, say, the next 24-48 hours.
No buyer is readily available to purchase your land, cattle or timber. What will you do?
You do not have the cash.
Consider keeping some amount of your emergency fund in the form of cash, perhaps in an
interest-bearing bank account. By doing this you will have prompt access to the cash in an
emergency situation where you are not able to sell your assets in a timely manner.
Step 7: Implement, Monitor Results, and Revise Periodically As Circumstances Change
You have developed your household budget, hopefully with both spouses working together. It is now time
to implement it. You will never get any benefits from it unless you learn to live with it and use it properly.
Remember the homework assignment that was to last 30-60 days? You now realize that you never stop
keeping that spending inventory. You will now need those records regularly as you implement your budget.
If you have a monthly budget, you and your spouse should sit down at least once each month to review
your income and expenses. Compare them to the budget. Keep written records of your results – your
spending inventory. (You may be able to use a computer to assist you with this effort. If not, pencil and
paper work fine.)
Remember, also, that a budget is a prediction of a perfect future. Of course, we know the future is not
perfect. As a result, you will very likely see differences each month between the income you expected and

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the income you actually received. Similarly, you will very likely see differences between the expenses you
expected to incur and the ones you actually experienced.
For each difference, ask yourself three questions: (1) Why did it happen? (2) Will it happen again? (3)
What will you do about it? A difference is neither good nor bad until you understand it by answering these
questions.
Let us say the Moldovan family experienced income and expenses as shown in the following chart:
Comparison of Actual Monthly Results with Budget for Moldovan Family
Actual Budget Difference
Income (After Taxes) 2,400 2,200 200
Tithes and Offerings 260 235 25
Savings 150 150 0
Land/Home 300 300 0
Food 550 450 100
Utilities 500 500 0
Telephone 100 100 0
Clothes 200 200 0
Debt A 100 100 0
Debt B 20 20 0
Debt C 30 30 0
Debt D 10 10 0
School Expenses --- 105 (105)
Total Expenses 2,220 2,200 20
Surplus / (Deficit) 180 0 180
The Moldovan family has income of 2,400 MDL, 200 MDL more than expected. Why did it happen? The
wife made more money from her sewing business than expected. Will it happen again? No. The wife
advises that it was a special set of circumstances that are not likely to repeat. What will they do about it?
They will give an additional 25 MDL in tithes and offerings to the Lord from the extra 200 MDL and save
the remainder.
Now, let us suppose the wife says she underestimated her ability to produce income. She expects to earn
the extra 200 MDL every month. What will they do about it? They could decide to give additional tithes
and offerings and increase the savings as well as the amount they set aside for school expenses.
The Moldovan family spent 550 MDL on food – 100 MDL more than planned. Why did it happen? The
wife explains that she and her neighbors discovered a special price on rice and bought enough for two
months. Will it happen again? No, it was a one-time event. What will they do about it? Nothing. She
will not need to buy rice next month. Food expenses will be less than planned and come back into balance.
Now, let us suppose the answer to the question of “why” is that food prices went up. Will it happen again?
Yes, the price increase is permanent. What will they do about it? They will need to review their entire
budget again (step 5) to determine where they can make adjustments so they handle this increase in food
prices.
There were no School Expenses. Why did it happen? The expenses are not due yet. Will it happen again?
Yes, every month until the expenses are due. What will they do about it? They will put the 105 MDL in a
separate bank account specifically for that purpose until the expenses are due.
During the first several months of implementation, you may find yourself making adjustments to the budget
each month. As you gain experience over a period of time, you should try to develop a household budget
that will be stable for a longer period of time, say, a year. In our household, my wife and I generally make
adjustments to our budget at the beginning of each year.
Step 8: Follow the Budget Consistently
You need to follow your budget consistently – day after day, week after week, month after month, year
after year. Your budget is your plan for financial success. It is your plan to achieve your vision for your
family. Failure in almost any effort is often a result of failure to follow the plan consistently.
Again, God gives us advice in His Word:

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Habakkuk 2:3 For the vision is yet for an appointed time, but at the end it shall speak, and not lie:
though it tarry, wait for it; because it will surely come, it will not tarry.
Financial success is not a destination. It is a journey. You have to be faithful to the plan you have developed
and give it time to help you achieve your vision. Be patient as this Scripture teaches us.
OTHER CONSIDERATIONS
The Moldovan family developed their budget based on averages over a 12-month period. This will likely
require some level of savings at the beginning that they can draw upon when some expenses are seasonally
high, such as utility bills in winter. They can replenish their savings during other months when these
expenses go down.
Similarly, if your income is variable due to commissions or other factors, you will need to draw upon your
savings to supplement your budget when your income is below the amount you used in developing your
budget. Replenish your savings when your income exceeds the average.
In some circumstances you may be setting some money aside every month for an expense that only occurs
one or two times during the year, such as school expenses. It is very important that you leave these funds
alone until you need them for the specified purpose. One of the worst things you can do to ruin your budget
is to spend funds you have set aside for a specific purpose for something else instead. If you do this, you
just create problems for you and your family.
You may need advice in developing your budget. Pride may be an obstacle. You may fear that others see
you as weak if you seek advice. If pride is an obstacle for you, just let it go. Remember, God is trusting
you with this money. You should try to manage it as wisely as possible since it really is not your money
anyway. The following Scriptures instruct us:
Proverbs 11:14 For lack of guidance a nation falls, but many advisers make victory sure.
Psalm 37:30-31 30The mouth of the righteous man utters wisdom, and his tongue speaks what is just.
31The law of his God is in his heart; his feet do not slip.

Scripturally speaking, it is acceptable to seek advice. Try to find someone whom you know to be Godly.
Be sure to find someone who is trustworthy with confidential information and who is smarter than you are
regarding the specific area in which you need help. Your parents may often be good sources of advice.
Prayer is also important.
Remember, you are really managing money that belongs to God. You should do your best since God has
blessed you with the funds. Be prepared to spend a half-hour or hour each week, every two weeks, or every
month to manage your budget. Be willing to exert the discipline and courage to make it work. Finally, be
willing to take significant – even drastic – action to get your financial plan on track and keep it there.
Attachment A presents the Moldovan family’s household budget along with sample results and analysis.
SECTION 2: GETTING OUT OF DEBT
Debt is perhaps the biggest single factor that hinders families and individuals everywhere. In all of my
counseling experiences with families and individuals having financial issues, debt has always been the
problem. Learning to live without debt relieves a great deal of financial stress and helps facilitate greater
financial success.
WHAT DOES SCRIPTURE SAY?
As always, let us look first at Scripture for guidance about debt.
Proverbs 22:7 …the borrower is servant to the lender.
In other words, if you are in debt, you are an economic slave to the lender.
The Bible does not say we cannot borrow money, but it does speak against usury rates of interest:
Nehemiah 5:10 …let the exacting of usury stop!
Usury is the charging of abnormally high interest rates on loans. If the normal loan rate is 12%, one might
reasonably conclude that a rate of 30% is usury. Usury rates allow the lender to take advantage of the
borrower.
Scripture indicates that borrowing makes us economic slaves to lenders, but it still indicates that borrowing

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is permissible. There seems to be tension between these two concepts. How do we resolve this tension?
We turn to the book of Romans for the answer. It makes a strong case for living a debt-free lifestyle:
Romans 13:8 Let no debt remain outstanding, except the continuing debt to love one another...
This verse clearly discourages debt, and at a minimum requires repayment of loans. Notice that the only
debt this Scripture promotes is the debt to love one another. Moreover, it is a continuing debt – an
interesting description. As good stewards, we have a responsibility to make payments on our debts. The
debt to love one another, however, is continuing in nature. It is a debt that cannot be fully repaid, yet we
must make regular payments toward it. Financial debts, on the other hand, are clearly discouraged and
must be paid back.
IF BORROWING IS NECESSARY, CONSIDER THREE THINGS
We may encounter instances where we feel we must borrow money. Again, remember Philippians 4:6. It
is clear from this verse that we should go to the Lord in prayer about all things, including financial matters.
Before borrowing money, we should pray about our needs and seek God’s assistance, for example, to
determine other means of securing the funds we need or to seek out the right lender if we must borrow.
If we must borrow money, we should consider debt for no more than three things:
• A home or land – Real estate is expensive, and it is often not possible to acquire a home or land
without borrowing money.
• A vehicle – Vehicles (cars, trucks, motorcycles) are also expensive. They can make our lives so
much easier in many ways, such as providing basic transportation or operating a business.
• A university or technical education – Education can also be expensive. However, education
provides benefits that last a lifetime, so borrowing for an education that provides such long-term
benefits may sometimes make sense. Remember, you may be the one needing additional education
to maintain your skills and income-producing ability.
DEBT BRINGS STRESS TO INDIVIDUALS AND FAMILIES
Debt may be necessary in some instances. In any event debt can cause financial stress because with debt
you now have someone else with a claim on your income, assets, and livelihood until you pay the debt in
full.
Debt can also cause emotional, physical, and spiritual stress in your life. This can cause anxiety and may
even constrain your walk with God. When you mind is preoccupied with your financial situation, there is
no room for God to come into your life and operate effectively. Your walk with Him may actually become
weaker.
Think about this for a moment: Every leu, Euro, ruble, or dollar you pay in interest on a loan is a leu, Euro,
ruble, or dollar you could have used for other purposes – purposes that you choose, not someone else.
HOW TO GET OUT OF DEBT IN THE SHORTEST TIME WITH THE LEAST AMOUNT OF INTEREST
There are many ways to get out of debt. The method I describe in the following paragraphs will get you
out of debt in the least amount of time while also paying the least amount of interest.
First, verify that each of your debts is a simple interest loan, which allows you to pay off the loan early and
save interest. For example, if you borrow money for 12 months, you want to be able to pay that loan in
full in, say, 8 months to avoid the interest charges for the last 4 months. You also want to avoid a penalty
for paying the loan early, if possible. If you are not able to save interest by paying back the loan early, then
just keep making the monthly payments early until you retire the debt.
Conduct a debt inventory for your household. List your debts according to the loan interest rate, highest to
lowest. By always focusing on paying off the highest interest rate loan first, you can achieve the most
savings in interest. If you have two or more debts with the same loan rate, list them in order of smallest to
highest principal remaining. In this instance paying off the smallest of these loans just helps you to feel
good about your progress while still allowing you to achieve maximum savings in interest overall.
Let us say your debt inventory looks like that of the Moldovan family as shown in the following chart.

Mastering Your Personal Finances (MD) – p. 11 of 16

 Moldovan Family Debt Inventory
Annual Current Required Minimum
Debt Interest Rate Principal Monthly Payment*
A 18% 5,000 MDL 100 MDL
B 12% 1,000 MDL 20 MDL
C 12% 1,200 MDL 30 MDL
D 7% 500 MDL 10 MDL
* Minimum monthly payment is for illustration only. Actual
payment would be governed by the length and other terms of the
loan.
You should already have established a budget by which to manage your household finances. If you are not
budgeting wisely, you will find it even more difficult to get out of debt.
Continue making the required minimum monthly payment as noted for each debt.
Go through your household budget item by item to determine how you can earn more income or reduce
expenses in each area (budget step 5). This may be very hard to do, but you must do it. In the Moldovan
family example, let us say they are able to free up an extra 20 MDL per month.
Apply the extra funds to the monthly payment for debt A and continue to do this every month until you pay
debt A in full. Your monthly payment for debt A will now be 120 MDL instead of the required 100 MDL.
You will be able to pay it in full before the date of the final payment that was specified when you borrowed
the money. How soon you pay it off depends on how much extra money you add to the 100 MDL monthly
payment the loan requires.
Remember that while they are paying off debt A early, you are still making the required monthly payments
on debts B, C and D.
Debt A is now paid in full. Add the 120 MDL you were paying on debt A to the monthly payment for debt
B. Your monthly payment on debt B will now be 140 MDL. The remaining balance of this loan will
disappear quickly as you make these payments. You still continue to make the required payments on debts
C and D.
When you pay debt B in full, apply the 140 MDL to the monthly payment for debt C for a new monthly
payment of 170 MDL. Again, this balance will disappear quickly, too. You still make the payment on
debt D.
When you pay debt C in full, apply the 170 MDL to the monthly payment for debt D for a new monthly
payment of 180 MDL. This debt will disappear so fast that it may make your head spin. Praise the Lord!
You are now debt-free. What a wonderful, exhilarating feeling!
The following chart illustrates this process.
Process for Achieving Freedom from Debt
Annual Current Required Minimum Additional New
Debt Loan Rate Principal Monthly Payment Payment Payment
A 18% 5,000 MDL 100 MDL + 20 MDL 120 MDL
B 12% 1,000 MDL 20 MDL + 120 MDL 140 MDL
C 12% 1,200 MDL 30 MDL + 140 MDL 170 MDL
D 7% 500 MDL 10 MDL + 170 MDL 180 MDL
FREEDOM FROM DEBT – A VERY LIBERATING EXPERIENCE
There is even more benefit! Look at how much money the Moldovan family has available in their
household budget every month – 180 MDL. Over 8% of their household funds are now available for other
purposes, such as retirement, emergency fund, motor vehicle, and so on.
Examine your situation for a moment. You may have been very frugal in certain areas. By getting out of
debt, you have more funds to apply to those areas. You may have left some items out of your budget, such
as health insurance or retirement planning, because you felt you could not afford them. Now, you can
begin applying funds to those areas. You may use the funds you have been directing to debt payments each
month to buy additional land for farming or to buy your own home. You can see that getting out of debt is
a very liberating experience that gives you greater financial flexibility for your household!

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Consider your spiritual welfare. With the stress of debt removed from your household, you may very likely
find yourself able to concentrate on spiritual matters more seriously and serve God more effectively.
A Note about Borrowing, If You Must…
Sometimes lenders make loans that require all interest to be paid even if you pay the loan
off early. For example, let us say you borrow 2,000 MDL for 12 months with a payment of
180 MDL per month. Let us say that you walk in at the beginning of the seventh month and
explain to the lender that you wish to pay off the balance of the loan at that time. The
balance may be 1,000 MDL. However, if your loan requires the full interest to be paid, you
will still owe 1,080 MDL (6 months times the 180 MDL monthly payment). You will not
be able to avoid the remaining interest of 80 MDL. In the United States this kind of loan is
sometimes known as a “Rule of 78 Loan”, or “Sum of the Digits Loan”, or “Precomputed
Loan”. This kind of loan provides no benefit for paying it off early. If you have a loan like
this, you are probably just as well off to make the regular monthly payment until you pay
the loan in full. In the future, if you must borrow, be sure you understand how the loan
works before you borrow the money so that you can avoid a Rule of 78 Loan.
If you must borrow, always borrow money at simple interest. This means you only pay
interest on the amount of the loan outstanding. As your principal goes down, the amount of
interest you pay each month also goes down even though your monthly payment remains
the same. Further, if you make extra payments, you shorten the length of the loan and avoid
the interest that would have been charged otherwise – a real savings to you.
Before closing this session, I want to address a concern that has been expressed to me many times. People
say to me: “Debt is part of our culture.” That may be true, but does that make it right when you understand
all of the negative aspects of debt and their effects on your household? In view of Deuteronomy 10:14,
Psalm 24:1, and Romans 13:8, can you reasonably conclude that debt makes you a good trustee of God’s
estate?
Remember Psalm 24:1 – everything we have belongs to God, including our finances. Trust Him to help
you be a good trustee of His estate.
SECTION 3: RECOGNIZING SUCCESS WITH YOUR HOUSEHOLD BUDGET
There are several ways to determine that you are achieving success with your household budgeting. Three
good methods are: becoming debt-free, increasing your assets, and giving more to God. Each of these
methods is an indicator, but not a guarantee, of success.
BECOMING DEBT-FREE
One way to know you are succeeding with your household budget is to see your debts disappearing. With
effective budgeting and debt management, you will be able to pay off your debts while not incurring new
ones. Becoming debt-free removes stress from your life and may even enable you to serve God more
effectively. It also provides financial flexibility for your family, both now and in the future.
INCREASING YOUR ASSETS
As you follow your budget effectively over time, you will see the value of your assets grow. The value of
your assets will consist primarily of your home and land (if you own them) and your savings.
Remember, you are not accumulating funds to say you have money in the bank or that you are “rich.” On
the contrary, we see from the budget process that every leu, Euro, ruble, or dollar has a name and a purpose.
Any funds you are able to accumulate have a name and a future purpose. When that purpose arrives, you
have the funds to accommodate it. Retirement is perhaps the ultimate and final purpose for your funds,
and the funds you have saved may be your only source for retirement.
GIVING MORE TO GOD
As followers of Christ, we should understand the spiritual importance of giving to His Kingdom. We do
this in a number of ways, including giving to our church and helping those around us who are needy. I
believe that when you manage your personal finances effectively over time, you will find that you have
more income available, and you are able to give more to God. (Remember, He owns it already.) How is
this possible?

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One way of having more income to give back to God is to get out of debt, except maybe for a mortgage if
you are buying your home or land. By getting out of debt and staying out of debt, you will now be able to
use these debt payment funds for other purposes, including giving back to God.
Another way of having more income to give to God is to trust Him to honor your efforts to be a good
steward. The purpose of giving is not to get something in return, so we should never give to God with that
expectation. God in His own pleasure rewards those who diligently serve Him. These rewards may occur
in any number of ways – good health, for example. He may bless you with better decision-making and
spending habits that allow you to reduce your cost of living so that you have extra funds available. He may
also bless you with a raise or promotion at work or a bountiful harvest so that you have more income for
your household.
2 Corinthians 9:10-11 indicates that God honors our giving:
10Now he who supplies seed to the sower and bread for food will also supply and increase your store

of seed and will enlarge the harvest of your righteousness. 11You will be made rich in every way so that
you can be generous on every occasion, and through us your generosity will result in thanksgiving to
God.
In fact I have received testimonies from people with whom I have spent time teaching these principles.
They advise me that they have indeed been able to give more to God over time.
Simply trust God and see what He will do.
A TEMPLATE FOR YOU TO USE
Attachment B displays a template that you can use in implementing your budget.
In the format, notice that differences are determined by “actual minus budget.” When examining
differences, always ask the three important questions: (1) Why did it happen? (2) Will it happen again?
(3) What will you do about it? Remember, a difference is neither good nor bad until you understand it.
Notice that a positive difference in income means you have more income than budgeted – generally a good
thing. However, a positive difference in expenses means you are spending more than budgeted – generally
not a good thing, except for savings. So, be sure to adjust your thinking so that you interpret income and
expense differences properly and determine appropriate action to be taken.
Remember, if an expense is monthly, and you have a biweekly budget, you will get some big swings in the
differences when you are monitoring your results. Do not let the swings alarm you unless things appear to
be out of control after several budget periods. Then, you have to examine the answers to the three questions
more critically. Similarly, if you have an annual expense, you will see both large positive and negative
differences depending upon when the annual expense occurs.
By all means, never give up. Remember, financial success is a journey, not a destination. As Habakkuk
2:3 instructs us, we need to be patient – but also persistent.

Mastering Your Personal Finances (MD) – p. 14 of 16

 Attachment A

An Example

Moldovan Family Household Spending Plan and Sample Results

One Month Three Months

Actual Budget Difference Actual Budget Difference
Income (After Taxes) 2,200 2,200 0 6,700 6,600 100

Tithes and Offerings 235 235 0 715 705 10

Savings 150 150 0 540 450 90
Land/Home 300 300 0 900 900 0
Food 425 450 (25) 1,300 1,350 (50)
Utilities 500 500 0 1,500 1,500 0
Telephone 110 100 10 310 300 10
Clothes 205 200 5 575 600 (25)
Debt A 100 100 0 300 300 0
Debt B 20 20 0 60 60 0
Debt C 30 30 0 90 90 0
Debt D 10 10 0 30 30 0
School Expenses 105 105 0 1,300 315 985
Total Expenses 2,190 2,200 (10) 7,620 6,600 1,020

Surplus / (Deficit) 10 0 10 (920) 0 (920)

During this month the Moldovan
family followed their spending plan
with very good success. There is a
large variance in the School
Expenses because the expenses are
not due yet. The family will save
these funds until they have to pay
the expenses later in the year. None
of the other variances give reason
for concern.
During this three-month period, the
Moldovan family continued to follow
their budget with good success. The
increase in income of 100 MDL was
a one-time condition resulting from
the wife’s extra sewing one month.
Notice that they increased their
giving to God (Tithes and Offerings)
by 10 MDL and put the remaining 90
MDL into their savings. Except for
School Expenses, the individual
differences in expenses are not
severe and may be offset in the
following months. The large
difference in School Expenses is due
to the annual expenses coming due.
The family used their monthly school
expense budget amounts they had
accumulated during the past 12
months to pay the expenses without
harming the family’s financial well-
being. Overall, there is probably no
reason to make changes to the budget
at this time. The family is doing a
good job.

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 Attachment B

Example Budget Monitoring

Budget Period: ______________

a b c
Actual Budget Difference Notes
Income #1: c=a–b
Income #2: c=a–b
Income #3: c=a–b
Income #4 c=a–b
Total Income c=a–b

Tithes and Offerings c=a–b

Savings c=a–b
Retirement c=a–b
Land/Home c=a–b
Food c=a–b
Utilities c=a–b
Telephone c=a–b
Clothes c=a–b
School Expenses c=a–b
Loan Payment (Debt #1) c=a–b
Loan Payment (Debt #2) c=a–b
Loan Payment (Debt #3) c=a–b
Other: c=a–b
Other: c=a–b
Other: c=a–b
Other: c=a–b
Other: c=a–b
Other: c=a–b
Other: c=a–b
Total Expenses c=a–b

Income – Expenses 0

Your budget should show income and expenses being equal. If actual income minus actual expenses
is 0 or nearly 0 on a consistent basis, you are probably budgeting effectively. If income is consistently
greater than expenses, you appear to have funds available for other uses, including giving back to God.
If income is less than expenses on a consistent basis, you need to address the situation quickly. You
need to generate more income, reduce expenses, or perform some combination of both to bring things
into balance.

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