How to Create a Church Budget

It costs money to conduct ministry effectively. Managing your finances through creating a church budget helps ensure that the work we do serves God and helps people in ways that make a difference in our communities and the world.

Three Types of Church Budgets

1. Incremental Budgeting or line item/traditional budgeting uses a current budget as the basis for next year’s budget and adjusts each item for potential increases/decreases or activity changes. This approach is expedient, but not as thorough or as accurate as other budgeting methods.
2. Zero-Based Budgeting requires building every line item from the ground up (starting with zero). It can be very challenging and time-consuming, but useful for churches and organizations whose programs and methods of operation don’t change much year over year.
3. Program Budgeting focuses on evaluating programs and activities based on their effectiveness at their current levels of funding and on their potential funding needs. It requires establishing a target budget for the upcoming year, based on funding, pledges, past giving levels, projected growth, assessed needs or any combination of these criteria.

What to Include in Your Budget

Make it flexible enough to account for changes that might occur during the year and include items like:

• Expected income: tithes, offerings, rent, bequests and gifts
• Planned expenditures: mortgage payments, salaries, employee benefits and expenses, office expenses, charitable giving, buildings and grounds maintenance
• Sunday School and other education program expenses

Best Practices for Managing a Budget

• Select dedicated staff or volunteers who will be responsible for creating and adhering to your budget
• Create a committee on finance and stewardship (pastor, church treasurer, board of trustees) that:
  • Conducts a study of your current year’s financial performance
  • Collects proposed program estimates from various ministries
  • Proposes and monitors a budget