Why your budget is like building a house

Let’s say I were to give you a half a million dollars to build a house. You can build any style house you want but you must use the money to build the house. What would you do?

Would you head down to Home Depot and buy some lumber, pipes, wiring, etc. and head out to the site and start  haphazardly putting something together?budget

Perhaps you’d be a little more organized. Hire a builder and tell him “Well, I want a kitchen over here, and I suppose 3 or 4 bedrooms. Maybe a family room over here. Well you get the idea. Just kind of do whatever seems right. I’m sure it’ll turn out ok.”

Would anyone really build a house that way?

No, of course not. If you had $500,000 to build the house of your dreams, you would carefully plan. You’d probably talk with several architects to make sure you found one that you had confidence in. You’d lay out very careful plans for exactly how you wanted your house laid out.

Then you’d search carefully to find a trusted general contractor to execute those plans. You’d over see the construction carefully to make sure everything was done exactly how you wanted it. After all, this is your dream home we are talking about.

Finding that $500,000

So am I planning to offer some lucky reader a half a million dollars? Sadly no. But where could you get $500,000?

According to recent US Census Bureau data the median income for families in the United States was $51,017. That means that over a 10 year period the average family has a little over $500,000 pass through their fingers. Many of us though reach the end of that 10 years and have no idea where that money went.

The problem is we approach our income like that foolish home builder. We don’t really have a plan so we spend a little here and a little there and wonder why our financial house ends up looking like a pretzel.

“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’ – Luke 14:28-30

While in context Jesus was talking about understanding the cost of being His disciple, I believe there is a principle here that is just as applicable to our finances.

Just as you would never consider building a $500,000 home without first creating a plan, you need to have a plan when it comes to your spending. That plan is called a budget. John Maxwell says a budget is simply telling your money where to go instead of wondering where it went.

Managing what we have been entrusted with

If the median annual salary is around $50,000 that means over the course of a normal 40 year plus working lifetime most people will earn more than 2 million dollars.

Now I understand not all of that 2 million dollars is free to spend. Naturally there are things like taxes and insurance. You need to spend money on basic necessities of life like food, shelter, transportation and clothing.

My point is when we are making the little day to day purchases it is easy to not consider the big picture. But when you take a step back and consider just how much money you will earn over the course of a lifetime, it should make you stop and more carefully consider how you will spend your money.

As a Christian I believe that everything I have belongs to God anyway and I am just a manager of those resources. I want to manage those resources well and when I consider how much I have been given over the course of a lifetime, I realize just how important it is to have a plan.

I know many see a budget as something that will keep me from ever doing anything fun, and this is just one more attempt to shame me into not buying what I want. In reality, it is the opposite. The budget is a plan that we use to make sure that in the midst of spending the millions of dollars we earn over the course of a lifetime, we are spending it on what really matters most.

Take a few moments to add up approximately how much money you have earned and are likely to earn over the course of your lifetime. Are you happy with what you have to show for it?

Photo credit: Oregon Husky (creative commons)

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