Learn—Maximum Time: 45 Minutes

Today’s Discussion:

Budget

Financial Stewardship Success Map

Discuss:Why do you think “budget” is a wall on the Financial Stewardship Success Map instead of a layer?

Read:Today we will discuss one of the most vital tools for building financial security and becoming self-reliant: creating and effectively using a budget. A budget is a plan. Using a budget, you plan how you will use your money for a certain period of time.

Following a budget will help you and your family take control of your temporal life, put off the natural man (see Mosiah 3:19), and invite the Spirit into your home. Budgeting can also help you to protect your family from hardship as you use it to allocate money for building an emergency fund, paying down debt, and saving for future expenses.

Creating and following a budget is an act of faith. We cannot predict the future, and costs often arise unexpectedly. It is important to remember that a budget must be flexible—continually adjusted and improved. When you create a budget this week, remember that it will need to be consistently reviewed and revised during your regular family councils. If you go over budget, don’t give up! It may take several months of adjustments before you have an effective budget.

Activity (5 minutes)

Step 1: Take a minute to quietly review the paragraphs you just read about using a budget. Underline the specific blessings of using a budget.

Step 2: Then go around the group and share the underlined blessing that is most meaningful to you.

1. Build a Budget

Read:In the following activities, we will practice creating a budget.

For today, you will estimate the asked-for amounts based on what you know and what you have learned from tracking your income and expenses. One of your commitments this week will be to repeat this exercise with real numbers using the table at the end of this chapter.

To build a budget, start with your income.

Activity (3 minutes)

In the sample budget on page 60, fill in the first cell of the “Income” column with your estimated monthly net income. Net means what you actually take home.

Read:The next step to creating a budget is to classify and estimate your expenses. You have been tracking your expenses and placing them in the categories you created in chapter 1. Now we will split our expenses into two types: “Fixed” and “Variable.” Below are some examples.

Fixed Expenses (F)	Variable Expenses (V)
Mortgage/rent	Utility bills
Car payment	Groceries
Insurance payment	Eating out
Tithing	Fuel and transportation
Emergency fund	Home supplies
Other bills	Entertainment

Fixed Expenses

Read:Fixed expenses are for a definite amount and do not change. Most of these expenses will be monthly, but there may be some that occur more or less frequently. Fixed expenses cannot directly be controlled by spending habits; instead, fixed expenses are controlled by assessing your situation and making changes. A good way to identify fixed expenses is to ask, “Does this expense occur regularly, and is this expense the same amount each time?” Common examples include a mortgage, rent, a car payment, and certain expenses like internet, cable, or cell phone bills.

There are also fixed expenses that aren’t necessarily monthly; sometimes expenses occur annually, semiannually, or quarterly. For example, if you pay car insurance every 6 months or life insurance every 12 months, this is a fixed expense. To convert this fixed expense to fit your budget, divide the amount you pay by the number of months between payments. While you may not pay this bill monthly, you will set aside the necessary portion each month so you can pay the bill when it is due.

Activity (10 minutes)

Write your fixed expenses in the sample budget on the next page. Write an F in the “Type” column, and estimate the amount of the expense in the third column. As you add expenses, keep a running balance of how much income is left in the “Balance” column. See the example budget for help.

Variable Expenses

Read:Variable expenses are not the same amount each month. There are some variable expenses that are not directly controlled by your spending habits. For example, expenses like your utility bills (water, gas, electric, and so on) fluctuate based on usage. However, even though the monthly amount may vary, you can still budget for these.

When it comes to budgeting, the most important variable expenses are the ones you have the most control over. These are directly controlled by your spending habits. A good way to identify many of these expenses is to ask yourself, “Do I buy this from a store (or online)?” For many variable expenses, you can make the choice to spend more or less in these areas. Examples include groceries, fuel, eating out, cell phones, and entertainment.

Activity (10 minutes)

Write your variable expenses in the sample budget. Write a “V” in the “Type” column, and estimate the amount of the expense in the third column. As you add expenses, keep a running balance of how much income is left in the “Balance” column. See the example budget for help.

Sample Budget Activity (Using Estimated Values)

Description	Type	Income	Expense	Balance
Income	(NA)
Balance

Example Budget

Description	Type	Income	Expense	Balance
Income	(NA)	1,000
◦ Tithes and offerings	F		110	890
◦ One-month emergency fund	F		50	840
◦ Insurance	F		80	760
◦ Rent	F		300	460
◦ Utilities	V		30	430
◦ Groceries and food	V		230	200
◦ Debt payments	V		80	120
◦ Transportation	V		50	70
◦ Entertainment	V		30	40
◦ Miscellaneous	V		40	0
Balance				0

2. Balance a Budget

Read:As you put together your budget, you may find that you have more in expenses than income. If this is your situation, you are not alone. And this is a problem you can solve. There are two ways to fix this challenge: Earn more income, or spend less money. For now, let’s discuss how we can use a budget to help us spend less by learning how to control how much we spend on our wants.

Watch:“Continue in Patience” available at srs.lds.org/videos. (No video? Read page 66.)

Continue in Patience

Discuss:How are you like these children at times? Which child are you?

Activity (7 minutes)

Step 1: Individually analyze your current spending patterns by checking the boxes in the following chart. Could you adjust your spending to better prioritize long-term needs over short-term wants?

How Do I Feel about My Spending?	I spend too little	I feel good about my spending	I spend too much
Eating out at restaurants	□	□	□
Groceries	□	□	□
Snacks and beverages	□	□	□
Entertainment	□	□	□
Rent or mortgage	□	□	□
Utilities	□	□	□
Clothing	□	□	□
Household items	□	□	□
Transportation	□	□	□
Insurance	□	□	□
Cell phone	□	□	□

Step 2: Pair up with your spouse or action partner. Identify where in your budget you could spend less, and write your ideas below.

The Commission Predicament

My husband gets paid on commission, so one paycheck is never the same as the last one. And sometimes there is a gap between receiving a paycheck at all! We’ve learned to just ‘go in order’: pay the most important bill first, then the next most important. Everyone has to decide what ‘most important’ means to them.

Discuss Budgeting in Your Family Council

Read:Elder Robert D. Hales taught, “[One] important way we help our children learn to be provident providers is by establishing a family budget. We should regularly review our family income, savings, and spending plan in family council meetings. This will teach our children to recognize the difference between wants and needs and to plan ahead for meaningful use of family resources” (“Becoming Provident Providers Spiritually and Temporally,” Ensign or Liahona, May 2009, 9).

During your family council this week, work together with your spouse to create your family budget. If you are single, or if you would like additional help, counsel with a friend, parent, family member, mentor, or group member. You may want to use the “Sample Family Council Discussion” outline below.

Sample Family Council Discussion

Be sure to begin and end with a prayer to invite the Spirit.

Part 1: Review

• How much do you spend in each category?

• How is budgeting an act of faith?

Part 2: Plan

• Create a budget using the instructions in this chapter. Fill out the “My Budget” table on page 67.

• Are you being realistic about each budget category?

• If needed, where can you spend less in your budget so that it is balanced or so that your spending aligns more closely with your needs or values?