The Procrastinating Pastors Guide to Annual Church Budget Planning


We published last week the 3 Reasons Your Church Needs an Annual Budget and had some good responses from pastors that agreed, but wondered what were those next steps to getting their annual budget planned.

Today, we’ll give you 6 steps to Annual Church Budget Planning started. From these simple steps, you’ll have most of the framework in place to have an Annual Church Budget you can use for your ministry.

Step 1 – Review Last Year’s Church Budget

One of the best indicators of how you are spending and allocating your spending for your ministry is to look back at the historical patterns. Review this past year as a Profit and Loss statement. It will show you what you took in (income) and what you spent (expenses).

Look for any patterns. Also, look for any areas that have bigger numbers. When you look at yearly spending as a whole, over the entire period of time, you may get some surprises that you didn’t expect once things are put into perspective. Often, we’ll have churches that don’t realize what seemed like a small amount they were spending weekly, when added up over the year actually becomes a bigger percentage of budget than they expected.

Use these findings to decide if there are areas you need to focus or re-think how you’re allocating funds.
“Be honest here. If you’re spending $100 a week on donuts, and throwing out 2-3 dozen every week, it may be time to analyze or help your donut buyer plan better!”

Step 2 – Project your church year end financial

Ok, now we’re going to get into the nitty gritty of planning.

Since we’re not quite complete with the year, we’ll need to do some projecting of how things will end. The good news is if you’re reading this post in late November when it is published, we only have a few weeks left of the year so the projection will not be too hard. However, since you may be reading this at another time, we’ll show you a quick way to project.

Take your YTD Profit and Loss report for your church. This should show you what has been recorded as income and expenses so far this year. If you’re using Quickbooks, or hopefully our Simplify Church Bookkeeping System, this report will be pretty easy to produce.

If you can, export that report to Excel.

Once you have it in Excel, create a formula as follows =SUM (Col # / # of months in report) * 12. It will end up looking something like this: = SUM(B2/11) * 12

On the cell with your formula, grab the little square at the bottom right of the cell. Click and hold as you pull down so that you are highlighting all the way to the last row of the report. This is a quick way to duplicate the Excel formula you just made for all the rows.

What did we just produce?

This new column will be your End of Year projection on how you will finish the year. From this information, you can now start to project your Church Budget for the new year.

Step 3 – Analyze Year End and Plan the New Year

This is where the real planning begins.

Use the information you just produced and begin to think through your next year. I would re-color or highlight any numbers that are going to stay the same in the next year. This may be things like Rent, Subscriptions, Fees and other expenses that you are committed to or are vital to your ministry that you already know you will use in the next year.

PRO TIP : Add numbers into a third column in Excel so you have:
Column 1 – Real numbers produced from your Church Accounting Software
Column 2 – Projection from the equation you created in Step 2
Column 3 – Numbers we’ll enter as we create the next year’s Annual Church Budget

As you review line by line, think about those expenses that made up the numbers. Do they seem high? How does that line contribute to your ministry? Does that expense help you fulfill the Mission and Vision for your church?

Think through the spending of each line with those questions as a filter and use that to analyze what you’ve done so far.

As you complete your review, use Column 3 to put your final numbers for the next year’s church budget.

Step 4 – Get input from your ministry leadership team and key ministry leaders

Once you have a draft of the budget, which should be completed now in Column 3, share it with your ministry leaders. Get their input and thoughts.

If you have a staff, this is a good time to get their input into their ministry area and their plans for the new year. If we had more time, or had started this sooner, we could have had them draft their ministry area and then plan accordingly. Since we’re at crunch time, we can give each leader a primer for their decisions, and let them have input into the process.

Have a discussion with each leader about their area. Ask the same questions you considered in your preparation for the spending in their ministry area. The key here is to accept their input and get “buy in” from them. Let them feel a part of the process and understand why we have a budget, and how important good financial stewardship is to the success of the ministry.

If there are any adjustments that come up here in those discussions, adjust your budget at this point so you have a good, prepared final draft to present for approval.

Step 5 – Begin the preparations necessary to finalize and approve your annual church budget

If your church by-laws or constitution requires it, this is a good time to start scheduling whatever meeting is going to be appropriate for a vote on accepting this as the budget for your ministry.

It may also be required that a draft of the budget is required to have out for review to your membership as well. Get this information out soon as well so that people can be well informed. Having a well-planned and thoughtful budgeting process can help to alleviate some of the unnecessary headaches and drama that so often plagues ministries in this process.

Step 6 – Review the Church Budget Monthly and Quarterly in the New Year

Now that we’ve spent the time to prepare the budget, let’s really put on ministry on fire and use that planning throughout the year.

Each month or at least each quarter, do a review of your income and expenses against your budget.

PRO TIP: Simplify Church Bookkeeping clients get this report each month for a quick and easy review!

As you move throughout the new year, you will now have a financial road map for your church. You will find ministry decisions become easier (from a financial standpoint anyway) as you are able to look at things and plan against you expected annual church budget.

Hopefully you get a chance to start your budgeting process now. I’ve been in your shoes before and know as a pastor you wear many hats. If you’re like most, those hats that seem daunting, or you’re not exactly sure how to complete are the ones that get put on the back burner.

The steps I laid out here can be completed in just an hour or so. The analysis part make take a bit longer but it will only take a short time to get there. If you need some help, advice on your budget or want to get this off your plate completely by using our Simplify Church Bookkeeping System, Schedule a demo today.

Hey! We’re offering a webinar on Wednesday December 7, 2016 where we will go through these steps and I’ll show you exactly the steps I go through to create church budgets. If you’re interested, Register Here!

3 Reasons Your Church Needs an Annual Church Budget


It’s that time of year again when it’s time to start planning and finalizing your budget for the upcoming year. (assuming you’re on a Jan-Dec Fiscal year)

Fundamentally, your budget is nothing more than a spending guide. A roadmap, so to speak, on how you will allocate your spending for the upcoming ministry year. For ministries, your budget is one more tool you can use to quantify your ministry effectiveness. This is not a post about numbers, as some get all antsy when people start talking about ministry and numbers, but we must have some areas of ministry we can track. If you can measure it, we can track it.

So where do we start?

I am amazed by how many churches come to us with no budget. I guess the same can be said for many households that don’t adhere to a budget as well. (I’ll admit I’m not the best at tracking household expenses to a budget as well)

A comprehensive budget is crucial for your ministry.

Here are three reasons why your church needs a budget for the next step of growth.

1. A Budget Will Make Ministry Decisions Easier

We’ve all been there in ministry. A new opportunity comes up, someone brings up and idea, or an unexpected expense comes out of no-where. All three have a unique set of responses and decisions that need to be made. As you’re probably well aware, ministry can cost money. In many cases, churches have to do more with less.

Ministries are organic and in turn, always growing … Hopefully.

In that growth, there are always new opportunities and ideas that present themselves. Many times, these opportunities come with a cost.

Here’s what a church budget does:

– It answers questions about the mission and vision of your church.

– It sets clear direction on where the money will be spent and where the priorities of the church reside.

– It provides a filter for making spending decisions that may come up throughout the year.

– It provides a measure and benchmark to track the financial health of the organization

– It sets a standard to reflect and review throughout the year to make future ministry decisions.

2. A Budget will Give Donors Trust In Giving

Let’s face it. Churches are completely dependent on the faithfulness of donors.

Unfortunately, not everyone will be faithful to what God has directed about giving. While that fact opens up great doors for ministry discussions to happen, it still doesn’t put money in the bank. Further, money is one of those areas that people don’t want to talk about, don’t want to discuss and especially in churches, its almost a taboo subject.

We’re not here for a discussion on Biblical Stewardship, but we can talk about positioning your church and ministry to reduce the number of excuses people can have.

We’ll already concede that many people are just flat out being unfaithful with their lack of giving to their church. That being said, we can move on to the secondary objections that people have for church donations.

One of those objections, whether voiced or not, is that the donor doesn’t trust the way money will be managed within the church. Just ask around to people that have been in church life long enough and ask about check approvals in business meetings. #SMH.

Trust is another big issue that we’ve written about in the blog post about church giving There’s Freedom in Trust so read that, I’ll save the room here.

Having a specified budget in place will help donors know how their money will be used. It gives the giver confidence that the money they are giving will be used wisely.

I was mentored early on in ministry by my pastor who made sure to emphasize with me the regard he holds for the resources given to the church. He stressed that I remember that the money we were given was often a sacrifice for the individual who gave. We should treat every dollar in much the same way. We are making light of their sacrifice when we don’t regard every spending decision with that thought.

We should treat every dollar spent remembering that the donor sacrificed to provide that resource to the church.

Having a budget in place, that can be shared with donors, is a security blanket so they can know their money will be used with wise stewardship decisions. When people have trust that their money will be used wisely, they will be more inclined to give above and beyond and be excited about giving.

3. A Budget Provides Direction for your Ministry

Ministry often moves fast.

If you’re like most growing churches, things will look different next month than they do now and most certainly, next quarter they will look different.

In a growing church, there are things that will come up throughout the year that will change what you’re doing in ministry. Being aware and cognizant of those changes is key to leading your church through that growth.

So how does that relate to your budget?

Your budget is a living document that allows you to make decisions throughout the year.

Think of it as the proverbial road map.

As you are navigating through the inevitable changes of a growing church, the budget becomes a guiding document (from a financial standpoint) for your to make decisions and see how the church may be affected financially. Now there are many other things that can play into that, but having a budget is a great way of knowing where you stand at any point in the year against your plan.

At any time in the year, you should be within 30 days of knowing where you stand actual vs. budget. If this is not a report you’re seeing currently, Contact Us and let us show you how you can get that report in an ongoing basis.

Your Church Budget is CRUCIAL to ministry

As you can see, having a budget in place for your church is crucial. In the many pastors we talk to all around the country we find this is often an overlooked area in ministry. If you’re having trouble putting together a budget, or if you want to know that you’re using the best practices to put together your budget, let us know and we’ll provide some resources and help for you.

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It’s time to change the way we talk about giving in church!