To develop a church budget, the first step is to determine the type of budget desired, then determine a target budget amount, the organization's budgeting history and present objectives, according to freechurchaccounting.com. This should be followed by developing a budget based on the type.
The basic types of budgeting are incremental, zero-based and program budgeting, states freechurchaccounting.com. Categories typically included in a church budget include income, personnel expenses, administration, property and equipment, outreach costs, direct ministry costs, expansion expenses and debt.
Before proceeding with a budget, church officials should answer a series of questions, faithsite.com recommends. These include: 1) what are the goals, 2) what did the church do in the past, 3) what is the church doing at present, and 4) what does the congregation want to do in the future. The whole organization should come to a mutual agreement about the answers to each question.
The church's mission statement should direct the goals, advises financial expert Dave Ramsey. He suggests that a spending plan is vital and should be based on projected income, not past. In addition, the leadership must agree on all aspects of the goals and corresponding budget. To be effective, the goals and spending plans must be communicated to the entire organization.
Ramsey further advises church leaders not to expect the budget to work as planned the first quarter. It normally takes an adjustment period.