Charting Your Way To Financial Freedom
People who aspire to lose weight are often advised to count calories, especially if they feel like they’re doing everything right but the scale isn’t budging. It’s the same with your finances. If you don’t know how much money you’re spending, how can you be sure if you’re actually making progress towards your goals? Even if you feel like you’re cutting back on some expenses, you may be unknowingly compensating in other ways. On the other side of the equation, do you know how much money you’re actually bringing in? Are you controlling for taxes, paycheck deductions you never see, gifts, tax refunds? As Proverbs 24 tells us, “By wisdom a house is built, and by understanding it is established; by knowledge the rooms are filled with all precious and pleasant riches.” (Proverbs 24:3-4)
Mr. Sense and I meticulously track our spending on a spreadsheet, and each expenditure is sorted into a category. The categories are: Groceries, Dining, Bills, Transport, Miscellaneous, Entertainment, Giving, Kid, Home Improvement, and Mr. Sense. Target numbers for each spending category are on the right hand side of the spreadsheet, with the running totals right next to them, highlighted in red if we’ve gone over budget. We track our income in similar fashion: my take home pay, 401(k) automatic deductions and company match, income Mr. Sense brings in from online sales, childcare credits, and other. There are also running pie charts showing income and spending, so we can easily compare each month with just a glance; wow, we must have gone out to eat more last month! At the end of the year, Mr. Sense and I sit down for a Spreadsheet Super Bowl, combining all the charts to identify trends and set goals for the next year. This event, which includes snacks and excitement, underscores how lucky I am to have married a guy who is willing to put up with my love of charts.
Annualizing the charts allows us to see the big picture. When we started tracking our spending, we didn’t have goals for each category. We just tracked the categories and monthly totals, comparing each month to the last one or two. At first, we justified higher than hoped for figures by pointing to one time larger expenses. We had to get the car fixed, or pay for that vacation. If you’ve tracked spending yourself, you’ve probably come to the same realization that we have: it’s always something! I recommend tracking for a few months without worrying about making substantial changes. Just put the numbers on the spreadsheet, and allow the number at the bottom to knock the breath out of you (or hopefully, pleasantly surprise you). Once you have a sense of your baseline spending, you can develop achievable goals. Mr. Sense and I began our most recent Spreadsheet Super Bowl with a prayer, asking God to guide us in setting the right goals for His money that’s been placed in our control. Mr. Sense had combined the previous twelve months’ spreadsheets, so we could see our average spending for each category. We analyzed the data carefully, discussing how well the spending levels aligned with our values. Then we created goals for each category for this year, cutting some categories down (we’re driving less, so we shouldn’t need as much transportation money) and increasing others (more Kid spending associated with homeschooling, more giving). Even if financial independence isn’t your goal, being aware and in control of your spending is critical to getting the most out of limited resources. If you like travel, cars, or restaurants, tracking your spending can nudge you to funnel your income towards them and away from sneaky expenditures that don’t bring you joy.
If you are in the process of repaying consumer debt, the difference between your spending and income should be thrown at the debt. Most credit card, auto, student, and personal loan debts carry a significantly higher interest rate than what you could expect to make on reasonable investments. Even if your debt is financed at a low rate, I still think it’s wise to prioritize most debt repayment over investing, in part because the return is guaranteed. But more importantly, the Bible is clear about our responsibility to repay debts honorably, and warns us about the spiritual risk of debt, which it describes at times as a kind of slavery (Proverbs 22:7). While Christians are not outright restricted from carrying debt, we must be cautious. Maintaining consumer debt while speculatively buying stocks or other investments can lead to trusting other forces instead of God for our financial wellbeing. While the immediate practical consequences (bad credit, bankruptcy, surprise stock market crash) can be bad, the spiritual risk of placing our faith in our own investing acumen is much worse.
Finally, and perhaps most importantly, tracking your outgoing money to see if it aligns with your values can highlight your responsibility to give generously. Psalm 37:21 says “The wicked borrow, and do not pay back, but the righteous are generous and keep giving.” In the financial independence movement, there’s a strong temptation to cut corners across our budgets to achieve a big pile of wealth. While trimming waste from your budget is a worthy goal, clutching your checkbook too closely instead of giving generously is clearly sinful. Christians of conscience can disagree on the exact percentage we should give, but not on the general requirement. Financial independence for Christians is more than saving a big enough investment account to support ourselves for life; it’s about freeing ourselves from dangerous ideas about money, including the pernicious fear that if we trust God enough to share with our neighbors, we may not have enough left for ourselves.
