Running head: BUDGETING
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Budgeting: Staying Out of Debt
Liberty University
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Budgeting: Staying Out of debt
Budgeting is an important step when it comes to running a business successfully (Luke
14:28-30, New International Version). Budgets are put in place to help plan for a business’
future and also to offer coordination which ultimately makes it easier to reach business goals.
They can be used for the future, but they are also used in the present. When a company is trying
to reduce their debt or refrain from having any debt at all, a budget is a great tool in helping
know exactly what assets and liabilities are in the company’s financial situation (Wild & Shaw,
2016). In conjunction with staying out of debt, budgets also help companies remain content,
have a savings, and the possibility to give back. Putting God first reminds everyone “wealth and
honor come from you; you are the ruler of all things; in your hands are strength and power to
exalt and give strength to all” (1 Chronicles 29:12).
Staying Out of Debt
Debt management and budgeting go together when it comes to a business running
successfully. While staying out of debt might not seem possible for a business, it is possible. An
everyday person would say the way to stay out of debt is to just make sure that your assets are
more than your liabilities, but it is not that simple. Budgets are a necessity to a business because
you must complete a budget and a financial income statement so that you will know exactly
where all the company money is going and what exactly the company can afford from the assets
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and liabilities that are already there. A successful budget includes a sales forecast, determining
the cost of goods/services sold, tackling expenses, and reviewing cash needs (Epstein, 2012).
The sales forecast is an important determining factor in budgeting because a business must
“decide how much net revenue you anticipate for the company during the year before you can
start estimating how much cash you’ll have to cover costs and expenses” (Epstein, 2012, p. 96).
If a company fails to do budgeting within their organization, then there is the possibility of over-
spending which increases the chance of adding more debt onto a company’s finances instead of
working towards getting out of debt. The Bible can be a great guiding tool when it comes to
budgeting and running a business. When a company is thinking about acquiring more debt they
should remember “the rich rule over the poor, and the borrower is slave to the lender” (Proverbs
22:7, New International Version).
Remaining Content
Once a company reaches financial stability their goal is to remain content with their
planned budget. Staying out of debt requires a business to remain content with the products and
services that they can produce and provide while staying within their set budget (1 Timothy 6:6-
7). This can be accomplished through prayer with God, seeking His direction for the business. It
can be difficult to remember at times that “And my God will meet all your needs according to the
riches of his glory in Christ Jesus” (Philippians 4:19). This isn’t to state that a business can’t
continually strive to be better, perform better, and grow (2 Corinthians 9:6). Before God will
bless a business with abundance, it must first steward what it has properly (Proverbs 3:9-10). It
can be easy for a business to remain content when resources are miniscule, but abundance can
also breed discontentment. It is vital for the business owners and managers to adhere to the
scrutiny of their spending no matter how small or vast their resources are. This can be
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accomplished by sticking to their production and operating budgets. Production budgets
determine the number of units to be produced in a set period (Wild & Shaw, 2016). Lastly, it is
important to keep the focus on where it needs to be, accomplishing work here on earth for the
betterment of the Kingdom, doing God’s work. Hebrews 13:5 states “Keep your lives free from
the love of money and be content with what you have, because God has said, ‘Never will I leave
you; never will I forsake you.’”
Savings: Allowing for Margin
The Bible says, “The wise store up choice food and olive oil, but fools gulp theirs down”
(Proverbs 21:20). In business the same advice applies. Just like in personal life you don’t want
your bills to be more that your income. Keeping cash reserves will help ensure that you will
never owe. Keeping the business debt free (Drake, 1995). When you run a business your total
cost of direct, indirect, and overhead costs should not be more than what you sell the finished
product. That’s why there are many checks and balances that businesses use like Balance Sheets
and Income Statements that accountants use to figure how money is being spent and to balance
the books. By using these, an accountant can see where the business can save money when it
comes to direct and indirect materials so the business does not buy more materials than what is
used in production and allows a manger to see how their employees are allocating their time
during production. The manger now can see where they can save money. Savings in business
allows a safety net for future investments and provides flexibility. One principle that can be
applied to this are the 10-10-80 principle. This principle is taught by many churches around the
world in that you give (tithe) 10%, you save 10%, and you operate off of 80%. While many
successful businesses prefer to allow more margin than that, it can be a good starting point.
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Another mechanism the business can use is instituting an emergency savings. Many companies
do this by providing themselves a cash cushion.
Wild and Shaw (2016) provides this insight:
“For example, Apple's cash and short-term investments balance is over $40 billion.
According to Apple's CEO, Tim Cook, the cushion provides “flexibility and security,”
important in navigating uncertain economic times. A cash cushion also enables
companies to jump on new ventures or acquisitions that may present themselves” (p. 259)
Giving
One of the key things that can be done, not only as an individual, is to give back what
God has blessed the business with. While the love of money can be the root of all evil (1
Timothy 6:10), “money can be the root of all good when earned with the right heart and used as
God intends” (Anderson, & Maxwell, 2009, p. 149). One strategy that would benefit the business
would be to partner with a nonprofit organization. By placing cause marketing into the budget,
there is the possibility to increase sales, “with financial benefit to the nonprofit” (Worth, 2014, p.
305). This strategy also follows God’s word in Luke where we are told “Give, and it will be
given to you. A good measure, pressed down, shaken together and running over, will be poured
into your lap. For with the measure you use, it will be measured to you” (Luke 6:38). A
businesses plan for giving should be a first consideration when planning their yearly budgets and
not an afterthought. Proverbs 3:9 tells us “Honor the LORD with your wealth, with the first
fruits of all your crops.” By including giving as a line item to the budget, a company will ensure
they are providing first fruits and honorably serving God with their blessings.
Putting God First: God is the Source
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It is of most importance, as Christians, to place God first in any business conducted. God
commands it, He expects it, and He is true to deliver to those who uphold it.
In the parable of the Great Banquet, the invitees to banquet gave excuses, Jesus said, “But
they alike began to make excuses. The first said, ‘I have just bought a field, and I must go and
see it. Please excuse me.’ Another said, ‘I have just bought five yoke of oxen, and I’m on my
way to try them out. Please excuse me’” (Luke14:18-19). While there is nothing wrong in
conducting business, however, their priorities were not in order.
In his article, Getting the Trophies Ready: Serving God in the Business World, Richard
Mouw writes about how Christians ought to place God first in their lives and businesses! Seek
God’s business and God will seek yours. Mouw explains in his story how his business turned to
God’s business, thus glorifying God and casing crowns at Jesus’ feet. Mouw concludes his article
with this statement “But there are also many other trophies to lay at his feet: market surveys,
advertising portfolios, accounting sheets, projects for resource explorations, the minutes of our
budget meetings, our strategic plans, our annual reports. With all of these trophies we, too, can
crown him Lord overall” (Mouw, 2015, pp. 197-198). While the world is occupied with earthly
and carnal riches, seeking God’s kingdom in the market place, and being accountable to Him will
provide a structure of Providence over all that is conducted.
God promised in Philippians 4:19, “And my God will meet all your needs according to
the riches of his glory in Christ Jesus.” God will always make good on His promises to His
people, only if we would to place our trust in Him.
In conclusion, it is possible to maintain a business while staying out of debt if the
business maintains Biblical principles. To accomplish this, the leadership of the business must
first establish a vision of operating the business while staying out of debt. Adopting this mindset
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can be the easy part. From there the management team must first and foremost remain content
with what God has blessed them with (Hebrews 13:5). After implementing an attitude of
contentedness, the business owners and managers need to ensure they are working off of margin
and ensuring they establish a business savings to help cover unforeseen expenses (Proverbs
21:5). The next essential Biblical principle the business owners and managers must adhere to
successfully remain out of debt is to adhere to the Biblical principles of tithing (proverbs 3:9)
and giving (Luke 6:38). The final essential element is to remember that everything the business
possesses and achieves is by a direct blessing from God. God has provided and entrusted (1
Chronicles 29:12) all the business resources to the business. It is the duty of the business owners
and managers to properly steward what God has entrusted to them (John 3:27). Luke expands on
this further with “Whoever can be trusted with very little can also be trusted with much, and
whoever is dishonest with very little will also be dishonest with much. So, if you have not been
trustworthy in handling worldly wealth, who will trust you with true riches” (Luke 16:10-11). By
embracing these Biblical principles, and turning over the business to God, it is quite possible to
establish and maintain a fruitful business while remaining out of debt.
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References
Anderson, D., & Maxwell, J. (2009). How to run your business by the book: A biblical blueprint
to bless your business (1st ed., pp 149). Hoboken, N.J: John Wiley & Sons.
Drake, M. B. (1995). Top broker diversifies his business for the future; for Raymond Betz, one
secret of success was staying out of debt in the '80s. Houston Business Journal. 24(35),
p14. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu/ps/i.do?
p=ITOF&u=vic_liberty&id=GALE|
A16491551&v=2.1&it=r&sid=summon&userGroup=vic_liberty
Epstein, L. (2012). The business owner's guide to reading and understanding financial
statements: how to budget, forecast, and monitor cash flow for better decision making.
Retrieved from http://site.ebrary.com.ezproxy.liberty.edu/lib/liberty/reader.action?
docID=10524066
Mouw, R. J. (2015). Getting the trophies ready: Serving God in the business world. Journal of
Markets and Morality, pp. 189-198. Retrieved from http://ezproxy.liberty.edu/login?
url=http://search.proquest.com.ezproxy.liberty.edu/docview/1709293989?
accountid=12085
Wild, J. J., Shaw, K. W. (2016). Managerial Accounting. (5th ed.). New York, NY: McGraw-Hill
Education.
Worth, M. J. (2014). Nonprofit management: Principles and practice (3rd ed., pp 305). Thousand
Oaks, CA: Sage
