Healthy financial habits lay a strong foundation for growth
The adage is true. Experience is the best teacher. And the lessons you learn from experience not only tend to stick, but they’re often worth passing along to others. Which is why you’ll probably want to download ECCU’s free e-book, The Three Financial Habits of Successful Churches. It contains financial wisdom we’ve gained from working with churches for more than 50 years.
While serving thousands of churches during these five decades, we’ve identified three critical areas affecting church stewardship. By excelling in each one, you can protect your team from mismanagement and prepare your church to grow. Here’s a summary of these three habits:
- Creating and managing a budget. A budget is simply a tool, but it’s one with eternal implications because it reflects a plan to fund the mission God has called your church to pursue. This black-and-white plan is your guide for mission-focused decision-making. Without it, you run the risk of saying yes to opportunities that may be good ones but not the right ones for your church. A budget ensures that you have the funds to meet your strategic goals. Because it’s such a vital tool, your budget isn’t something you build in a day or a week. We suggest seven steps to building a sound one, starting with a thorough review of your mission and a realistic forecast of your annual income. Once your budget is finished, then begins the work of monitoring, which requires an accurate accounting of your income and expenses.
- Keeping accurate records. Before we talk about the importance of accurate financial records to stay on budget, it must be said that it is these same accurate numbers that enable you to build healthy budgets in the future. Without these numbers, you’re left guessing how much to assign to each budget category. With that said, the key to keeping good financial records is coming up with a system to manage all those details. If you have a drawer full of receipts and deposit slips waiting to be entered, you’re only asking for trouble. You’ll eventually forget what a specific receipt was for or misplace some important information. To avoid this and a host of other accounting issues, set up a clear rhythm for entering information into your software. Best to meet with your bookkeeper and decide together how these details will be managed.
- Communicating financial information. The key to effectively communicating information, financial or otherwise, is to know your audience. Your two primary audiences are your church’s key leaders and the congregation. The leadership team that approves your budget will need more detailed information than most members. Each of them should be regularly receiving basic financial statements, balance sheets and income statements. They’ll want to compare these statements to your budget in their review and approval process. As for the congregation, it’s wise to give them at least two opportunities a year to learn about the church’s financial health and plans. They won’t need (or want) as much detail as your leaders. The information you do provide should be presented as visually as possible and should include real-life stories of the impact of the church’s finances on people’s lives and God’s kingdom.
Thanks to the free e-book The Three Financial Habits of Successful Churches, you have access to the complete picture of how to build these practices into your church’s financial management. Download your copy here.