Small Church Finances: 4 Budgeting Lessons I Learned The Hard Way

Money isn’t the goal of ministry. But it is a tool – and an important one. When we manage our money well, we can do better ministry with it.

Some lessons come easy. Some lessons come hard.

For many, maybe most of us, the practical financial lessons of ministry often come hard. We learn by doing – and by making mistakes. I wish I was the exception to that rule, but I’m not.

Over the years I’ve made more than my share of money mistakes while overseeing a church budget. But I’ve learned not to repeat them.

Here are 4 hard-earned lessons about annual budgeting in a church, including the mistakes I made that taught me each principle:

1. Don’t Spend More Money Than You Bring In

This is so important, I’ve called it Job One of biblical stewardship.

Any church that plans a budget with the expectation that they’ll bring in more money next year than they did last year isn’t living by faith, they’re practicing bad stewardship. Click To Tweet

Any church that plans a budget with the expectation that they’ll bring in more money next year than they did last year isn’t living by faith, they’re practicing bad stewardship.

How I Learned The Hard Way

Several years ago, when our church was on a significant growth curve, we budgeted on the expectation of projected growth. When the growth slowed, then stopped, then reversed, the pain was made exponentially worse by our poor budgeting.

Since then, we budget conservatively, so any increase in funds is a bonus, not a necessity.

2. Build Strong And Sturdy, Not Cheap Or Fancy

There are three ways to spend money on the church building.

  • Get the cheapest possible materials and workmanship
  • Insist on the latest and greatest of everything, or…
  • Build sturdy, strong and lasting

Churches usually do the first one when we have limited funds. Churches that do the second way usually insist on it under the guise of phrases like “God deserves the best.” But good stewardship requires the third way.

How I Learned The Hard Way

I’ve never built anything the fancy way. But I have made the mistake of building too cheap. When we do that, we end up spending more money in the long run, due to breakage, replacement costs, even injuries.

Better to anticipate potential needs, save up a little longer and do it with quality workmanship than to get it done fast, cheap and unsafe.

3. Anticipate “Surprises”

The vast majority of a church’s expenses stay relatively the same year after year. Most churches know how to budget for that.

What wipes the budget out is when the heater dies during a snow storm, or a piece of the ceiling falls in because it’s been eaten by termites. Then, we’re left scrambling for finances, making emergency offering pleas, cutting back on missions, salaries, or ministry, and/or going into debt.

The reality is, if the church owns a building, there will be emergency repairs. While we don’t know when they will happen, it should not be a surprise that they happen.

Every church needs a line-item in the budget for deferred maintenance. Click To Tweet

Every church needs a line-item in the budget for deferred maintenance. This is money that is set aside every month to be ready when needed for those “surprises”.

How I Learned The Hard Way

One day at my first pastorate, I came to the church to see water flowing like a river from the basement. Our water heater had broken – as I had been warned it would – and had flooded the basement.

If I had set money aside every month we could have replaced the water heater for a couple hundred dollars before it broke instead of the several thousand it cost us (even after insurance kicked in) for repairs to everything from flooring, to walls, to appliances and more.

4. Do Not Hire Ahead Of Growth

New staff members won’t bring in enough money to cover their salaries as a result of the growth in their ministry. It never works out that way. Ever.

Invest in discipleship. Raise your leaders from within. It’s cheaper, longer-lasting and more biblical. Click To Tweet

Instead, invest in discipleship. Raise your leaders from within. It’s cheaper, longer-lasting and more biblical.

How I Learned The Hard Way

When our church had a short-lived, but dramatic growth spurt a few years ago, we hired staff for the size we expected to be soon. When the attendance stalled, then went in reverse, the financial and emotional toll was made exponentially worse by those choices.

Today, we train our own church members, put them in positions of leadership on a volunteer basis, and only hire after the budget has been well established to handle the cost.

Pay Now Or Pay Later

Most church budgeting principles fall under the “pay now or pay later” rule.

When we do as Jesus taught us, and count the cost of building and maintenance, most of our financial emergencies diminish substantially.

There will always be financial challenges. I don’t know of any church, large or small, that would say they have all the money they need. But when we spend a little time planning and paying for things up front, we pay less, we’re more in control, and we have more money to use for actual ministry instead of playing catch-up with maintenance.

And isn’t that the point of all this, anyway? Money isn’t the goal of ministry. But it is a tool – and an important one. When we manage our money well, we can do better ministry with it.


For more resources on leading a smaller congregation through uncertain times, check out SPARK Online at KarlVaters.com.



What do you think? Leave a comment, suggestion or idea below.

Copyright © by KarlVaters.com. Click here to request permission to reprint.

(Photo by Allef Vinicius | Unsplash)

Got questions or comments? Use the comment section, below.

Want to reprint this article? Click here for permission. (This protects me from copyright theft.)

2 thoughts on “Small Church Finances: 4 Budgeting Lessons I Learned The Hard Way”

  1. Pingback: Small Church Finances: 2 Security Lessons I Learned The Hard Way – KarlVaters.com

  2. Great principles that all church budgets should live by. Particularly in lean times. COVID has exposed the gaps in many church budgets, and I hope Sr. Leaders and Treasurers are learning from it by implementing principles like these. I particularly enjoyed the personal experience that went into this post. Thanks!

I'd love to hear from you!