Now that we are a couple months into the new year, it’s an excellent time to take a fresh look at your church’s finances and do some spring cleaning. The five steps below can help you improve your church finance knowledge and preparedness.
- Review the budget
Budget planning is essential to good church financial management. A budget provides a way to track income and expenses, providing you with the information necessary for making strong financial decisions. A properly planned budget will help you maintain and possibly even increase cash flow by keeping expenses within the church’s income.
Our most popular tool is the Church Budget Template. Download it to help identify areas your church may be able to improve.
- Build an emergency fund
Every church needs an emergency fund of at least three to six months of operating expenses. The best way to build it is to make saving part of the budget. It’s recommended to allocate 5-10% of income toward cash reserves. Then once you’ve built your emergency fund, you can begin saving toward ministry goals.
Investing is a great way to maintain and grow your ministry’s cash reserve. Many churches choose to invest in church extension funds, such as AG Loan Fund.
View the AG Loan Fund Offering Circular for more information.
- Assess risk management strategies
Poor risk management is a leading cause of serious financial loss for churches. No matter the size of your church, it’s a good idea to appoint a risk management leader or team. These individuals can be tasked with assessing the areas of risk your ministry faces and then implementing measures and policies to minimize them.
Learn exactly how to minimize risk with the AG Financial Insurance Solutions Risk Management Guide.
To stay up to date on the latest issues that could affect your ministry from a risk standpoint, tune in to Risk Mgmt LIVE each month. Each 30-minute discussion features insights from church law expert and attorney Richard Hammar, and Certified Church Risk Manager Jerry Sparks. It is information that could make all the difference for your ministry.
- Give insurance policies a check-up
Church finance spring cleaning isn’t complete without a thoughtful evaluation of all current insurance policies the church carries. Your church’s needs can change over time. If you’ve recently begun new ministry ventures, added a daycare or school, or made other significant changes, you’ll need to make sure that your coverage is adequate to protect your ministry in case of a loss. In addition, you may be able to find better coverage at a lower cost by comparison shopping.
Learn recommended coverage types and amounts with the Church Insurance Guide.
- Celebrate progress and plan the future
Spring symbolizes renewal and hope for the future. Take time to celebrate what God is doing in your church and community now and consider what the future may bring. Is your church experiencing significant growth? If so, it’s wise to begin preparing financially for the possibility of a renovation or even a new facility.
Learn what to expect and where to go from here with the Church Construction White Paper.
By following these five recommended steps, you’ll help keep your ministry strong and on track to fulfill what God has called you to do.
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