I have a confession. I hate talking about money. Don’t misunderstand me—I don’t hate talking about money in general. I don’t hate talking to students about money and teaching them how to be wise and generous stewards of their money. I can do that without a problem. After all, I majored in accounting when I was in college!
I hate talking about my money. (I know it isn’t really my money; I am a steward. But bear with me for a minute.) We live in a culture where there is no topic more taboo than money. We may talk about something being expensive, but we are unlikely to divulge the price we paid. We may mention that we have donated to a particular cause, but we are unlikely to define exactly what that means. We are even more unlikely to tell someone in any detail about how much money we do or don’t have in retirement!
Why is this? In our culture, the topic of personal finance is too private and personal. We live in a culture that openly talks about sex, but is closed off when it comes to money. In the evangelical culture, we have more accountability partners to deal with sexual temptation than we do the issue of greed.
Yet for me, it’s not financial conversations with friends and acquaintances that I dread the most. Which conversations do I dread? I dread talking about money with my wife! Why? Is it because we get in arguments about money? Rarely. Why then? It’s because talking about our finances can stir up angst and tension inside of me.
To be honest, I’d often rather just not talk about money. Ignorance is bliss! But even though this is a conversation that I would like to avoid, it is a conversation that we must have. Sitting down with our budget and making decisions on how we will handle our money is something we must do! It is not an option. To ignore our finances would be detrimental to our personal lives and our ministerial lives as well.
This article is not just about dollars and cents. While there are some practical recommendations, this is also about our fears and faith. It is about tensions and decisions. It is about our hearts! As you read this article, you may hit a few internal roadblocks and points of tension. After all, reading and thinking about money can be just as uncomfortable as talking about it! I believe by God’s grace and the Spirit’s power, we can step forward in courage to make better financial decisions and thrive personally and as ministers.
I want to talk to you about two major things: living on a budget and saving for the future. I am assuming as gospel people that we already practice generosity (especially since we live by the generosity of others). I imagine that while more of us give steadily to our churches and other missionaries, fewer of us have a monthly budget and are adequately prepared for retirement, if the Lord grants us the years to get there.
“It’s not how much money you make. It’s how you spend it.”
These are words that my grandfather taught me, and I have found his words to be true. I have seen people make much more money than I make, yet be more strapped for cash and experience much more financial stress than I do.
When it comes to money, the old axiom is true: “Fail to plan, plan to fail.” If you are figuring out if you can make a purchase by checking your bank account balance online and then trying to mentally back out all the bills you haven’t paid yet this month, you will surely fail.
As Dave Ramsey says, “We must give every dollar a name and make it obey.” A budget will demand you give every dollar a name, so when it is time to make a financial decision, you can adequately answer the question, “Can we afford it?” If the answer is “No,” you hold off until you have enough funds and save yourself a financial headache. If the answer is “Yes,” you can spend the money guilt-free because the money already had the designated name on it (eating out, groceries, clothing, etc.)
In this way, budging serves two purposes—first, it constrains you from overspending. Second, it actually frees you to spend money without worrying! If you’ve budgeted for a new pair of shoes, you don’t walk out of the store in guilt wondering if you really could afford them!
Dave Ramsey also says, “We need to prepare for a rainy day, because it is going to rain.” This rainy day fund is also called an emergency fund. For starters, try to save $1,000 as fast as you can. Why? Without an emergency fund, you will have to go in debt to pay for any unexpected expense. This fund will help when an unexpected expense comes your way. Once you’ve saved $1,000 in your emergency fund, keep saving! The experts say the ultimate goal is to save two to three months of living expenses in your emergency fund.
As you think through your budget categories, let me make a recommendation: include items in your budget that only happen periodically. This is called smoothing your expenses. What are your known expenses that happen periodically? Christmas, vacation, car repairs, and house repairs are just a few examples of expenses that you know are coming and will be substantial financial commitments to deal with when they come. So think about how much you typically spend annually on each of your budget categories and then divide that amount by twelve. That will tell you how much you should budget monthly for each expense. When you get paid, transfer the amounts you are saving for each of these categories into your savings account. When these expenses occur, you’ll have the money available in the savings because you have been saving all year long. If you fail to plan for these expenses, you will be planning to fail. While these expenses are often the ones that we put on our credit cards and take us into debt, we can avoid these scenarios by planning and saving ahead of time.
Tracking Your Budget
After you have established your budget, the time comes to actually use it! As my fellow Gen Xers will remember, at the end of every episode of G.I. Joe, he ended with a statement, “Now you know, and knowing is half the battle.” For budgeting this is absolutely true. It is one thing to make a budget, but it is a different thing to actually live on a budget. An effective system is what makes both possible.
My wife and I tried many different systems over the years. The one that has worked the best for us is what we call the “envelope method.” How does it work? I encourage you to go to the bank after pay day and take out cash for each budget category that covers expenses that happen throughout the month (expenses that are not just monthly checks, online bill pay). Then go home and put cash in an envelope for each category. When it is time to go to the grocery store, take cash out of the grocery envelope. When it is time to get gas, take cash out of the gas envelope. When it is time to go out to eat, take money out of the eating out envelope. If you do this, you will not overspend on your categories, and make actually living on a budget much easier.
Prepare for the Future
Finally, I want to encourage you in one final area. Save for retirement. All credential holders recently received a letter from Doug Clay asking us to help ministers who are now retired but were not able to adequately prepare for retirement. Let me say, I am glad our movement cares about our retired ministers! I am also thankful for those pioneers that paved the way for us through their own sacrifice, and as a result were not able to save for retirement.
However, this is a picture of the reality of what can happen when we do not prepare for retirement. If you are Nationally Appointed, you are blessed. Our leadership has given you the opportunity to put money aside for retirement every month. Also, if you have completed a CMIT and hold credentials, you are eligible to put money aside monthly into retirement as well. If this is a privilege that is available to you, you must do it! Therefore, as far as I am concerned, your budget isn’t raised until you have raised the part designated for your retirement as well.
Don’t cut yourself short! For the sake of your future, your family, and your kids please do it! The government will loan your kids money to go to college (if you have them), but they will not loan you money for your retirement.
The earlier you start the better! I always share with students the difference of starting to save for retirement in your twenties verses starting to save in your thirties. The difference is dramatic—hundreds of thousands of dollars. This is because of an idea called the Time Value of Money. The longer your money is invested, the longer it has to grow. The end result of investing earlier rather than later is huge.
If you don’t know how to invest your money, let me make a recommendation. Call AG Financial and ask to speak to a representative and ask them for help. Once you begin investing, keep going, and keep going, and keep going. If you do, I can assure you that you will never regret it!
Our leadership has sought to bless us, but we have to take the step to raise the extra money and set up our accounts. In the same way that you prioritize setting up your account with the electric company when you move and you make sure you pay your electric bill on time every month, please prioritize setting up and contributing to your retirement account! Consider it as important as paying your electric bill. You will be glad you did!
If you do not fit the categories above and cannot raise money for retirement, let me encourage you to work it into your personal budget anyway. It may not be much, but whatever you invest will be significant over the long haul. Even if you can only save $25 a month, establishing that financial priority and steadily preparing for retirement will set you on a good trajectory.
In closing, let me encourage you to set a time on your calendar today to sit down (with your spouse if married) and make a budget or evaluate your budget. Set a time to call AG Financial to set up your retirement, if you haven’t already done so. Put it on the calendar today. You will be glad you did!
I hope that as you put these ideas into practice you will walk in both faith and wisdom. God has already blessed us abundantly through the financial supporters he has given us. We have every reason to trust God that He will provide what we need! In light of that faith, may we also walk in wisdom, not ignoring the financial realities of our lives because they are uncomfortable, but engaging them head on and taking one step at a time towards greater financial health.