“If there is any one thing that will bring peace and contentment into the human heart, and into the family, it is to live within our means.
–Heber J. Grant
We’ve all heard the clichéd phrase “money can’t buy happiness.” Though having money does not lead directly to happiness, being in control of our finances and being good stewards of our money will give us “peace in our hearts” and provide us and our families with the opportunities to fulfill our dreams, reach our goals, and bless our families. Personal finance is much more than just a financial principle, it is also about behavior- demonstrating discipline and discretion and being in control of our lives. But even more so, it is a spiritual principle. The Lord has commanded us to take care of our own houses first, which includes our family finances. By gaining control of our finances and following the counsel of our spiritual leaders and the scriptures we can find freedom from worry and peace of mind, wherewith we will find greater strength, allowing us to serve and bless others in a much larger capacity. And true happiness comes through service and giving of ourselves to others.
“Set in order your own house, for there are many things that are not right in your house.”
Key factors that will lead us closer to financial freedom:
Tithing, Offerings, and Giving
Successful family finances begin with the payment of an honest tithe and the giving of a generous fast offering.
I know, I know, another cliché right? Pay your tithing and all will be well. Maybe you’re asking, “Wouldn’t I have more money if I didn’t give 10% of it away?” The answer is no. I’m not exactly sure why it works, I just know that it does. Giving makes people good. And good people find more opportunities for success.
In Malachi 3:10, God commands us to give an honest tithe- 10% of our income to our local church. Our tithes should come off the top, meaning the tithe should be the first thing we pay when we receive our incomes. The law of tithing allows us to put God first and demonstrate our willingness to obey him. It also teaches us the importance of giving- a key component in achieving personal happiness and building wealth. In return, the Lord has promised us he will “open the windows of heaven” and give more blessings than we have room to receive.
Offerings are different from tithes in that an offering is to come from surplus in our budgets. Meaning that after we have paid a full tithing and have taken care of all of our other household financial obligations, we should prayerfully consider giving up offerings. Giving is one of the highest callings we can have while on this earth and we should embrace the opportunity to help others in need. When we give we are literally making an investment into other people. We should be thoughtful in our giving and do so as we are spiritual guided. Giving will bring more joy into our lives and fill our hearts with more love and compassion as we are able to help others, as a result we will be blessed with greater opportunities to prosper.
As you discharge this obligation to your Maker, you will find great, great happiness, the like of which is known only by those who are faithful to this commandment.
–N. Eldon Tanner
Budget and Family Council
We should regularly review our family income, savings, and spending plan in family council meetings.
-Robert D. Hales
The budget is an essential tool in wealth building and achieving financial freedom. It allows us to be intentional with our spending and helps us prioritize our needs versus our wants, ultimately giving us the ability to live within our means. The budget is a specific, written game plan in which you tell your money exactly what to do. A new budget should be created monthly. In order for the budget to work, those who make the budget have to work. It requires discipline and accountability. You’ll be surprised by how much you will be able to get out of your income.
If you are married, have regular family council meetings, in which the family finances are discussed. It is important that your spouse and you sit down and work the budget together until you both agree on exactly how the money will be spent for that month. Both partners get an equal voice and an equal opportunity to give their opinions. If something comes up later in the month and requires a budget adjustment, sit down again and make the appropriate changes together.
Our basic needs should be the first things listed in our budget: Tithing, food, shelter, utilities, transportation, and clothing. After these necessities are covered, the other household expenses should be listed accordingly as we have the money to do it. Spend all of your money on paper before the month begins. Do not deviate from your budget once it is finalized and agreed upon. It is a binding contract. When both spouses are on the same page and understand the household finances equally, your ability to control spending and your get-out-of-debt power will be amplified.
Many people think a budget robs them of their freedom. On the contrary, successful people have learned that a budget makes real economic freedom possible.
-N. Eldon Tanner
One of the better ways to simplify our lives is to follow the counsel we have so often received to live within our income, stay out of debt, and save for a rainy day.
-L. Tom Perry
One of the primary keys to winning financially and avoiding financial hardships is to build an emergency savings fund. It should be the highest priority when creating a solid financial plan. A rainy-day fund is insurance for unexpected expenses that were not included in the budget. Emergencies will happen- job loss, medical emergency, car repair, heating and A/C goes out- and without an emergency fund we will be left exposed to the storms and the hardships that follow. Having a good emergency fund will give us peace during a trying time and will prevent us from having to borrow money in order to cover the costs, thus we will avoid perpetuating our debt burdens. It will turn a potential emergency- which can cause tremendous strain and worry on our families- into a mere inconvenience.
If you are already in debt, not including a mortgage, a good beginner rainy-day fund is $1000. When you become (or if you already are) completely debt-free or your only debt is a mortgage, the rainy-day fund should be between 3-6 months of your household expenses. It might take a few months to fully fund your initial emergency fund, but find a way to do it as fast as possible by adjusting your budget, cutting expenses, or selling some unneeded items. You cannot afford to not have an emergency fund. Having a fully funded rainy-day fund will help you continue to reach your financial goals and bring peace into your life.
Remember, your emergency fund is for emergencies only and should be replenished as soon as possible after it is used.
The wise understand the importance of saving today for a rainy day tomorrow.
-Joseph B. Wirthlin
Interest never sleeps nor sickens nor dies; … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.
-J. Reuben Clark
Our most powerful tool for building wealth and achieving financial freedom is our income. Our greatest adversary to reaching these financial goals is debt. The bible tells us that “the borrower is servant to the lender (Proverbs 22:7).” Why would we intentionally put ourselves in this type of position? Too often our income is wasted away through debt payments, leaving very little of our income to provide for our families and create adequate savings. The scriptures and the leaders of the Church advise us to live within our means and avoid going into debt, with the exception of a reasonable mortgage. If we live within our means and have a sufficient emergency reserve fund, there is no excuse to not avoid borrowing money. We go into debt by living beyond our means and buying stuff we don’t need and we can’t afford. We need to use more discretion when determining our needs and our wants. If you don’t have the cash to buy it, then you can’t afford it. Eliminate from your life the option to borrow, period. If borrowing money isn’t an option, it will cause us to be more diligent and more creative when making tough financial decisions.
Pay cash for stuff. Be different. Use your budget to save money for more expensive items. If you want to buy a new TV or your family needs a new car, determine how much money you will need and how soon you will need it and create a savings plan for that particular luxury item. Get away from the monthly payment trap. Think to yourself “how much does this cost?” rather than “how much are the monthly payments?” When our monthly income is eaten up by multiple monthly payments, it becomes nearly impossible to save money for the future and reach our financial goals. The cost of staying in debt could potentially be millions of dollars over a lifetime. Say NO to debt!
Those who structure their standard of living to allow a little surplus, control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage.
-President N. Eldon Tanner
Of him unto whom much is given much is required.
Winning on any level requires some kind of sacrifice. Winning financially is difficult and it requires a tremendous amount of discipline and self-control. The ability or inability to say no to yourself, your spouse, or you children could mean the difference between retiring a multimillionaire and retiring broke. The time will come when you can enjoy your wealth and do the things you always dreamed of doing, but you must sacrifice now in order to win later. Use the budget to control your spending. Show restraint and delay gratification. These are signs or maturity. If you are currently in debt or you don’t have an adequate amount of savings in the bank or you haven’t put anything away for retirement, you just might not be able to take that vacation, buy that car, or eat at that restaurant. You’re going to have to make some major lifestyle adjustments today in order to be able to do those things tomorrow. Seriously, how enjoyable is life when you are buried in debt and stressed out of your mind wondering how you’re going to find money to pay the light or gas bill this month? That is no way to live. You might have to drive a used car, shop at discount clothing stores, eat mom’s home-made cooking, and stay home for the holiday weekend. You might even have to take on a part-time job or a night position in order to work your way out of debt or save money to fund your emergency fund or buy a much needed item. But nobody is saying you’ll have to do these things forever, just until you have put yourself and your family in a better financial position- debt-free, having adequate savings for emergencies, children’s college, and retirement. This is called financial freedom. When you are in this position you can afford nicer cars, to eat out on occasion, and take the family to Disneyland.
One of Dave Ramsey’s popular sayings is “live like no one else, so later you can live like no one else.” Getting out of debt and saving money is going to be hard work, but it will be worth it in the future when you’re able to pay for your children’s college, retire with dignity, and give to those who are in need. This is a much more powerful position to be in than being stressed out, living paycheck-to-paycheck, and running up massive amounts of debt on things you can’t afford.
If our charities do not at all pinch or hamper us, I should say they are too small. There ought to be things we should like to do and cannot do because our charitable expenditure excludes them.
Too many of our youth get into financial difficulty because they never learned proper principles of financial common sense at home. Teach your children while they are young… Teach them the principles of hard work, frugality, and saving… If you don’t consider yourself informed well enough to teach [your children], all the more reason for you to begin learning. Abundant resources are available–from classes, to books, to other resources.
–Joseph B. Wirthlin
The importance of becoming financially literate cannot be stressed enough. Incredibly, there are many people out there who have no clue how to balance a checkbook or live on a budget. Embarrassingly, I was one of these people once upon a time. I knew how to balance a checkbook and I knew what a budget was, but I didn’t grasp the importance of making one, let alone following one. We just spend and spend and spend some more until the cashier tells us our debit card has been declined. So we reach into our pockets and pull out one of our several credit cards. Nearly 50% of Americans say they could not come up with $2000 within a month if they had to. This is alarming, but not surprising. We have no plan, no savings, and little idea of what to do. But we sure know how to borrow money. I was incredibly ignorant about personal finance. And I’ve talked to enough people in my life to find out I was not the only one. We must gain an understanding about how money works. How debt works. How to save. How to invest. How to buy a home. What interest is and how it affects our lives. There are so many different ideas, teachings, theories, and programs out there in regards to personal finance and money. We must study on our own and learn for ourselves how to relate with money and what plan works best for us. But it’s also important to understand how God wants us to handle money. And it’s pretty clear he requires us to be good stewards, live within out means, avoid debt, save money, pay tithing, and give.
In the parable of the talents (Matthew 25:14–30), the lords emphasizes the importance of being good stewards, or managers, of the financial resources we have been given. We will not be judged by how much we have or don’t have, but by what we do with what we have. As we continue demonstrate our ability to manage money well, the Lord has promised that he will give us more, “thou hast been faithful over a few things, I will make thee ruler over many things.” If we want to prosper and find financial independence, we must learn how to manage and control our current circumstances. It is impossible to simply out-earn our financial ignorance (or stupidity). Eventually, our lack or understanding will catch up to us and we will find ourselves deeply in debt (I did). And once we reach that point it is far more difficult to dig our way out than it would have been to prevent ourselves from digging the hole in the first place.
There are so many wonderful books, websites, blogs, talks, and other resources out there from which we can learn. Here are some of my favorites. Some of which have been extremely influential in my new financial journey to become and live debt-free.
- LDS.org (Financial Management)
- Earthly Debts, Heavenly Debts- Joseph B. Wirthlin
- Pay Thy Debt and Live- Ezra Taft Bensen
- The Total Money Makeover- Dave Ramsey
- Debt-Free Living- Larry Burkett
- Rich Dad, Poor Dad
- Millionaire Next Door- Dr. Thomas Stanley
- One for The Money- Marvin J. Ashton (providentliving.org)
- Christian Personal Finance (Christianpf.com)
The prepared person should establish financial goals, pay tithes and offerings, avoid debt, wisely use and preserve economic resources, and save during times of production for times of nonproduction.
– Marion G. Romney
Personal Finance is primarily about behavior. If we can control our urges and discipline ourselves to live within our means and be wise in our giving, saving, and spending, the end result will be financial freedom. The further we move away from debt and the positions of bondage it creates, the more freedom we will receive and the more power we will have in order to build wealth, bless our families and others, pursue our dreams, and achieve financial freedom.