Mt. Timpanogos Singles

Preparing for the Future Through Taking Responsibility for your Finances: A Primer for Singles

January 22, 2015

Bryan Sudweeks, Ph.D., CFA From the BYU Marriott School of Management website on Personal Finance at http://personalfinance.byu.net

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Objectives

A. Our perspective B. The “why’s” (doctrines), “what’s” (principles) and “how’s” (application) of Personal Finance C. Ideas to learn it D. Ideas to live it (with some cautions) for Singles 2 2

A. Our Perspective

• “Personal Finance” is part of the gospel of Jesus Christ. It is: • Putting Christ first in our hearts and lives • Knowing the true value of things, not what the world is trying to sell you • Using our resources carefully and wisely 3 3

B. The “Why’s,” “What’s’” and How’s” of Personal Finance

• Why learn personal finance?

• Let’s take different perspectives: • Spiritual • Temporal • Family • Individual 4 4

Why’s (Doctrines)

(continued) • 1. Spiritual: Bring us to Christ • The end purpose of any law of God is to bring us to Christ. And how well will the law work? It depends on what we think of the Author of the law (Elder C. Max Caldwell, “What Think Ye of Christ?,”

Ensign,

Feb 1984).

• 2. Temporal: Become wiser stewards • Our resources are a stewardship, not our possessions. . .We will literally be called upon to make an accounting before God concerning how we have used them to bless lives and build the kingdom (Elder Joe J. Christensen, “Greed, Selfishness, and Overindulgence,”

Ensig

n, May 1999).

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Why’s (Doctrines)

(continued) • 3. Family: Return with our families back to Heavenly Father’s presence • “The most important work you will do will be within the walls of your own home” (

Teachings of Presidents of the Church: Harold B. Lee

[2000], 134).

• 4. Individual: To help us learn and accomplish our divine missions • I bear testimony of the fact that if you keep the commandments, He nourishes you, strengthens you,

and provides you means for accomplishing all things necessary to faithfully finish your divine mission here on earth

Lord”,

Ensig

n, Mar. 1986).

(Elder Gene R. Cook, “Trust in the 6 6

What’s (Principles)

(continued) 1. Ownership: Everything we have is the Lord’s • The Psalmist wrote: • The earth is the Lord’s, and the fullness thereof; the world, and they that dwell therein (Psalms 24:1).

2. Stewardship: We are stewards • It is expedient that I, the Lord, should make every man accountable, as a steward over earthly blessings, which I have made and prepared for my creatures. (D&C 104:13) 7 7

What’s (Principles)

(continued) 3. Agency: The gift of “choice” is man’s most precious inheritance • Next to the bestowal of life itself, the right to direct that life is God’s greatest gift to man. . .

Freedom of choice is more to be treasured than any possession earth can give

(David O. McKay, Conference Report, Apr. 1950, p. 32; italics added).

4. Accountability: We are accountable for every choice • For it is required of the Lord, at the hand of every steward, to render an account of his stewardship, both in time and in eternity (D&C 8 72:3).

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“How’s” (Application)

• 1. Pay the Lord first through tithes and offerings • 2. Create and use a budget • 3. Avoid and stay out of debt • 4. Prepare for emergencies and build a reserve • 5. Save for short- and long-term goals • 6. Protect yourself and family through insurance • 7. Open communication about finances • 8. Teach your children and family 9 9

C. Ideas to Learn It

• How do to you learn to be wise financially?

• Let me add two sources to your list: • 1. The LDS Provident Living Website • www.providentliving.org

Finances , then Family • 2. The BYU Marriott School of Management’s Personal Finance website • http://personalfinance.byu.net

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Education Week 2013

Learn It: LDS Provident Living Website

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Learn It: Provident Living Website

(continued) 12

Learn It: The MSM Personal Finance Website www.personalfinance.byu.edu

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Learn It: The MSM Website

(continued) 14

Learn It: The MSM Website

(continued) 15

C. Ideas to Live it: Financial “Do’s” for

•

Single Adults

1. Do Pay the Lord First

• “Prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it (Mal. 3:10). • The blessings may or may not be financial, but they will be what we need 16 16

Do’s for Single Adults

(continued) •

2. Do Manage Your Money Better and Tighten Your Budget

• Every family should have a budget. Why, we would not think of going one day without a budget in this Church or our businesses. We have to know approximately what we may receive, and we certainly must know what we are going to spend. And one of the successes of the Church would have to be that the Brethren watch these things very carefully, and we do not spend that which we do not have (Spencer W. Kimball, April Conference, 1975, pp. 166-167). • Make your lifestyle match your budget, not your budget match your lifestyle 17 17

Budgeting: The Old Way

Income Tithing Expenses Available for Savings

Personal Goals

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Budgeting: The Better Way

Income Pay the Lord Pay Yourself Expenses Other Savings

Personal Goals

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Do’s for Single Adults

(continued) Elder L. Tom Perry taught this when he said: • After paying your tithing of 10 percent to the Lord, you pay yourself a predetermined amount directly into savings. That leaves you a balance of your income to budget for taxes, food, clothing, shelter, transportation, etc. It is amazing to me that so many people work all of their lives for the grocer, the landlord, the power company, the automobile salesman, and the bank, and yet think so little of their own efforts that they pay themselves nothing (L. Tom Perry, “Becoming Self-Reliant,”

Ensign,

Nov. 1991, 64).

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Do’s for Single Adults

(continued) • 3.

Do Get Out of All Debt

• We have been commanded to stay out of debt for 6,000 years (ever since 2 Kings 4:7).

• “The borrower is servant to the lender (Prov. 22:7). • “The Lord desires his Saints to be free and independent in the critical days ahead. But no man is truly free who is in financial bondage” (Ezra Taft Benson, “Prepare Ye,”

Ensign

, Jan. 1974, p. 69). 21 21

Do’s for Single Adults

(continued) • 4.

Do Save (Even More) for Retirement

• Increase your savings percentage as you age (20% is a good minimum) • Try to pay off your home before you retire • Follow President Hinckley’s advice to have “a modest home and pay off the mortgage” (Gordon B. Hinckley,

Ensign

, May 1998).

• Save for increased medical costs as you age • Contribute to your company’s 401k program if they have one, and an IRA or Roth IRA if they do not • Always contribute enough to get your company match 22 22

Do’s for Single Adults

(continued) • Most may also contribute to an IRA or Roth IRA in addition to your company 401k • Being saving using CDs, Money Market Funds, Money Market Mutual Funds and other low-risk investments • For those with higher risk tolerance, you may want to invest part in no-load low turnover and broadly diversified index funds • Always maintain a diversified portfolio consistent with your acceptable level of risk • Develop a “sleep-well” portfolio 23 23

Do’s for Single Adults

(continued) •

5. Do Make the Social Security (SS) Decision Carefully and Wisely

• Can begin taking payments up to 5 years before full retirement age (FRA) • However, it reduces your payouts for the rest of your life by 30% (at 5 years before FRA) • For each year after FRA you defer receiving payments, you will receive 8.5% more for the rest of your life • If you can financially, try to defer taking Social Security as late as you can 24

Do’s for Single Adults

(continued) • Once you begin taking Social Security you are constrained to that decision for the rest of your life • Work to understand Social Security and its benefits • Make a well thought through decision as to when to best start taking benefits • It may be beneficial to keep working and wait a few more years before beginning benefits 25

Do’s for Single Adults

(continued) •

6. Do Take Responsibility for Your Finances

• Don’t put this responsibility on others • Accept where you are and begin to improve today • Your children are not responsible for your finances (they have enough challenges already) 26 26

Don’ts for Single Adults

(continued) • a. Don’t allow your adult children to guilt you into helping them financially • Your first priority is to prepare for your retirement and rising medical costs • Then after your financials are sufficient for retirement, then you may consider helping your adult children financially • Parents who continually support their children financially, will find their children will always need support 27 27

Don’ts for Single Adults

(continued) • b. Don’t go into debt to invest • Watch out for scams • Some salesmen want you to take the equity out of your home to buy this other investment product (in which they make a huge commission) • Don’t take money out of your home to invest in other investment or insurance products (especially in cash value insurance products) • You can’t save by borrowing 28

Don’ts for Single Adults

(continued) • c. Don’t sell out of one retirement account to go into another • Watch out for scams • Some salesmen want you to cash in your 401k (and take the tax hit) to buy other investment products, again usually cash value insurance, in which they make a huge commission) • Don’t do it • Don’t take the tax hit and keep the money for yourself for your needs 29

Don’ts for Single Adults

(continued) • d. Don’t think you can find “guaranteed high returns” without risk on investments • All investments carry an element of risk • If it seems too good to be true, it usually is • Remember the “Law of the Harvest” is still in effect • Don’t take on more risk than you are comfortable with just because you are closer to retirement • Risk is still risk • Invest at a risk level you are comfortable with 30

Do’s for Single Adults

(continued) •

7. Do Hold Fast to the Promises

• The Lord will stand by you (D&C 68:6) • The Savior will go with you and be in your midst (D&C 49:27) • Nothing shall prevail against you (D&C 32:3) • His Power shall rest upon you (D&C 39:21) • You shall have greater treasures that the treasures of the earth (D&C 19:37-38) • He will take care of your flocks (D&C 88:72) • He will send you the Comforter (D&C 79:2) 31 31

Do’s for Single Adults

(continued) • Other promised blessings (yes, just hold on): • He will go before your face. He will be on your right hand and on your left (D&C 84:88) • His angels will be round about you (D&C 84:88) • You shall have great faith (D&C 39:12) • You will be able to keep God’s laws (D&C 44:5) • You shall have revelations ((D&C 28:8) • Your sins will be forgiven 31:5, 36:1, 60:7, 62:3) • You shall have eternal life (D&C 14:7) • You shall be made truly rich--he that hath eternal life is rich (D&C 11:7) 32 32

Education Week 2013

Conclusions

• Personal Finance is simply living the gospel of Jesus Christ • Like learning charity, attending church, serving others, or doing missionary work. • Single adults and others should be learning, doing, and teaching the “why’s”, “what’s”, and “how’s” of personal finance to their ward members and families (the doctrines, principles and applications) 33 33

Conclusions

(continued) • God really does want us to learn the “why’s (or doctrines) of personal finance • The reasons are many and they are important. They are to: 1. Spiritual: Bring us to Christ 2. Temporal: Help us become wiser stewards 3. Family: Help us return with our families to Heavenly Father’s presence 4. Individual: Help us accomplish our divine missions for which we each were sent here to earth 34 34

Conclusions

(continued) • There are four “what’s” (or principles) on which our perspective is based. They are: • 1. Ownership: Everything we have is the Lords • 2. Stewardship: We are stewards over all the Lord has, is, or will bless us with • 3. Agency: The right to choose is one of God’s greatest gifts to man • 4. Accountability: While we are free to make our choices, we will be held accountable for those choices 35 35

Conclusions

(continued) • There are 8 different “how’s” (or applications) that we should emphasize. They are: • 1. Pay the Lord first through tithes and offerings • 2. Create and use a budget • 3. Avoid and stay out of debt • 4. Prepare for emergencies and build a reserve • 5. Save for short- and long-term goals • 6. Protect yourself and family through insurance • 7. Open communication about finances • 8. Teach your children and family 36 36

Conclusions

(continued) • We then shared things Single Adults must do: • 1. Do pay the Lord first • 2. Do manage your money better and tighten your budget • 3. Do pay off and get out of all debt (including mortgage debt) • 4. Do save more for retirement • 5. Do make the Social Security decision carefully and wisely • 6. Do take responsibility for your finances • 7. Do hold fast to the promises 37 37

Conclusions

(continued) • Although times are tough, a prophet has said: • I testify to you that our promised blessings are beyond measure. Though the storm clouds may gather, though the rains may pour down upon us, our knowledge of the gospel and our love of our Heavenly Father and of our Savior will comfort and sustain us and bring joy to our hearts as we walk uprightly and keep the commandments. There will be nothing in this world that can defeat us. My beloved brothers and sisters, fear not. Be of good cheer.

The future is as bright as your faith

(italics added, Thomas S. Monson, “Be of Good Cheer,”

Ensign,

May 2009, 92).

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