Transcript Buying a Home - Brigham Young University

Budgeting Myths and Realities:
Developing a Budget
You Can Live With
August 15, 2012
Bryan Sudweeks, Ph.D., CFA.
From the Marriott School of Management’s
“Personal Finance: Another Perspective” web site at
http://personalfinance.byu.edu
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Abstract
• Personal finance is not separate from, but
simply part of, the gospel of Jesus Christ. One
of the most critical parts of individual and
family finance is a budget or spending plan.
This presentation talks about the reasons why
we don’t budget, myths about budgeting,
principles of budgeting, and implementing a
budget that you can live with. We finish with
applying this information to an actual case
study.
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Objectives
• A. Understand the “Why” of personal finance
• B. Understand my favorite excuses why people
don’t budget
• C. Understand budgeting myths and realities
• D. Understand how to develop and implement
a budget you can live with
• E. Apply this learning to a real case study
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A. Why Understand the “Why”
• We all have lists of what we could and should do in
our [priesthood] responsibilities. The what is important
in our work, and we need to attend to it. But it is in the
why of [priesthood service] that we discover the fire,
passion, and power. The what of [priesthood service]
teaches us what to do. The why inspires our souls. The
what informs, but the why transforms. . . My prayer is
that as bearers of his priesthood we will ever stay
attuned to the why of [priesthood service] and use the
principles of [] the restored gospel to transform our
lives and the lives of those whom we serve (italics,
color and brackets added, Dieter Uchtdorf, “The Why
of Priesthood Service”, Ensign, May 2012).
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The “Why” (continued)
• We all have lists of what we could and should do in
our [personal finance] responsibilities. The what is
important in our work, and we need to attend to it. But
it is in the why of [personal finance] that we discover
the fire, passion, and power. The what of [personal
finance] teaches us what to do. The why inspires our
souls. The what informs, but the why transforms. . .
My prayer is that as bearers of his priesthood we will
ever stay attuned to the why of [personal finance] and
use the principles of [personal finance and] the
restored gospel to transform our lives and the lives of
those whom we serve (italics, color and brackets
added, Dieter Uchtdorf, “The Why of Priesthood
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Service”, Ensign, May 2012).
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The “Why” (continued)
• What is the “Why” of personal finance that
inspires our souls?
• How important is it for each of us to understand
these “whys”?
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A. My Favorite Excuses
Why People Don’t Budget
• I have been teaching personal finance for over
a dozen years
• These are my favorite excuses on why people don’t
budget
• After the excuse, I have included what the
research says about this excuse
• References are available upon request
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1. I don’t have any money
(And I plan to stay that way!)
• Many do not budget because they fail to see
how it can help them be more responsible with
their spending
• It is not much fun to be responsible
• It is easier to blame circumstances, others, or to
be bailed out financially by others
• It is hard to admit and follow through on needed
change
• Research has shown that when people take
responsibility for their spending, i.e., they begin
budgeting, they make better choices as to the things
they purchase, and acquire more wealth
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2. I love using my credit cards
(That way I can spend my money before I earn it)
• Many do not budget because they have credit
cards to bail them out
• Credit cards take away the urgency and need to
balance the budget each month
• Credit cards encourage consumption
• Most do not consider credit cards as cash—they
will pay 12-20% more for an item with a credit
card than those who pay with cash
• Research has shown that when you budget, credit
card use is part of your overall plan—it is not your
only plan
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3. I don’t want more money at retirement
(I want to flip burgers for the rest of my life)
• Many do not budget because they have not
caught the vision of how it can help them
• They keep doing what they have been doing
because they:
• Don’t have the knowledge
• Haven’t learned the skills
• Are not willing to put in the effort
• Research has shown that those who budget have
more at retirement than those who don’t
• This is likely due to a host of related reasons
• One article stated that those who budget have
39% more at retirement than those who don’t
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4. I want money related stress in my life
(Stress makes life more interesting, right?)
• Many do not budget as they do not realize the
impact of financial issues on the family
• Many different studies have found that money was
a major stress in 60-80% of the lives of those
surveyed, both single and married
• Remove the source of the stress, i.e., not
knowing where the money is going or where the
money is coming from, and you reduce the stress
• Research confirms that with a budget where both
spouses plan and know where the money is coming
and going, there is less stress in life and marriage
and both spouses are happier
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5. I don’t like managing my money
(I would rather it manages me instead)
• Many do not budget because they are unwilling
to put in the effort to managing their finances
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Pay interest instead of earning interest, and you
will have difficulty getting ahead financially
• The average credit card user pays nearly $1,400
per year in interest (for a family of four, that is
$5,600 in interest annually or nearly 55% of
your income for debt service payments)
• According to the Federal Reserve, 40% of
American families spend more than they earn
• Research supports when you plan where money
goes, it goes farther and you accumulate more
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6. I don’t want to be happier in life
(I want to be miserable like everyone else)
• Many fail to budget because they do not see the
relationship between finances and happiness
• Economic freedom is a key element of happiness
• Those in debt are in a form of “indentured
servitude”, which can last for over 50 years in
some cases when people do not understand
interest
• Research shows when individuals and families owe
money to others, they do not have that economic
freedom they desire, and research has found them
less happy
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7. I like being in debt to other people
(I understand how the other 60% live)
• Many fail to budget because they do not see
how it can help them avoid or eliminate debt
• Consumer debt per capita was $7,730 in 2005 or
55% of income for a family of 4
• The average household debt in 2005 was
$14,500 in non-mortgage debt
• It is hard to get ahead financially when you are
paying 55% of your earnings in interest
• Research supports when families get on a budget
where they earn interest instead of pay interest, they
have so much more for themselves and their
families
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8. Budgeting is a temporal activity
(Prophets only talk of spiritual things)
• Many do not budget because they either don’t
realize what scriptures and prophets have
counseled us or are not yet motivated to act
• Spencer W. Kimball said that “every family should
have a budget” (Spencer W. Kimball, Conference
Report, April 1975, pp. 166-167) .
• We have been counseled by prophets for over
6,000 years to “pay thy debt and live” (2 Kings
4:7).
• Experience has shown that when we obey the prophets
and scriptures, we are happier, healthier, and more
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able to bless the lives of our families and others
C. Understand the Myths of Budgeting:
• There are many myths of budgeting that are not
only wrong but hazardous to your wealth (and
health). They include:
• Myth 1. Its all mine
• Myth 2. Budgeting is easy
• Myth 3. there is one right way to budget
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Myth 1. It’s All Mine
• Some believe the oft-quoted statement “it’s all
mine”
• They think they own:
• The belongings they have
• The education they gained
• Their money and investments
• They earned these assets through their hard
work, intellect, effort, sweat, tears, luck and
the time they spent
• The reality is different
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Education Week 2012
It's All Mine (continued)
• Do you remember the cause of the downfall of the
peoples in the Book of Mormon?
• What did it start with?
• It started with pride from their riches
• What was the “cycle of destruction?”
• Riches led to pride
• Pride led to wickedness
• Wickedness led to destruction
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Reality 1. I Am a Steward
Principle 1: Ownership
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).
• The Lord is the creator of the earth (Mosiah 2:21),
the supplier of our breath (2 Nephi 9:26), the giver
of our knowledge (Moses 7:32), the provider of our
life (Mosiah 2:22), and the giver all we have and are
(Mosiah 2:21).
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I Am a Steward (continued)
2. Stewardship: We are stewards over all that the
Lord has, is giving, or will share with us
• The Lord through the prophet Brigham Young said:
• Thou shalt be diligent in preserving what thou
hast, that thou mayest be a wise steward; for it is
the free gift of the Lord thy God, and thou art his
steward (D&C 136:27).
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I Am a Steward (continued)
3. Agency: The gift of “choice” is man’s most
precious inheritance
• President David O. McKay wrote:
• 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 (Conference
Report, Apr. 1950, p. 32; italics added).
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I Am a Steward (continued)
4. Accountability: We are accountable for every
choice we make
• The Savior through the prophet Joseph stated:
• 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 72:3).
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I Am a Steward (continued)
• On the questions of what is really ours, Elder Neal
A. Maxwell stated:
• The submission of one’s will is really the only
uniquely personal thing we have to place on
God’s altar. The many other things we “give,”
brothers and sisters, are actually the things He
has already given or loaned to us. However,
when you and I finally submit ourselves, by
letting our individual wills be swallowed up in
God’s will, then we are really giving something
to Him! It is the only possession which is truly
ours to give! (italics added, “Swallowed Up in
the Will of the Father,” Ensign, Nov. 1995, 22).
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Myth 2. Budgeting is Easy
• Some consider that budgeting is easy, that it is
only math
• All you need to do is just need to make sure that the
math is correct--you spend less than you make and
it will all work out
• The reality is different
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Budgeting is “Bringing Together”
• Budgeting, and money in general, is much
more emotional and behavioral in families
• For couples, it is bringing together two very
different people who have two different:
• 1. Backgrounds and history
• 2. Goals and objectives
• 3. Views of the message of the gospel of Jesus
Christ
• And so they have different views on how the money
should be planned for and spent
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Reality 2. Budgeting is a Challenge
• Its not that only one partner’s view is right
• It’s just that both views are different
• Dave Ramsey said:
• “Personal finance is more personal than it is
finance, it is more behavior than it is math”
• The key is to understand the emotional or
behavioral component of money that comes
from these differences
• Then we can better budget
• How do we do that?
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Challenge 1. Different
Backgrounds and History
• How do you handle different backgrounds and
history?
• Understand how each other was brought up
• Do together Learning Tool 21: Key Questions
on Money and Relationships. This will help you
understand how each other was brought up to
think about money and help you put together an
Action Plan for your family
• Included are questions about: attitudes
toward money, family, cash management,
savings, education, missions, investments,
and retirement
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Challenge 2. Different
Goals and Objectives
• How do you handle different goals and
objectives?
• Develop family goals together as a couple
• Write them down and make them yours, then
work toward them. Read the lesson on Setting
Personal Goals and look at Learning Tool 2:
Completed Financial Plans. Look at how they
set up their personal and family goals
• Answer the question: What would Heavenly
Father have you be or do?
• Write down your top three family goals
• Write down your top three individual goals
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Challenge 3. Different
Views on The Gospel of Jesus Christ
• How do you handle different views of the
message of the gospel?
• Be accepting of each other wherever they are,
regardless of where they are
• Assume they are trying to do their best
• Work on building an environment in the home
where the Spirit of the Lord can reside
• Work on building consensus and avoiding
contention
• Strive to do things that strengthen relationships
• Work together to understand what Jesus Christ would
have you and your family do—then do it!
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A Challenge--But Worth It
• Budgeting is not easy--but it is worth it
• Developing and living on a budget is the single
most important thing you can do to achieve your
personal and family financial goals
• President Gordon B. Hinckley promised:
• If you have paid your debts, if you have a
reserve, even though it be small, then should
storms howl about our head, you will have
shelter and peace in your hearts (“To the Boys
and to the Men,” Ensign, Nov. 1998, 52–54).
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Myth 3. There is One Right Way to Budget
• Some consider that there is only one right way
to budget (and it is the way they do it). There
are no other valid ways that work
• The reality is different
• There are many different methods of budgeting,
although some may be better than others
• The key is to get the principles right
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Reality 3. There are Many Methods—Just
Follow the Principles
• What are the principles of successful
budgeting?
• 1. Spend less that you earn
• 2. Use a budgeting method that meets your
Individual and family needs and objectives
• 3. Keep good records for spending, tax and other
purposes
• Whatever method you choose, it should accomplish the
above three principles
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Main Budgeting Methods
• There are five main types of budgeting
methods:
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•
•
•
•
•
•
Traditional methods
1. The Envelope Method
2. The 60% Rule
3. Spreadsheet Methods
4. Budgeting Software Methods
The method too many people use:
5. DNAH-ial Methods (Do Nothing and Hope)
• There are advantages and disadvantages to
each
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The Envelope Method
• Requirements: Envelopes
• Divide spending each month into categories. At the
beginning of each month, take the money you have
planned for each category and put it in the envelope
• Once a bill comes, take the money from the
corresponding envelope and pay the bill
• Once the money is gone from one envelope and you
need more, you must shift money between other
envelopes or make do with what you have
• There is no getting money outside the system
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The Envelope Method (continued)
• Advantages:
• Low cost and easy to use
• Will keep within budget unless you bypass the
system
• Can save if savings is one of your “envelopes”
• Harder to cheat this method if followed correctly
• Disadvantages
• Does not allow for quality record keeping
• Must be updated regularly
• Must be careful not to bypass envelopes using
credit cards
• Must be careful with the available cash
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The 60% Solution Method
• Requirements: Journal or spreadsheet
• Determine your gross salary each month. Take
60% of that amount and only spend that amount
each month. Do not spend beyond that amount
• Take 20% of your salary and save for long-term
goals
• Take 20% of your salary and save to pay your
taxes at year-end
• Once you have spent your money, you cannot go
outside the method for more money
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60% Solution Method
(continued)
• Advantages:
• Low cost and easy to use
• Has no individual categories or category tracking
• Will keep within budget unless you bypass the 60%
• Can save if update regularly and follow plan closely
• Disadvantages
• Does not allow for good record keeping
• Must be careful not to bypass 60% limit using credit
cards
• May be difficult to determine closeness to the limit
• Easy to miss the 60% targets
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Spreadsheet Methods
• Requirements: Computer and spreadsheets
• Determine your gross salary and take home each
month after taxes and other deductions
• Determine spending by category (row) and date
(column), and budget each category
• As bills come in, input the spending on each date
(column) and row (category)
• Plan in adequate amounts for a financial reserve and
long-term goals
• Type in spending directly into spreadsheet
• Can be useful if updated regularly
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Spreadsheet Methods
(continued)
• Advantages:
• Relatively inexpensive and easy to use, depending on
the spreadsheet
• Can keep you within budget if you plan and execute
carefully and update regularly
• Disadvantages
• May be difficult to track spending with categories
• Does not allow for good record keeping
• Easy to bypass limits using credit cards
• Difficult to determine limits unless updated regularly
• Easy to miss goals and targets
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Computer Software Methods
• Requirements: Computer and software, such
as Mint.com (free), Quicken, Mvelopes, YNAB
• Determine your gross salary and take home each
month after taxes and other deductions
• Determine spending by category, and budget each
category. Work to within your budget for each
category spending
• Obtain receipts and credit card information directly
via internet from banks and credit card companies
• Can plan in adequate amounts for a financial
reserve and long-term goals
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Computer Software Methods
(continued)
• Advantages:
• Relatively easy to use and low cost depending on the
program (Mint.com is free and quite good)
• Will keep within budget if you plan and execute
carefully (can also save if follow plan closely)
• Downloading data from banks makes recording easy
• Allows for record good keeping if recorded properly
• Makes tax planning very easy if done right
• Disadvantages
• Plan must be followed carefully
• Easy to miss goals and targets if not updated regularly 41
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DNA H-ial (Do nothing and hope) Methods
• Requirements: None
•
•
•
•
This is what too many people use
Do nothing
Deny there is a concern
Hope things work out (they should because I pay
my tithing)
• Only respond when things get so bad that you have
to act
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DNA H-ial Methods (continued)
• Advantages:
• Easy and low cost
• Requires no effort or planning on your part until
things get really bad. Then it’s a real pain!
• Disadvantages
• There is no plan, no target, or no goals
• Does not accomplish any of the principles of
successful budgeting
• Likely result is failure and inability to reach any
major financial goals
• Likely result is children will follow your example
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Which is the Best method?
• In my experience, the best plans are those that:
• 1. Are relatively easy to use
• 2. Are low cost
• 3. Allow downloading of bills from banks and
credit card companies (makes data entry easier)
• 4. Allow adequate categorization of spending for
income, spending, reporting and tax purposes
• 5. Minimize the time spent in doing finances (I
spend roughly 1-2 hours per week)
• What I recommend (for most):
• Mint.com for those starting out (free), and Quicken
and Mvelopes for more advanced users
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D. Developing a Budget You Can Live With
• Why develop a budget?
• President Spencer W. Kimball said:
• 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. (Conference
Report, April 1975, pp. 166-167.)
• If the brethren watch these things very carefully, 45
shouldn’t we?
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A Budget You Can Live With (continued)
• What is a Budget?
• It is the single most important tool in helping you
attain your personal goals.
• It’s the process of making sure your resources
are used for the things that matter most—your
personal goals
• Budgeting is a star to set your sights by, not
a stick to beat yourself with
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A Budget You Can Live With (continued)
• What is the Budgeting Process?
• 1. Know what you want to accomplish (know your
goals)
• 2. Track your spending—your expenses
• 3. Develop your cash budget
• 4. Implement your budget
• 5. Compare it to actual expenses, then make
changes where necessary to achieve your goals
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1. Know What You Want to Accomplish
• Know and write down your individual and
family goals
• What do you want to accomplish?
• Do you want to:
• Graduate from college?
• Prepare to be a worthy spouse?
• Get a great job?
• Send kids to college and on missions?
• Save for retirement?
• Return to live with your family and your
Heavenly Father?
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2. Track Your Spending
• There are different ways to track spending:
• Checks and credit cards
• These expenditures leave a paper trail. These
expenditures can be downloaded directly if the
banks are set up correctly
• Cash
• Record expenditures in a notebook
• Computer programs, i.e., Quicken, Money
• These are very useful, especially if tied to bank
and credit card companies
• The goal is to generate a monthly income and
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expense statement for your family
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Education Week 2012
3. Develop your Cash Budget (the better way)
• What is a Cash Budget?
• A plan for controlling cash inflows and outflows
• Its purpose is to help you spend money for what is
really important to you
• Income:
• Examine last year’s after-tax total income and make
adjustments for the current year
• Expenses:
• Identify all fixed (“must have”) and variable
(“would be nice to have”) expenditures
• Look for ways to reduce both types of expenses 50
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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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The Better Way (continued)
• Before
• You paid the Lord first, lived on the rest, and
whatever money was left at the end of every month
went into savings
• Now
• You pay the Lord first, yourself second, and then
live on the rest--your priorities are now in order
• And now you have twice the chance of
achieving your personal goals
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The Better Way
(continued)
• President Gordon B. Hinckley stated:
• In managing the affairs of the Church, we have tried
to set an example. We have, as a matter of policy,
stringently followed the practice of setting aside
each year a percentage of the income of the Church
against a possible day of need. I am grateful to be
able to say that the Church . . . is able to function
without borrowed money. If we cannot get along,
we will curtail our programs. We will shrink
expenditures to fit the income. We will not borrow.
(Gordon B. Hinckley, “To the Boys and to the
Men,” Ensign, Nov. 1998, 51.)
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The Better Way
(continued)
Elder L. Tom Perry affirmed 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 SelfReliant,” Ensign, Nov. 1991, 64.)
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4. Implement your Cash Budget
• Try the budget for a month
• Record all income and expenses in the proper
category by date
• Sum all days or columns
• Note how much you have available in each category
at the end of each week
• Adjust the plan or expenses as necessary to
maintain the plan
• Try to be as financially prudent as possible
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5. Compare Budget to Actual
• Compare your budget to actual
• Adjust the plan or your expenses as necessary to
maintain the plan
• Don’t reduce payments to the Lord or yourself
• If all else fails, this method will work!
• The Envelope method:
• Put money for each expense in an envelope
• When the money is gone, its gone
• It forces you to make it work (no cheating)
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Final Remarks on Budgeting
• Elder Marvin J. Ashton stated:
• Some claim living within a budget takes the fun out
of life and is too restrictive. But those who avoid
the inconvenience of a budget must suffer the pains
of living outside of it. The Church operates within a
budget. Successful business functions within a
budget. Families free of crushing debt have a
budget. Budget guidelines encourage better
performance and management (italics added,
Marvin J. Ashton, “It’s No Fun Being Poor,”
Ensign, Sept. 1982, 72).
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D. Apply Knowledge to Case Study
I received the following email. What problems do you see
and what recommendations would you make to help this
family begin their budget?
• “I would be interested in a unit on the emotional
component of money, and how to avoid contention when
two people have opposite ideas of how money is to be
managed. Sometimes, the pathway of applying correct
principles leads right to the doorway of contention.”
• “For example: one spouse believes in your advice to save
a small amount of money. The other spouse refuses to
allow that and insists on spending it. If the spender is the
husband and the saver is the wife, how do you reconcile
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those positions while avoiding contention?”
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Case Study (continued)
Does your answer change with this second email?
• “How does the more sophisticated money manager
spouse, say the wife, remain patient with the more
primitive money manager, say the husband, when real
financial harm or financial chaos is being created?
How can that be tolerated in order to avoid contention?
Which is the higher priority: avoiding contention or
working to stop the financial hemorrhaging?”
• “And the second issue involves the difference in risk
tolerances of husbands' and wives, i.e., the husband has
a particular talent and has started his own business, the
wife wants a steady paycheck. If the pros and cons are
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of equal weight in both scenarios, doesn’t the husband’s
idea win by default if he is the wage earner?”
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Case Study (continued)
How about with this second page of the second email?
• “Another point is that the presentation seemed to
assume that the viewers came from LDS families – I
for one am a convert, and did not grow up with parents
who saved for a mission or paid tithing. In fact, I have
to be extremely careful about my tithe paying as it is an
extremely sore subject for my non-member family who
disapproves of the practice.”
• “Again – yet another scenario in which it is the very act
of trying to obey correct principles leads to contention
and opposition within the family. You have my
permission to use my questions and concerns.”
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• Signed
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Case Study Answers
• Following are a few of my recommendations
that may be helpful for this couple:
• 1. Understand family backgrounds. There appears
to be a difference in how each was brought up and
how they relate to their families. While they cannot
control how they were brought up, they can decide
how they will do things in their family. They
should do it in the “best interests” of the family and
assume both are trying their best
• 2. Develop individual and family goals. There
appears to be a difference as to the goals of the
spouses. They should work together to come up
with shared individual and family goals
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Case Study Answers (continued)
• 3. Handle different views of the gospel in a Christlike manner
• A. Be accepting if each other--build the
relationship. Assume both spouses are trying to
do what is best, and that both are trying. Realize
that there may be differences of opinion, and
that is OK. They should first work to
understand, and then be understood
• B. Improve communication and problem-solving
skills. There seems to be concerns here. They
need to make finances a part of their weekly
“companionship” interview where they discuss
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children, scheduling, goals, etc. and finances
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Case Study Answers (continued)
• 4. Strengthen testimonies. Finally, they should
work to strengthen their testimonies and live
according to the gospel of Jesus Christ. They need
to work to bring Heavenly Father more into the
relationship through prayer, scripture study, etc.
When they are doing what God would have them
do, they can have His help. Since families are
ordained of God, God will help them resolve their
differences and become more like Him
• 5. Begin the budget. Once they accomplish these
things, then budgeting will be easy because they are
coming from a common direction. Then it really
doesn’t matter which system they use, as long as 64
they follow the principles of budgeting
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Summary
• We have talked of many things today
• A. We talked about the “Why” of personal finance
• B. I shared my favorite excuses why people don’t
budget
• There are lots of excuses, as many as there are
individuals
• But if one of our goals is to follow the
scriptures, the prophets, and our Savior, then
budgeting becomes not a question of math nor of
finances, but of faith, and none of the excuses
make any sense at all
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Summary (continued)
• C. I shared budgeting myths and realities
• Myth 1. It’s all mine
• Reality 1. I am a steward
• Myth 2. Budgeting is easy
• Reality 2. Budgeting is challenging
• Myth 3. There is one right way to budget
• Reality 3. There are different methods. Just get
the principles right and you will be fine.
• The principles are a. Spend less that you earn, b.
Use a method that meets your needs, and c. Keep
good records
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Summary (continued)
• D. I shared How to Develop and Implement a
Budget you can Live With. It is:
• 1. Know what you want to accomplish (know your
goals)
• 2. Track your spending—your expenses
• 3. Develop your cash budget
• 4. Implement your budget
• 5. Compare it to actual expenses, then make
changes where necessary to achieve your goals
• And I shared the better way to budget
• Pay the Lord first and yourself second
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Summary (continued)
• E. Finally, I showed how the process works
through a case study
• Doing the math is the easy part of budgeting
• Its the behavioral aspects are what make it really
challenging
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Conclusion: The “Why” of Personal Finance
• What is the “why” of personal finance?
• We learn and apply personal finance in our lives to:
• 1. Learn the lessons that personal finance can
teach us to help us become more like our Savior
Jesus Christ
• 2. Accomplish our personal and family goals
which will require financial resources in some
form
• 3. Accomplish our personal missions for which
we were sent here on earth, and
• 4. Help us return with our families back home
to our Savior and Heavenly Fathers’ presence 69
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