Below is a talk that I gave in church just a few weeks ago to all of the adults in our ward. I’m hoping that some of these things that I have learned will help some of the families in our ward to say financially independent.
"We encourage you wherever you may live in the world to prepare for adversity by looking to the condition of your finances. We urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt. ... If you have paid your debts and have a financial reserve, even though it be small, you and your family will feel more secure and enjoy greater peace in your hearts"
Brethren have put together this little pamphlet to help us with some of our Basic family finances. I know that you have probably heard this before but today I'd like to go into some specifics.
Pay tithes and Offerings: We have all read and heard the promise given to use in the Book of Malachi 3:10. and 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. If we have not already tested this promise that our Heavenly Father has given us, I recommend you test this out. So, first, Pay your Tithes and Offerings.
Avoid Debt: I know that we are told all of the time to avoid debt and I'm not here to tell you what qualifies or does not qualify for good debt. We just need to read what the Brethren have put together for us and make decisions in our own families on how to handle it. They recommend the following, "Spending less money than you make is essential to your financial security. Avoid debt, with the exception of buying a modest home or paying for education or other vital needs. Save money to purchase what you need. If you are in debt, pay it off as quickly as possible."
Build a Reserve: This has always been difficult because I didn't know how much money I should have in reserve. $200 – $500? I guess it depends on how much money you make and how much your expenses are. BUT, I'd like to propose that at the very least, you should have $1,000 as an emergency fund. This is not FUN money, this is not new couch money. This is money to use when your furnace goes out, or your car breaks down. EMERGENCY ONLY. So, before you start paying down your debt, you should build up an emergency fund. My problem was always that I would be paying off credit cards and then my car would break down. So, I'd have to use a Credit Card to pay for it to get fixed. Then, our furnace went out, so I'd use a credit card to get it fixed. I seemed to always be losing the battle. So, before you pay off your debts, get an emergency fund so if there is an emergency, you don't use credit cards, you use the fund. When you have to use the emergency fund, pay back the emergency fund of $1,000 first and then get back to paying off debt. I started by putting away 1% of my check in a separate account. You would be amazed at how quickly just 1% of your income can grow if you just stay at it.
Pay off Debt: I'd like to focus on Paying off Debt for a few minutes. The Brethren state that we should SAVE money to purchase what we NEED. If you are in debt, PAY IT OFF. How do we pay off our debt. I'm not an expert on paying off debt because I do have debt I'm working on, but how do you pay it off. Well the obvious answers are, make more money. Sometimes we will need to be creative because one way to get out of debt is to INCREASE YOUR INCOME. A few ways I increase our income is to sell things on ebay, have a garage sale, or see if there are extra jobs at work I can do to earn a little extra.
The second obvious answer might be SPEND LESS. I think all of us can look into our life and find thinks that we don't need. We recently looked through our finances and found ways to decrease our expenses. We turned off our home phone and we cancelled cable. We also try to travel in the least expensive car when going long distances. We have created a dinner menu for each week so we don't spend as much money dining out.
Lastly, if you do have debt, the Church has some awesome resources to help you pay it off. On the ProvidenLiving.org website there is a link with resources to help you pay off your debt. They have Calculators to help you determine how quickly you can pay off your debt. Other plans I have heard of are called "The Debt Snowball". This is a plan that lines all of your debts from smallest to greatest and then puts together a plan to pay off the smallest debt first. When that debt is paid off, you start working on the next until in snowballs into paying off the largest one.
Use a budget: One way to find ways of decreasing your expenses is to track them. If you MAKE A BUDGET, you will immediately see things that you are paying for that you can either cut, or decrease. It is estimated that you can decrease your spending significantly simply by recording what you spend. Budget are hard and cumbersome but if you will put one together and start tracking your money, it will begin to work for you. The church has many budget worksheets that you can use online or on paper.
Teach Family Members: Teach family members the principles of financial management. Involve them in creating a budget and setting family financial goals. Teach the principles of hard work, frugality, and saving. Stress the importance of obtaining as much education as possible. Let your kids know that you are trying to save money and trying to pay off debt. You will be amazed at how often they will want to help and find ways to save a little money.
If you have paid your debts and have a financial reserve, even though it be small, you and your family will feel more secure and enjoy greater peace in your hearts.
May the Lord bless you in your family financial efforts.
The First Presidency