The Basics of Family Finances

Reminder:  There is a Family Finances class being taught in the Morrisville building every Thursday evening 7-8:30 pm, for the next 6 or 7 weeks.

THE BASICS OF FAMILY FINANCES

A Message from the First Presidency – Family Finances Brochure - “All is Safely Gathered In”

 http://www.providentliving.org/media/training/peaceheart/main.html 

“Latter-day Saints have been counseled for many years to prepare for adversity by having a little money set aside.  Doing so adds immeasurably to security and well-being.  Every family has a responsibility to provide for its own needs to the extent possible.  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.  Pay off debt as quickly as you can, and free yourselves from this bondage!  Save a little money regularly to gradually build a financial reserve.  If you have paid your debts and have a financial reserve, even though it be small, you & your family will feel more secure and enjoy greater peace in your hearts.”

Pay an Honest Tithe and Offering

Successful family finances begin with the payment of an honest tithe and the giving of a generous fast offering.  The Lord has promised to open the windows of heaven and pour out great blessings upon those who pay tithes and offerings faithfully.  (see Malachi 3:10)

Avoid Debt

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.

Use a Budget

Keep a record of your expenditures.  Record and review monthly income and expenses.  Determine how to reduce what you spend for nonessentials.  Use this information to establish a family budget.  Plan what you will give a Church donations, how much you will save, and what you will spend for food, housing, utilities, transportation, clothing, insurance, and so on.  Discipline yourself to live within your budget plan.

Build a Reserve

Gradually build a financial reserve, and use it for emergencies only.  If you save a little money regularly, you will be surprised how much accumulated over time.

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.

Guiding Principles of Family Welfare, Monson 1986

Ensign » 1986 » September

First Presidency Message
Guiding Principles of Personal and Family Welfare
By President Thomas S. Monson
Second Counselor in the First Presidency

http://lds.org/ldsorg/v/index.jsp?hideNav=1&locale=0&sourceId=1203ef960417b010VgnVCM1000004d82620a____&vgnextoid=2354fccf2b7db010VgnVCM1000004d82620aRCRD

President Spencer W. Kimball further taught concerning self-reliance: “The responsibility for each person’s social, emotional, spiritual, physical, or economic well-being rests first upon himself, second upon his family, and third upon the Church if he is a faithful member thereof.

“No true Latter-day Saint, while physically or emotionally able, will voluntarily shift the burden of his own or his family’s well-being to someone else.” (Ensign, Nov. 1977, p. 77.)

Perhaps no counsel has been repeated more often than how to manage wisely our income. Consumer debt in some nations of the world is at staggering levels. Too many in the Church have failed to avoid unnecessary debt. They have little, if any, financial reserve. The solution is to budget, to live within our means, and to save some for the future. Nowhere is the oppressive burden of debt more clearly taught than in the graphic counsel of President J. Reuben Clark, Jr.:

“It is the rule of our financial and economic life in all the world that interest is to be paid on borrowed money. May I say something about interest?

“Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours. … 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.” (In Conference Report, Apr. 1938, p. 103.)......

......Recent surveys of Church members have shown a serious erosion in the number of families who have a year’s supply of life’s necessities. Most members plan to do it. Too few have begun. We must sense again the spirit of the persistent instruction given by Elder Harold B. Lee as he spoke to the members in 1943: “Again there came counsel in 1942. … ‘We renew our counsel, said the leaders of the Church, and repeat our instruction: Let every Latter-day Saint that has land, produce some valuable essential foodstuff thereon and then preserve it.’ … Let me ask you leaders who are here today: In 1937 did you store in your own basements and in your own private storehouses and granaries sufficient for a year’s supply? You city dwellers, did you in 1942 heed what was said from this stand?” (In Conference Report, April 1943, p. 127.)

Undergirding this pointed call is the stirring appeal from our own living prophet, President Ezra Taft Benson, wherein he has given specific suggestions for putting these teachings into action:

“From the standpoint of food production, storage, handling, and the Lord’s counsel, wheat should have high priority. … Water, of course, is essential. Other basics could include honey or sugar, legumes, milk products or substitutes, and salt or its equivalent. The revelation to produce and store food may be as essential to our temporal welfare today as boarding the ark was to the people in the days of Noah.” (Ensign, Nov. 1980, p. 33.)

As has been said so often, the best storehouse system that the Church could devise would be for every family to store a year’s supply of needed food, clothing, and, where possible, the other necessities of life.

The world is starting to teach the wisdom of food storage

I think it is interesting that on this video, the statistician John Williams is encouraging everyone to have food storage.

This was broadcast on Dec. 8, 2010.  I hope he isn't correct, but if he IS correct we better all have our food storage sooner rather than later.

(I had the wrong link a minute ago.)

http://watch.bnn.ca/squeezeplay/december-2010/squeezeplay-december-8-2010/#clip386602

If you want to watch the part that is specifically about food storage, start at 5:40.

Time to get our houses in order- Hinckley, 1998

Ensign » 1998 » November

To the Boys and to the Men
President Gordon B. Hinckley

I wish to speak to you about temporal matters.

As a backdrop for what I wish to say, I read to you a few verses from the 41st chapter of Genesis.

Pharaoh, the ruler of Egypt, dreamed dreams which greatly troubled him. The wise men of his court could not give an interpretation. Joseph was then brought before him: “Pharaoh said unto Joseph, In my dream, behold, I stood upon the bank of the river:

“And, behold, there came up out of the river seven kine, fatfleshed and well favoured; and they fed in a meadow:

“And, behold, seven other kine came up after them, poor and very ill favoured and leanfleshed. …

“And the lean and the ill favoured kine did eat up the first seven fat kine: …

“And I saw in my dream … seven ears came up in one stalk, full and good:

“And, behold, seven ears, withered, thin, and blasted with the east wind, sprung up after them:

“And the thin ears devoured the seven good ears: …

“And Joseph said unto Pharaoh, … God hath shewed Pharaoh what he is about to do.

“The seven good kine are seven years; and the seven good ears are seven years: the dream is one. …

“… What God is about to do he sheweth unto Pharaoh.

“Behold, there come seven years of great plenty throughout all the land of Egypt:

“And there shall arise after them seven years of famine;

“… And God will shortly bring it to pass” (Gen. 41:17–20, 22–26, 28–30, 32).

Now, brethren, I want to make it very clear that I am not prophesying, that I am not predicting years of famine in the future. But I am suggesting that the time has come to get our houses in order.

So many of our people are living on the very edge of their incomes. In fact, some are living on borrowings.

We have witnessed in recent weeks wide and fearsome swings in the markets of the world. The economy is a fragile thing. A stumble in the economy in Jakarta or Moscow can immediately affect the entire world. It can eventually reach down to each of us as individuals. There is a portent of stormy weather ahead to which we had better give heed.

I hope with all my heart that we shall never slip into a depression. I am a child of the Great Depression of the thirties. I finished the university in 1932, when unemployment in this area exceeded 33 percent.

My father was then president of the largest stake in the Church in this valley. It was before our present welfare program was established. He walked the floor worrying about his people. He and his associates established a great wood-chopping project designed to keep the home furnaces and stoves going and the people warm in the winter. They had no money with which to buy coal. Men who had been affluent were among those who chopped wood.

I repeat, I hope we will never again see such a depression. But I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people. In March 1997 that debt totaled $1.2 trillion, which represented a 7 percent increase over the previous year.

In December of 1997, 55 to 60 million households in the United States carried credit card balances. These balances averaged more than $7,000 and cost $1,000 per year in interest and fees. Consumer debt as a percentage of disposable income rose from 16.3 percent in 1993 to 19.3 percent in 1996.

Everyone knows that every dollar borrowed carries with it the penalty of paying interest. When money cannot be repaid, then bankruptcy follows. There were 1,350,118 bankruptcies in the United States last year. This represented a 50 percent increase from 1992. In the second quarter of this year, nearly 362,000 persons filed for bankruptcy, a record number for a three-month period.

We are beguiled by seductive advertising. Television carries the enticing invitation to borrow up to 125 percent of the value of one’s home. But no mention is made of interest.

President J. Reuben Clark Jr., in the April 1938 general conference, said from this pulpit:

“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”

(in Conference Report, Apr. 1938, 103).

I recognize that it may be necessary to borrow to get a home, of course. But let us buy a home that we can afford and thus ease the payments which will constantly hang over our heads without mercy or respite for as long as 30 years.

No one knows when emergencies will strike. I am somewhat familiar with the case of a man who was highly successful in his profession. He lived in comfort. He built a large home. Then one day he was suddenly involved in a serious accident. Instantly, without warning, he almost lost his life. He was left a cripple. Destroyed was his earning power. He faced huge medical bills. He had other payments to make. He was helpless before his creditors. One moment he was rich, the next he was broke.

Since the beginnings of the Church, the Lord has spoken on this matter of debt. To Martin Harris through revelation He said: “Pay the debt thou hast contracted with the printer. Release thyself from bondage” (D&C 19:35).

President Heber J. Grant spoke repeatedly on this matter from this pulpit. He said: “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. And if there is any one thing that is grinding and discouraging and disheartening, it is to have debts and obligations that one cannot meet” (Gospel Standards, comp. G. Homer Durham [1941], 111).

We are carrying a message of self-reliance throughout the Church. Self-reliance cannot obtain when there is serious debt hanging over a household. One has neither independence nor freedom from bondage when he is obligated to others.

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 in all its operations, in all its undertakings, in all of its departments, 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.

One of the happiest days in the life of President Joseph F. Smith was the day the Church paid off its long-standing indebtedness.

What a wonderful feeling it is to be free of debt, to have a little money against a day of emergency put away where it can be retrieved when necessary.

President Faust would not tell you this himself. Perhaps I can tell it, and he can take it out on me afterward. He had a mortgage on his home drawing 4 percent interest. Many people would have told him he was foolish to pay off that mortgage when it carried so low a rate of interest. But the first opportunity he had to acquire some means, he and his wife determined they would pay off their mortgage. He has been free of debt since that day. That’s why he wears a smile on his face, and that’s why he whistles while he works.

I urge you, brethren, to look to the condition of your finances. I urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.

This is a part of the temporal gospel in which we believe. May the Lord bless you, my beloved brethren, to set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts. That’s all I have to say about it, but I wish to say it with all the emphasis of which I am capable.

I leave with you my testimony of the divinity of this work and my love for each of you, in the name of the Redeemer, the Lord Jesus Christ, amen.

Mortgages

Here is one specific piece of counsel concerning provident living which was given in the October 2010 General Conference.

Henry B. Eyring, October 2010 General Conference, "Trust in God, Then Go and Do"
http://new.lds.org/general-conference/2010/10/trust-in-god-then-go-and-do?lang=eng

Years ago I heard President Ezra Taft Benson speak in a conference like this. He counseled us to do all we could to get out of debt and stay out. He mentioned mortgages on houses. He said that it might not be possible, but it would be best if we could pay off all our mortgage debt.9

I turned to my wife after the meeting and asked, “Do you think there is any way we could do that?” At first we couldn’t. And then by evening I thought of a property we had acquired in another state. For years we had tried to sell it without success.
But because we trusted God and a few words from the midst of His servant’s message, we placed a phone call Monday morning to the man in San Francisco who had our property listed to sell. I had called him a few weeks before, and he had said then, “We haven’t had anyone show interest in your property for years.”

But on the Monday after conference, I heard an answer that to this day strengthens my trust in God and His servants.
The man on the phone said, “I am surprised by your call. A man came in today inquiring whether he could buy your property.” In amazement I asked, “How much did he offer to pay?” It was a few dollars more than the amount of our mortgage.

A person might say that was only a coincidence. But our mortgage was paid off. And our family still listens for any word in a prophet’s message that might be sent to tell what we should do to find the security and peace God wants for us.

(Pres. Eyring said he heard President Ezra Taft Benson speak about paying off your mortgage. I will put Pres. Benson's talk on this blog tomorrow.)