Transcript Buying a Home - Brigham Young University

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
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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
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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
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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,” Ensign, 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 (Elder Gene R. Cook, “Trust in the6
Lord”, Ensign, Mar. 1986).
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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)
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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
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
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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, then Family
Finances
• 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)
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Learn It: The MSM Personal Finance Website
www.personalfinance.byu.edu
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Learn It: The MSM Website (continued)
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Learn It: The MSM Website (continued)
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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
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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
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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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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).
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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)
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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)
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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)
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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
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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
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Conclusions (continued)
• There are 8 different “how’s” (or applications)
that we should emphasize. They are:
•
•
•
•
•
•
•
•
1.
2.
3.
4.
5.
6.
7.
8.
Pay the Lord first through tithes and offerings
Create and use a budget
Avoid and stay out of debt
Prepare for emergencies and build a reserve
Save for short- and long-term goals
Protect yourself and family through insurance
Open communication about finances
Teach your children and family
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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
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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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