Family Financial Planning

Waldo J. Werning

   A nine-year-old girl who opened a bank account for the first time was asked to fill out an application blank. Required to list her previous bank, she wrote, "Piggy."

   Far too many people stay in the piggy-bank stage of financial planning and get into many difficulties as they continually flounder. Who has been advising such church members? Mostly, no one, or secular advisors had counseled people in trouble. However, the basics of Christianity must operate in financial planning as well as all over areas of family life.

   Alfred Haake, late economic consultant for General Motors, once stated, "The answers to the problems of economics are found in Christianity." Aristotle wrote on economics; so did Plato, but long before, God had told man, "Work and produce."

   Economics is necessary for human survival. The materialism of the Christian message can be observed in the biblical doctrine of creation; God brought matter into existence for a purpose. Christianity shows that man needs the material as well as the spiritual, and Christ gave meaning to both aspects of our world and life.

   Counseling on money matters is available from various sources

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— banks, credit agencies, insurance companies. Newspapers and magazines often offer counsel as well as educational films and materials to help families with financial planning.

   Churches have a special opportunity and obligation to provide guidance to their members in money management. Some Christians have financial difficulties and are not committed to the discipline required in handling money. Some find themselves in a rather chaotic condition which grows out of a lack of planning or from poor planning. Many families are experiencing frustrations with financial problems which even second incomes do not solve. Personal desires and wants often keep far ahead of incomes.

   Many marriage counselors report that money problems which are not being adequately dealt with are often at the base of family tensions and difficulties. Easy-credit buying has caused many families to obligate themselves financially far in excess of their resources. Most Christians do not adequately view money as a means for expressing their Christian faith. Recently, a New York Times service reported, "Recession Helping Marriages Go Broke." One couple interviewed stated, "We had a horrible case of the 'I wants.' "

   Churches that provide family financial counseling will help people gain insight and new awareness of what financial resources are available, of how Christian money management requires careful attention to the total family income and total family spending (which also involves saving and giving), of the importance of counseling (especially in crisis situations), of making financial adjustments that are required from time to time, and of using the church as a ready resource. Family financial counseling is one of the most obvious needs of church families.

GOD'S PLAN FOR THE CHRISTIAN

   Everything, including planning and deciding the use of possessions and money, is to be managed by the Christian in such a way that Christ is head. The Christian is God's manager and administrator, and he or she has a responsibility in all actions to witness to his or her Christian faith, to "declare the wonderful deeds of him who has called you out of darkness into his marvelous light" (1 Peter 2:9).

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   Managing our lives and possessions comes into focus when we are reminded: "Therefore if any man be in Christ, he is a new creature: old thing are passed away; behold, all things become new" (2 Cor. 5:17). Through the miracle of God's grace, we become new creatures and gain a new set of values and a new outlook on life, including the handling of our money. The world is filled with people who do not know who they are and what to do with the things they have, but Christians are released from slavery to possessions as they find newness and renewal through Jesus by the forgiveness of sins.

   Christianity is all about how sin can be removed from lives through faith in Jesus. Sin is a very real part of human experience; so repentance should also be a living experience, followed by forgiveness which washes away our guilt in the blood of Christ. As a response to God's grace, Christians express their faith in good management of money and are people of principle, honesty and integrity as they fulfill their purpose in life. Christians should look to the unprecedented wealth of even average people as a test of faith and a spiritual responsibility, remembering their accountability as managers for God.

   God's plan includes the use of income and possessions for the physical, spiritual, educational, social, and recreational needs of people. Besides supplying people with enough resources to support body and life, God has also made adequate provision for financing his work in the church. This is a revolutionary fact as families consider the use of their incomes.

   Money problems and inflation have a spiritual cause and spiritual solution, as may be seen in Haggai. God told his people, "Consider your ways. You have sown much but bring in little, and he that earns wages earns wages to put them into a bag with holes (inflation). Build the house of God, and I will be glorified. You look for much, but it comes to little, and when you bring it home, I blow it away. Why? Because the Lord's house lies in waste while your concern is your own homes. I have called for a drought upon the land and upon the labor of your hands. The silver is mine and the gold is mine, says the Lord of Hosts. Consider from the twenty-fourth day of the ninth month, even from the day that the foundation of the Lord's temple is laid, from this day will I bless you" (paraphrase of Haggai 1, 2).

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   The people experienced inflation and money problems because they put their own affairs and homes before God and his work. When they had a change of heart and started laying the foundation of the temple, God gave them his blessing.

   God said, "If you are willing and obedient, you shall eat the good of the land" (Isaiah 1:19, RSV). The plan of God requires obedience to his will and obedience in faith, which the Bible makes clear.

   As Christians we have three objectives in spending our money: God's glory, our own needs, and the needs of others. The order of priority between God and man is precise. God says, "No other gods before me . . . Love God with your whole self . . . Love your neighbor as yourself . . . Seek first the kingdom of God." God's plan is that Christians give to the Lord first and plan sensibly and reasonably the use of all their income and possessions by good management. Proper values will also be adopted in using money to provide for learning and fun and for expanding the horizons of life beyond mere existence.

   Paul introduced giving as a feature of weekly worship to the churches of Galatia and Corinth (1 Cor. 16:2). Offerings are an expression of our faith in Jesus and our love for him, a joyful part of worship (Psalm 96:7-8). No better system has been devised than regularly taking out of each dollar a certain definite percentage and putting it aside for church and charitable purposes.

ESTABLISH AND CLARIFY VALUES

   Economic decisions are made on the basis of one's philosophy of life. People spend according to their attitudes and spiritual values. Attitudes and values dictate the standard of life which a person demands, and they determine how money is spent — for good or evil.

   The temptation is to allow the values of our social group to override the values of our Christian faith. Determining family values is not easy as husband and wife bring their own sets of values to the marriage and both individually and as a unit are influenced by cultural and traditional factors.

   Parents are tempted to try to inculcate adult values upon the young by moralizing or simply by demanding that their own values be transferred to them. Sharing values works best when

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there is a consistency about what constitutes "desirable" values. It should be recognized that while parents offer one set of "shoulds" and "should nots," the church may suggest another, while the peer group offers a third set of values, popular magazines and TV another, the school yet another, and the president and Congress of the United States still one more set of values. Too often the important choices in life are made on the basis of peer pressure, or the power of propaganda, or the unthinking submission to authority.

   Understanding and examining one's motives and reasons are an important part of achieving worthy values. Money has awesome power to bless or curse. One's financial record or bank account only tells a small part about that person. A person is rich according to what he or she is and according to his or her values, not according to what he or she has. The true value of money lies not in its possession but in its use.

   Wrong spiritual values cause confusion, anxiety, and fear and result in improperly earning and handling money. True Christian values will help one establish right goals and spend money in a Christian manner.

   Greed and covetousness cause human values to deteriorate and cause persons to place things above human worth. John D. Rockefeller was once asked how you can make a man happy, and he answered, "By giving him just a little bit more." Forty percent of what Americans own is not essential to physical well-being and consists of options or near-luxury items. Alexander Solzhenitsyn on June 30, 1975, in Washington, D.C., said: "Something which is incomprehensible to the human mind is the West's fantastic greed for profit for gain which goes far beyond all reason, all limitations, good conscience." Jesus said, "Beware of covetousness, for a man's life does not consist of an abundance of things which he possesses." Covetousness and greed cause various problems — inflation, unmanageable debts, and family arguments.

   Getting more money is not always the solution to financial solvency (Eccles. 5:10). The true value of anything depends, not upon a price tag, but upon the extent it can satisfy our desires and fulfill life's necessities. The worth of anything is

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determined by the amount of the assistance or satisfaction that it gives. People should not needlessly deprive themselves of helpful things that contribute to their usefulness to God and to others, or that might add to their comfort, enjoyment, and broaden their knowledge. It is deplorable to spend what should have been saved; it is equally bad to save what should have been carefully spent.

   The hope for establishing and clarifying proper values will depend upon avoiding speculative philosophies, naturalistic ethics, relativism, idealism, and situational ethics. Surrounded by a bewildering array of alternatives, Christians should analyze their financial habits on the basis of biblical and Christian values. Values based on scriptural standards should mold our spending patterns. Christian faith forms and shapes a person's values, which determine goals and behaviors.

FACTORS IN MONEY MANAGEMENT

   There are certain things one needs to understand and calculate in order to be a good money manager. A person needs to:

1. Know what he owns

2. Know what he owes

3. Know what his total income is

4. Know where his money goes by maintaining an accurate record and by developing a spending guide

5. Learn to live on his income (this means that he learns to say no consistently when it is necessary)

6. Know the cost of credit

7. Recognize what are essentials and nonessentials in spending money (these should be separated into fixed and flexible expenses)

8. Make definite plans for family financial management and security (including safety)

9. Make effective disposition of all possessions at the time of death by writing a Christian will or living trust.

10. Watch waste, a great factor in administration of businesses, factories, government departments, hospitals, and homes.

   Genuine Christian standards need to be established to avoid

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foolish waste and unnessessary expenditures of all that God has given us. Unnecessary wear and tear on various items both inside and outside the house and on clothing is a waste of money. Every member of the family needs to be conscious of the ways in which he or she contributes to the waste of family income through careless or thoughtless treatment of property, income, or food and through poor planning.

   A general guide for the Christian use of money would involve the following categories of expenditures:

1. Support of the total work of the church at home or abroad

2. Living needs (food, clothing, shelter, taxes, medical care, transportation, repairs, insurance)

3. Life improvement (vacation, education, books, hobbies, recreation)

4. Economic security (life insurance, bank account, investments, and savings)

5. Danger-keep out (excesses, most luxuries, gambling, anything unwholesome)

   Families should write up a list of their important goals: (1) things they need and want soon — a new suit or dress, an automatic washer, larger church offerings, a fund for recreation, larger savings for retirement; (2) things they want during the next year — getting old bills paid, provision for medical care, a better vacation; (3) things they want in the future — a new car, larger savings, a home of their own or a better home.

   A portion of the income should be invested in savings. Principles of saving are taught in the Scriptures: the example of the wisdom of the ant storing up for future need (Proverbs 6:6-8; 30:24-25); the foolish spend unwisely (Proverbs 21:20); avoid risky investments and "get-rich quick" schemes (Proverbs 21:5; 28:20, 22); saving is not to be done on the basis of lack of faith or impure motives or out of anxiety (Luke 12:13-24; 1 Timothy 6:6-10).

   False values create situations in which the family is saddled with debts that deprive them of the real necessities of life. Far too many paychecks are spent on frills and luxuries before providing for necessities. Many do not understand that the high cost of finance tends to cause one to waste income on interest payments instead of using income to supply basic needs.

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   Credit and borrowing are justified to provide funds not otherwise available when sickness, death, unemployment, or some large purchase that is deemed necessary is required. Borrowing is not justified in order to obtain luxuries, postpone a necessary reduction in one's standard of living, provide cultural frills, or indulge in speculation. Financial stability is weakened when credit is used. Keep in mind these rules for credit: (1) Borrow the least you need, not the most you can get. (2) Make the largest monthly payments you can, not the smallest the creditor will permit. (3) Don't borrow far in advance of an actual need. (4) Borrow from the lowest source, which may not be the handiest or quickest. (5) Know the true rate of interest.

FAMILY DYNAMICS

   Money management is a family affair. If the family hopes to have a wholesome experience in handling their income, they should talk together about their past use of money without criticizing one another and should make plans for the present. Handling money involves a person in an endless chain of relationships with other people, starting in the family itself. Love and respect for God show themselves in respect for the rights of our fellow-men. Thus Christian integrity is to be evident in family relationships and dealing with one another in money matters.

FAMILY DECISIONS

   Although responsibility for major policy decisions in the use of money may rest ultimately with the parents, financial planning is best worked out by the family as a unit, all members participating according to their ability and need. Together the family should evaluate the needs and pressures they face and then apply sound Christian principles in planning their spending. In the process, each member of the family learns self-denial for the good of the family and ultimately for themselves. Thus it becomes necessary to evaluate the objectives and goals of the family and of each member.

   Husbands and wives should privately discuss first what each wants and needs, and then they should consult with the children

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who are old enough to understand their views. The entire family must be made aware of fixed and committed expenses. Each family member should receive a proper share of family income and not be denied necessary funds when other members receive adequate funds.

   We cannot develop an average budget for a family because money values and needs change as families change. The beginning family requires heavy purchases of durable goods while the income is relatively small but rising. The expanding family needs larger living quarters and encounters expanding food expenses, medical bills, clothing costs, car ownership, life insurance coverage, and school expenses. The contracting family, which grows steadily smaller until no children remain, may find peak spending power, where the family spends a smaller proportion of its income on fixed expenses and relies less and less on installment credit. The elderly couple faces a completely new situation, depending upon the amount of savings and investments they have acquired.

Children's Stewardship

   Children should have an opportunity to learn effective use of money at an early age, realizing that possession of money necessitates choices — whether to save or spend and on what to spend. Children who learn good stewardship of money in the years of dependency will show more responsibility when they become independent. At an early age they should learn to take care of themselves and their possessions as a trust from God and to protect property and to respect the rights of other individuals. They should learn to share gladly their gifts and abilities and to be aware of and to meet the needs of others. Progressively they should participate in planning with the family in the Christian use of money, abilities, and possessions.

   Children should be given allowances both because they have needs to be met and because they must learn how to handle money. They need to learn the difference between short-term and long-term objectives and how to evaluate the many different items for which they can spend their incomes. The amount

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of money that children receive should be related to their needs and maturity.

   Even though parents can afford to give everything to their children, they should not do so, for children need to learn some degree of independence and gain a sense of personal achievement. Allowances should not be given as rewards or as payment for doing chores, nor should they be withheld for poor grades in school, bad behavior, or a similar reason. Children should seek to do commendable work at home and school because of the responsibility involved. One is not paid for doing or being good, nor can money purchase the affection or approval of others. Work is a given, a fact of life, and there is no such thing as "no work" on the part of any healthy family member.

   Careful thought should be given to financial arrangements with children because they become conditioned to a pattern of events which they expect to continue and which creates certain behavior habits. Children who are conditioned to gratification expect things to be acquired without effort on their part by making a demand or creating a "scene." Children need a sense of dignity and of achievement, but too much pressure for achievement beyond ability puts too much strain on them, which has a destructive effect and causes anxiety, tension, and aggressive behavior.

   Teens have trouble spending wisely. The Rand Youth Poll reported in Youth Today that 38 percent say they buy ridiculous products to satisfy their egos and frustrations, that two-thirds think their friends are making foolish purchases, and that teenage savings are short term.

   As children and youth earn money, they can be helped to set up spending plans and records of their own which are simple at first and then expanded to suit their growing earning power. Setting financial priorities, including offerings to our Savior, should be learned.

   Parents need to set clearly defined standards and limits. Properly administered, these guides are a sign of loving children enough to care about their well-being by defining limits and holding to them, including handling money. All should realize

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that the use of money is a revealing index to their character and to their heart's attitude and commitment to Christ.

PRINCIPLES OF MONEY MANAGEMENT

   Planning for spending money (budgeting) helps select a standard of living within one's income. A suitable spending guide encourages responsible choices, frees rather than confines, and stimulates rather than depresses. It rewards good thinking and wise action and aids in attaining important goals. Good planning tends to eliminate family arguments about finances.

   The guiding principle of a budget is not to record expenses but to know and control them. Good financial planning will allow the family to gain a better standard of living at the same cost.

   Poorly made decisions produce confusion, guilt, and feelings of helplessness. Proper decisions depend upon adequate information, deciding what is important, understanding the rewards for balanced thinking and planning, and realizing that the quality of our lives is affected.

   Effective financial decisions are based upon a number of principles:

   1. Get the facts. Probe and question in a way that values will be clarified. Determine what is important, what is needed, and what is available.

   2. Define the goal. Maintain financial stability, make maximum use of total income and each dollar, understand all alternatives, write your own goals, and establish your own budget. Seek to use all resources according to God's plan and purpose. Understand your motives for spending. Look at your finances in God's perspective, and set a goal of a specific percentage for the Lord's work first.

   3. Establish priorities. Decide what shall be achieved now and what later. Rank the matters of importance now as they should be reflected in the actual spending guide. Don't confuse your priorities and miss God's plan for your life.

   4. Develop a plan. Choice is between effective and ineffective management. Decide how money is to be used on a monthly basis in the context of the annual budget.

   5. Keep adequate records. Simply, list the annual income, total

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fixed expenses, the balance available for variable expenses, and the amount you have left.

   6. Allow for revision. By watching carefully the financial records as they are kept, the plan can be kept flexible in order to make revisions. Learn self-discipline.

DECISION MAKING AND MECHANICS TO MAINTAIN ACCURATE RECORDS

   The simplest directions for keeping a record of family expenses involve these steps:

   1. Jot down item by item how you spent your income in the past months, and then decide whether you really want to spend that much on these items.

   2. Draw up a list of your most important goals: church offerings, a possession or replacement of something worn out, savings, old debts, education for children, and so on.

   3. Make up a monthly budget for the next year that cuts down on items where savings can be made and boosts spending for things you really want.

   4. Keep a day-by-day record of every penny you spend. At the end of each month compare what you have actually spent on each item with what was budgeted.

   Techniques for money management need not be difficult or overly time consuming. Find an easy-to-manage system for keeping account of and improving your family's financial situation.

TRAIN FAMILIES IN FINANCIAL PLANNING

   Most of the training of people in financial planning and budgeting is done on a crisis basis by banks or loan agencies. Good counseling should be preventive and actually prepare families for facing life on a sound financial basis. The church should be prepared to help young families before financial crises threaten their marriage or happiness and to help families plan their estates and build retirement programs.

   Several approaches should be considered in assisting couples and families to be fiscally responsible:

   Pastors should consider advising for effective Christian money management in premarital counseling sessions. The pastor might

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suggest that the couple review a filmstrip on financial planning and then counsel with them regarding this matter.

   Practical assistance might be given in a worship service by a qualified layman and the pastor through a study of a "Christian Money Management Guide" provided to all members. The members should be given both the motivation and the practical assistance to budget their incomes according to Christian priorities.

   Selected couples who have the potential to teach classes or counsel people might participate in a group study. The schedule could be for six weeks, meeting once a week for sixty to ninety minutes at a time. Capable laymen and qualified specialists with deep Christian commitment should provide assistance in Christian stewardship of income, family budgeting, costs of banking and borrowing, real estate investments, insurance, educational costs, wills, annuities, and so on. Both husband and wife should know their assets and liabilities.

   A program of family money management is a vital service for any parish that wishes to minister to its families in a very important aspect of life.

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Waldo J. Werning is executive secretary of stewardship for the Lutheran Church — Missouri Synod in South Wisconsin. He is widely known as a speaker, author, and workshop leader.

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