Download The Why`s, What`s, and How`s of Personal Finance

BYU Management Society
Indianapolis Chapter
The Why’s, What’s
and How’s of
Personal Finance
July 31, 2014
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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Who I Am
• Motto: “Learn, Do, Become”
• Previously managed $3.2bn in financial assets
in emerging markets
• Took a professional track position at the
Marriott School
• Teach asset management, modeling and
valuation, international finance, and personal
finance
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Increasing Personal Freedom
• I have a friend from the Philippines
• He is concerned because the Philippine Saints are
losing their personal freedom through poor money
management due to
• Poor spending habits
• Excessive debt
• Lack of saving for missions and retirement
• Lack on knowledge by Church leaders on what
to teach members
• We have the same problem
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Personal Goals for Tonight
• 1. Share a few thoughts on personal finance
that will make a difference in your lives
• 2. Have you take just one thought and
implement it into your life
• 3. Point you in the direction of good resources
that may be helpful in your quest for greater
learning in financial self-reliance
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Abstract
• Leaders and parents should be learning,
living and teaching the doctrines (“why’s”),
principles (“what’s”), and applications
(“how’s”) of personal finance. This way
they can help themselves, their families,
their ward members and others become
more free and to be better followers of our
Savior Jesus.
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Education Week 2013
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Education Week 2013
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Objectives
A.
B.
C.
D.
E.
F.
Our perspective
The “why’s” (doctrines)
The “what’s” (principles)
The “how’s” (application)
Ideas to learn it and live it
Blessings for those who live it
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A. Our Perspective
• What is perspective?
• Wikipedia.org defines perspective as “one’s point
of view, the choice of a context for opinions,
beliefs, and experiences” (“perspective,” May 1,
2007).
• While points of view can be different, the historian
Will Durant shared the need for a “correct”
perspective. He wrote of the human need “to seize
the value and perspective of passing things. . . . we
want to see things now as they will seem forever—
‘in the light of eternity’” (The Story of Philosophy,
New York: Simon and Schuster, 1927, p. 1).
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Perspective (continued)
• Our perspective is that “personal finance” is
simply part of the gospel of Jesus Christ
• It is putting Christ first in our hearts and lives
• It is knowing the true value of things, not what the
world is trying to sell you
• It is using our resources carefully and wisely
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B. The “Why’s” (Doctrines)
• Why does God want us to learn personal
finance?
• The “why” questions are the really important
questions in life--the hard questions of the heart
• It is important that we view different
perspectives as we seek to answer this question.
Possible perspectives include:
• Spiritual
• Temporal
• Family
• Individual
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Why’s (continued)
• 1. Spiritual: To bring us to Christ
• Elder C. Max Caldwell said:
• Whatever the problem may be in a person’s
life—failure to pay tithing, breaking the Word
of Wisdom, casual church attendance, [or I add poor financial habits, the]—real issue is faith in
Jesus Christ. If we can help people obtain the
gift of faith in Christ, good works will follow.
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 (“What Think Ye of Christ?,” Ensign, Feb.
15
1984).
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Why’s
(continued)
• 2. Temporal: to help us become wiser stewards
over our resources and blessings
• Elder Joe J. Christensen said:
• Our resources are a stewardship, not our
possessions. I am confident that 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 (“Greed,
Selfishness, and Overindulgence,” Ensign, May
1999).
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Why’s
(continued)
• 3. Family: To help us return with our families
back to Heavenly Father’s presence
• President David O. McKay stated:
• “No other success can compensate for failure in
the home” (quoted from J. E. McCulloch,
Home: The Savior of Civilization (1924), 42; in
Conference Report, Apr. 1935, 116).
• President Harold B. Lee said:
• “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).
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Why’s
(continued)
• 4. Individual: To help us learn and accomplish
our divine missions for which were sent here to
earth
• Elder Gene R. Cook said:
• 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. May the Lord
bless you in your decisions at this important
time in your lives (“Trust in the Lord”, Ensign,
Mar. 1986).
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C. The “What’s” (Principles)
• Elder Richard G. Scott commented:
• Joseph Smith’s inspired statement, “I teach them
correct principles, and they govern themselves,”
still applies. The Lord uses that pattern with us.
You will find correct principles in the teachings of
the Savior, His prophets, and the scriptures—
especially the Book of Mormon. . . Your consistent
adherence to principle overcomes the alluring yet
false life-styles that surround you. Your faithful
compliance to correct principles will generate
criticism and ridicule from others, yet the results are
so eternally worthwhile that they warrant your
every sacrifice (Richard G. Scott, “The Power of 19
Correct Principles,” Ensign, May 1993, 32).
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What’s
(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).
• The Lord is the creator of the earth (1 Nephi 17:36),
the creator of worlds, men, and all things (D&C
93:10), the preserver of our life and then supplier of
our breath (Mosiah 2:21), the giver of our
knowledge (Moses 7:32) the grantor of our life
(Mosiah 2:26), and the giver of all we have and are
(Mosiah 2:21).
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What’s
(continued)
2. Stewardship: We are stewards over all that
the Lord has, is, or will share with us
• The Lord through the Prophet Joseph Smith
stated:
• 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)
• 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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What’s
(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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What’s
(continued)
4. Accountability: We are accountable for every
choice we make
• The Lord stated:
• Verily I say, men should be anxiously engaged in
a good cause, and do many things of their own
free will, and bring to pass much righteousness.
For the power is in them, wherein they are agents
unto themselves. (D&C 58: 27-28)
• 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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What’s
(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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D. The “How’s” (Application)
• The final step is the “how’s” of personal
finance. hat are the things we have been
counseled to do
• Let me just share a few of them from scriptures and
Church leaders
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How’s
(continued)
• 1. Communicate
• Communication on financial matters is critical
• Key areas of communication are:
• 1. Personal and family goals
• What do you want to accomplish and
what are you working toward?
• 2. Key financial milestones:
• Emergency fund: 3-6 months income
• Budgets: Weekly, monthly and annual
• Short-term savings: vacations, autos, etc.
• Long-term savings: retirement, missions,26
and education
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How’s
(continued)
• Family finances are a shared responsibility
• Management of family finances should be full and
equal, and mutual between a husband and a wife.
Control of the money by one spouse as a source of
power and authority causes inequality in a marriage
and is inappropriate. Conversely, if a marriage
partner voluntarily removes himself or herself from
family financial management, that is an abdication
of necessary responsibility (Elder Marvin J.
Ashton, One for the Money, Intellectual Reserve,
2006, p. 3).
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How’s
(continued)
• 2. Pay the Lord First
• When we pay tithes and offerings we are only
giving Him what is rightfully His (remember we get
to keep 90%)
• Tithing is the law upon which all our blessings
are predicated. Pay a full tithing and be generous
with offerings, and the windows of heaven will
be opened.
• “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
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receive it (Mal. 3:10).
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How’s
(continued)
• The Lord requires the heart
• He requires the first 10%, not the last
• Paying tithes and offerings first shows we put God
first in our lives
• “And when we obtain any blessing from God, it
is by obedience to that law upon which it is
predicated” (D&C 130:21).
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How’s
(continued)
• 3. Manage Your Money and Use a Budget
• A budget is the single most important tool in helping
families achieve their financial goals
• It is giving, as Dave Ramsey says, “every dollar a
name”
• It is planning where your money goes, instead of
wondering where your money goals
• It is the “spiritual creation” before the “physical
creation”, planning before spending, and it
teaches learning, choices, prioritization, and
accountability
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How’s
(continued)
President Spencer W. Kimball counseled:
• “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).
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How’s
(continued)
• 4. Pay Off and Get Out of Consumer and
(eventually) Mortgage Debt
• We have been commanded to stay out of debt for
only the past 6,000 years (ever since 2 Kings 4:7).
• Can the truth of God go forth “boldly, nobly and
independent” by people who are in debt to
others and can’t control their spending?
• When we go into debt, we give others power over
us
• “The borrower is servant to the lender (Prov.
22:7).
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How’s
(continued)
• President Ezra Taft Benson shared:
• “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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How’s
(continued)
• 5. Prepare for Emergencies and Build a
Reserve
• The principle is to “be prepared,” and covers both
financial and temporal preparedness
• “If ye are prepared ye shall not fear” (D&C
38:30)
• Financial preparedness should start with a cushion
for rough times of roughly 3 to 6 months’ worth of
living expenses be set aside in a liquid account
• Emergency funds are for very specific
purposes—lost job, hospital or medical bills,
major home or car repairs, or other unexpected 34
events (which always happen)
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How’s
(continued)
• Temporal preparedness would include many
different areas including:
• Appropriate food storage
• Other emergency essentials in case of need
• Continuing job training to keep job skills current
to stay ahead of job needs
• Increased learning in other skills to reduce cash
expenses around the home
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How’s
(continued)
• 6. Save for Long-term Goals
• Begin saving now for long-term goals
• Home and education
• It is appropriate to borrow as necessary for
education and home, but limit debt for both.
A mortgage is the likely largest financial
obligation you will take on, and it will be a
burden on your shoulders until the day it is
paid.
• Follow President Hinckley’s advice to “get a
modest home and pay off the mortgage”
(Ensign, May 1998).
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How’s
(continued)
• Other goals may include:
• Retirement
• Understand your options and use them wisely
• Save for retirement—get the company match
• Let time be your ally by starting early
• Children’s education and missions
• If you choose, begin saving for your children’s
missions and education
• Save for other long-term goals
• Starting early beats starting late every time
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How’s
(continued)
• 7. Protect Yourself and Family Through
Adequate Insurance
• Elder Marvin J. Ashton counseled:
• “Appropriately involve yourself in an insurance
program. It is most important to have sufficient
medical, automobile, and homeowner’s
insurance and an adequate life insurance
program. Costs associated with illness, accident,
and death may be so large that uninsured
families can be financially burdened for many
years” (Marvin J. Ashton, “Guide to Family
Finance,” Liahona, Apr. 2000, 42).
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How’s
(continued)
• Key insurance types:
• Auto and homeowners insurance
• Both required by law
• Make sure liability limits are sufficient
• Life insurance
• Have sufficient to take care of your family
• You do not need the most expensive insurance
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How’s
(continued)
• 8. Teach your children and family these
principles
• Teach family members why we want to be
financially responsible
• Honest and integrity are part of the gospel plan
• Teach the principles of personal finance early
• Emphasize hard work, frugality, and saving
• Involve them in creating personal budgets and in
contributing to the family budget as well
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How’s
(continued)
• Stress the importance of education
• Education is the key that unlocks the door to
opportunity
• Stress the importance of obtaining as much
education as possible
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E. Ideas to Learn It and Live It
• Ideas to learn it, to be wise financially?
• There are many sources of good information
• It just takes time to sort them out
• Let me add two other 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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Ideas to Live It
• Following are ideas to help live the gospel
• 1. Understand doctrines
• Elder Packer said:
• True doctrine, understood, changes attitudes
and behavior. The study of the doctrines of
the gospel will improve behavior quicker
than a study of behavior will improve
behavior (Boyd K. Packer, “Little Children,”
Ensign, Nov. 1986, 16).
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Live It (continued)
• Living wisely is simply part of the gospel of
Jesus Christ
• These are not just nice things to do, but are
commandments of God
• It changes the perspective
• Obeying is no longer a question of money,
but a question of faith and duty
• These are not temporal commandments (D&C
29:35)
• There is no separation between the temporal
and spiritual
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Live it (continued)
• 2. Catch the vision:
• A. The vision of who you are
• You are a child of God with unlimited potential
to do good (Gal. 3:26).
• “No doctrine is more basic, no doctrine
embraces a greater incentive to personal
righteousness . . . as does the wondrous
concept that man can be as his Maker”
(Bruce R. McConkie, The Promised
Messiah: The First Coming of Christ (Salt
Lake City: Deseret Book, 1978), 133).
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Live it (continued)
• B. The vision of what you want
• Do you know what you want?
• President Ezra Taft Benson wrote:
Every accountable child of God needs to set
goals, short- and long-range goals. (Ezra Taft
Benson, “Do Not Despair,” Ensign, Nov.
1974, 65).
• Elder M. Russell Ballard said:
• When one learns to master the principles of
setting a goal, he will then be able to make a
great difference in the results he attains in
this life (italics added, Preach my Gospel,
Intellectual Reserve, Inc., 2004, p. 146). 51
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Live it (continued)
• C. The vision of what you can become and do
• Elder Ted R. Callister said:
• “With increased vision comes increased
motivation” (“The Power in the Priesthood in
the Boy,” Ensign, May 2013).
• Nelson Mandela said:
• “Once a person is determined to help
themselves, there is nothing that can stop them“
(Nelson Mandela).
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Live it (continued)
• 3. Decide to decide today
• Make the decisions now and commit to them now!
• Decide now what you will and will not do, and
be done with those decisions once and for all
• Follow a prophet who said to “decide to
decide” (Spencer W. Kimball, “Boys Need
Heroes Close By,” Ensign, May 1976, 45).
• Seek the Lord’s help in making these decisions
• There is no one who loves you more
• Commit to the Lord and follow through
• “Commit thy way unto the Lord; trust also in
Him; and He shall bring it to pass” (Psalms 53
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Live it (continued)
• President Spencer W. Kimball said:
• We hope we can help our young men and young
women to realize, even sooner than they do now,
that they need to make certain decisions only once.
. . . We can push some things away from us once
and have done with them! We can make a single
decision about certain things that we will
incorporate in our lives and then make them ours—
without having to brood and re-decide a hundred
times what it is we will do and what we will not do.
. . . My young brothers [and sisters], if you have not
done so yet, decide to decide! (Spencer W.
Kimball, “Boys Need Heroes Close By,” Ensign, 54
May 1976, 45).
Live it (continued)
• 4. Do it willingly (because we have to)
• The prophet Joseph Smith, on his way to Carthage,
knew that he would not return. ”I am going like a
lamb to the slaughter, but I am calm as a summer’s
morning; I have a conscience void of offense
towards God, and towards all men. . . . And it shall
yet be said of me—he was murdered in cold blood
(D&C 135:4).
• He brought his will in subjection to the will of
Heavenly Father
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Live It (continued)
• Isn’t that a purpose of life, to bring our wills in
line with the will of the Father?
• We know we will either “bend the knee” willingly
of our own free will and choice, or we will be
compelled to do it when He comes again (Mosiah
27:31)
• Either way, we will come to recognize Christ
• How much better it is to do these things
willingly because we have faith in Christ and are
seeking to obey His commandments
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Live it (continued)
• 5. Share your goals with others
• Let others know what you are doing
• Embarrassment sometimes is more powerful
than guilt in motivating us to accomplish more
• Share your goals with family and friends
• Let them know of your successes and
failures
• As we let others know what we desire to
accomplish, they can help us and give us
motivation to accomplish our goals
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F. Blessings of Living the Gospel
• As we do the things we have been commanded,
the Lord has given wonderful promises:
• The Lord will stand by you (D&C 68:6)
• None shall stay you (D&C 1:5)
• The Savior will go with you and be in your midst
(D&C 49:27)
• Nothing shall prevail against you (D&C 32:3)
• Power shall rest upon you (D&C 39:21)
• He will uphold you (D&C 93:51)
• 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)
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Blessings (continued)
• Other blessings:
• He will send you the Comforter (D&C 79:2)
• 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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Blessings (continued)
• The challenge:
• We must be willing to give up what we want now
(which is spending) for the bigger goal that we
want in the future (which is life eternal)
• We must not let what the world says is important
(money and power) overpower what we really
know is important (charity and the gospel of Christ)
• We must not sell our birthrights (our long-term
goals) for a mess of pottage (our short-term wants)
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Education Week 2013
Conclusions
• Personal Finance is simply living the gospel
of Jesus Christ
• It is like learning charity, attending church,
serving others, or doing missionary work.
• Leaders and parents should be learning, doing,
and teaching the “why’s”, “what’s”, and “how’s”
of personal finance to their ward members and
families, which are the doctrines, principles and
application of personal finance
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Conclusions (continued)
• Why does God want us to learn personal
finance? It is important that we understand the
why’s, or the doctrines
• The key is to take different perspectives to answer
this critical “why” question
1. Spiritual: To bring us to Christ
2. Temporal: To help us become wiser stewards
3. Family: To help us return with our families
back to Heavenly Father’s presence
4. Individual: To 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:
• 1. Ownership: Everything 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 and should choose wisely
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Conclusions (continued)
• There are 8 different “how’s” that we should
emphasize, the application. They are:
•
•
•
•
•
•
•
•
1. Communicate
2. Pay the Lord first
3. Manage your money and use a budget
4. Pay off and get out of consumer and mortgage
debt
5. Prepare for emergencies and build a reserve
6. Save for long-term goals
7. Protect yourself and your family through
adequate insurance
8. Teach your children and family
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Conclusions (continued)
• Our responsibility first is to learn about
personal finance
• There are a number of very good resources to help
bishops, individuals and families
• The LDS Provident Living website
• The Marriott School Personal Finance website
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Conclusions (continued)
• Our responsibility then is to live it
• We shared some ideas to help you get motivated to
follow the doctrines, principles, and applications of
personal finance
• 1. Understand doctrine
• 2. Increase your vision
• 3. Decide to decide
• 4. Do it willingly
• 5. Share your goals with others
• Finally, we shared the promised blessings. They
are numerous and are only accessed through
obedience to the commandments of the Jesus Christ66
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Set Some Goals
• Lets take a few minutes to think about the
items discussed
• What one thing can you do to become more
financially self-reliant tonight?
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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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