LDS Widows and Widowers Conference Making the Most of the Widows Mite: Financial Advice to my Widower Father and to my Widow Step-mom March 15, 2014 Bryan Sudweeks, Ph.D., CFA From the BYU Marriott School of Management website on Personal Finance at http://personalfinance.byu.net
Abstract • The deaths of my mother (at age 53) and my remarried father (who died at age 87) were traumatic experiences for all involved, including my siblings. My family and I were very vulnerable during that time. When tragedy happens, we often become so discouraged by what we have lost that we fail to remember the things we still have. The gospel is a gospel of joy, and as we remember our covenants, we will see that “weeping may endure for a night, but joy cometh in the morning” (Psalm 30:15). This presentation will help remind us of our covenants and the things that we must do to hold fast to those covenants to obtain eternal life.
To Make the Most of the Widow’s Mite: • 1. Remember the plan • 2. Hold fast to your covenants • 3. Understand where you are • 4. Give every dollar a name • 5. Watch out for “well-meaning” advice • 6. Stand in holy places • 7. Leave your adult children alone financially • 8. Start saving now • 9. Take responsibility for your learning • 10. Remember the ifs
1. Remember the Plan • We all know the promises of adversity • The Lord told the prophet Joseph Smith: • Know thou, my son, that all these things shall give thee experience, and shall be for thy good (D&C 122:7). • Nephi told his son Jacob: • Nevertheless, Jacob, my firstborn in the wilderness, thou knowest the greatness of God; and he shall consecrate thine affliction for thy gain (2 Nephi 2:2).
Remember the Plan (continued) Orson F. Whitney said: • No pain that we suffer, no trial that we experience is wasted. It ministers to our education, to the development of such qualities as patience, faith, fortitude and humility. All that we suffer and all that we endure, especially when we endure it patiently, builds up our characters, purifies our hearts, expands our souls, and makes us more tender and charitable, more worthy to be called the children of God … and it is through sorrow and suffering, toil and tribulation, that we gain the education that we come here to acquire and which will make us more like our Father and Mother in heaven (as quoted in “Tragedy or Destiny,” p. 6).
Remember the Plan (continued) • Our perspective is that adversity is part of the gospel of Jesus Christ • While this is all good, it doesn’t make the experience any easier • However, it wasn’t planned to be easy--it was planned as a learning experience • “And we know that all things work together for good to them that love God” (Romans 8:28)
Remember the Plan (continued) • What is the “why” of adversity? • While understanding the “what” and the “how” of the gospel is necessary, the eternal fire and majesty of the gospel springs from the “why.” When we understand why our Heavenly Father has given us this pattern for living, when we remember why we committed to making it a foundational part of our lives, the gospel ceases to become a burden and, instead, becomes a joy and a delight. It becomes precious and sweet. (Dieter Uchtdorf, “Forget Me Not”, Ensign, Nov. 2011).
Remember the Plan (continued) • A. Adversity can bring us to Christ • 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 - adversity, 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 (C. Max Caldwell, “What Think Ye of Christ?,” Ensign, Feb 1984).
Remember the Plan (continued) • B. Adversity can help us accomplish our divine missions for which were sent here on earth • 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. (Gene R. Cook, “Trust in the Lord”, Ensign, Mar. 1986).
Remember the Plan (continued) • C. Adversity can help us return with our families back to Heavenly Father’s presence • It helps us keep our priorities in order • 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 , 134).
Remember the Plan (continued) • D. Adversity can help us become wiser stewards • 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 (Joe J. Christensen, “Greed, Selfishness, and Overindulgence,” Ensign, May 1999).
Remember the Plan (continued) • What are the principles on which this perspective is based? a. 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 (Mosiah 2:21), the creator of men and all things (D&C 93:10), the supplier of our breath (2 Nephi 9:26), the giver of our knowledge (Moses 7:32), the provider of our life (Mosiah 2:22), and the giver all we have and are (Mosiah 2:21). 12
Remember the Plan (continued) b. Stewardship: We are stewards over all that the Lord has, is, or will share with us • The Lord said: • 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). 13
Remember the Plan (continued) c. 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). 14
Remember the Plan (continued) d. Accountability: We are accountable for every choice we make • The Lord stated: • 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). 15
2. Hold Fast to your Covenants We have made many covenants with God A covenant is an agreement between God and man whose terms are set by God God has promised that if we keep our part of the covenants, we can know He will keep His part We must hold fast to God’s promises by keeping our covenants 16
Hold Fast to your Covenants (continued) • What covenants have we made? • At baptism we covenanted to always remember Him • He has promised us that if we do we will have His spirit to be with us • In temple ordinances we covenanted to obey his laws and keep his commandments in • If we remain faithful, we become inheritors not only of the celestial kingdom but of exaltation, the highest glory within the heavenly kingdom, and we obtain all the divine possibilities God can give (D&C 132:20).
Hold Fast to your Covenants (continued) • We need strong Christians who can persevere against hardship, who can sustain hope through tragedy, who can lift others by their example and their compassion, and who can consistently overcome temptations. We need strong Christians who can make important things happen by their faith and who can defend the truth of Jesus Christ against moral relativism and militant atheism. What is the source of such moral and spiritual power, and how do we obtain it? The source is God. Our access to that power is through our covenants with Him (Elder Todd Christofferson, “The Power of Covenants, Ensign, April 2009).
Hold Fast to your Covenants (continued) • I testify that in The Church of Jesus Christ of Latter-day Saints is found the priesthood authority to administer the ordinances by which we can enter into binding covenants. . . .God will keep His promises with you as you honor your covenants with Him(Elder Todd Christofferson, “The Power of Covenants, Ensign, April 2009).
3. Understand Where You Are • We must understand where we are financially • The Lord said to the prophet Joseph Smith: • Organize yourselves; prepare every needful thing; and establish a house, even a house of prayer, a house of fasting, a house of faith, a house of learning, a house of glory, a house of order, a house of God (D&C 88:119). • Organization is even more critical now • Understand all your financial assets, retirement assets, and liabilities • Understand your current and potential sources of income
Understand Where You Are (continued) • Financial Assets • Find out all common financial assets including: • Joint bank and savings accounts • Joint brokerage and other accounts • Insurance papers and accounts • Real estate documents • Other pay on death (POD) accounts • Money lent to friends and family
Understand Where You Are (continued) • Retirement assets • Determine retirement amounts • Determine amounts in qualified retirement accounts, such as 401k and 403b accounts • Determine amounts in Individual Retirement Accounts (IRAs), such as IRAs and Roth IRAs • You don’t have to make any decisions now, but find out where those assets are and the amounts in those accounts
Understand Where You Are (continued) • Liabilities • Find out all liabilities which are legally yours • Find out all joint liabilities which you are responsible for • Determine amounts remaining on your home mortgage and other properties • Keep copies of all documents and debts • Remember that unless your name is on the account, your are not responsible for a deceased spouses debts
Understand Where You Are (continued) • Current income • Determine what you earn each month if you are working • How much goes to taxes, and how much do you bring home each month • If you will need to begin working • How many hours could you work each week • How much potentially could you bring home each week after taxes and insurance
Understand Where You Are (continued) • Social Security • Determine benefits available to you through government plans, such as Social Security (SS) depending on your age • Understand the Social Security system and the benefits you might receive through: • Retirement • Disability • Survivors • Medicare • You can find our your benefits at www.ssa.gov
Understand Where You Are (continued) • The key is to understand all your assets and liabilities and your current and potential sources of income • Understand your assets, which may be necessary to help you to live on • Understand your liabilities, which are debts you need to discharge • Understand all sources of income, including work, Social Security and other government programs • All of these are critical pieces in the need to “organize yourselves: prepare every needful thing” (D&C 88:119)
Understand Where You Are (continued) • Create a “love note” for your children • Powers of attorney (for husband and wife) • Conventional, Durable, Living Will, and Advanced Medical Directives • Documents for your Safe Deposit Box • Wills and trusts Organ donor info. • Birth/death certificates Probate records • Citizenship papers/passports Real Estate deeds • Marriage certificate Durable Powers • Personal loan documents, service/warranties • Obituary and funeral instructions • Investment, insurance, and tax records
4. Give Every Dollar a Name You will need to be even more organized with your finances Critical to this is that you give every dollar a name You must learn to develop and live on a budget if you are not already doing so A budget is critical if you are to live within your income It is also a commandment of God 28
Give Every Dollar a Name (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 (Conference Report, April 1975, pp. 166-167). 29
Give Every Dollar a Name (continued) • What is a Budget? • It is the single most important tool in helping us attain our personal goals. It is a tool—just like a hammer or a nail • It is the process of planning your spending • It’s making sure your resources are used for the things that matter most—your personal goals 30
Budgeting: The Old Way Income Available for Savings Tithing Expenses Personal Goals 31
Budgeting: The Better Way Pay Yourself Income Pay the Lord Expenses Other Savings Personal Goals 32
Give Every Dollar a Name (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). 33
Give Every Dollar a Name (continued) • Elder Marvin J. Ashton stated: • Some claim living within a budget takes the fun out of life and is too restrictive. But those who avoid the inconvenience of a budget must suffer the pains of living outside of it. The Church operates within a budget. Successful business functions within a budget. Families free of crushing debt have a budget. Budget guidelines encourage better performance and management(italics added,Marvin J. Ashton, “It’s No Fun Being Poor,” Ensign, Sept. 1982, 72). 34
5. Watch Out for “Well-meaning” Advice • Be careful with “unsolicited financial advice” • Many, including family, friends, and others you did not know, will come to you selling financial products and advice • They do this, not because they are thoughtful or that these are good deals for you, but because they are good deals for them • Be careful • A bit of personal financial advice • Don’t mix insurance and investments • Insurance is not your best investment and investment is not your best insurance—keep these two separate
Watch Out (continued) • Beware the agency problem • Always ask with any financial product: “How much are you getting paid from this sale, including what the company will pay you?” • With many permanent insurance products, the sales commissions are huge, up to 120% of first year commissions! • With many investment products, there are 6-7% commissions or higher with front-end loads • It is hard to get ahead when you pay 7% of your hard earned money upfront for a sales charge • Remember you are a steward
Watch Out (continued) • If someone tries to sell you financial or insurance products • Tell them: • “Thank you for your concern. Let me study it out and learn more about it. If I have any questions, I will call you. Please do not call me” • Then when you are ready and have learned sufficient to make a good decision, work with a trusted financial advisor that you are comfortable with to accomplish your goals
6. Stand in Holy Places • Stand in holy places • Keep doing the things you should be doing and being in the places you should be in • Spend time in the temple serving others • Spend time doing your family history (and making it as well) • Spend time serving in your ward callings • Spend time doing your home and visiting teaching • Continue being an example of what the gospel does in peoples lives • Help to hasten the work of the Lord
Holy Places (continued) • Only go to places where you can feel the Spirit • If you would not have gone to those places before, don’t go now • Continue being the example to your family and friends of one who listens to and follows the Spirit • Continue making your home a “holy place” • Remember your purpose to help your children and their families return to Heavenly Father’s presence
7. Leave Your Adult Children Alone • I know you love all your children, but leave your adult children alone financially • Many adult children seek financial help for specific needs • They assume that the remaining parent has sufficient funds and they can and will give them without penalty or the need to pay them back • Teach your children to be responsible adults • Leave your children alone! • You likely do not have the resources to help them and meet your needs as well 41
Leave Your Children Alone (continued) • After children become adults, they are responsible for their own financial well-being • You are not responsible for your adult children’s finances—your adult children are, regardless of how they were raised • Likewise your children are not responsible for your finances—you are • Parents who continually support their children financially, will find their children will always need support 42
Leave Your Children Alone (continued) • When children (and others) come seeking money, offer encouragement and counsel: • “I feel really sad that you are in this predicament. However, I am confident that as you pray and seek guidance from the Lord that you will be inspired to know what to do to solve this problem.” • Put the responsibility where it belongs—on them • Express confidence in their ability to solve their problems by themselves • Encourage them to solve their problems with the help of the Lord • You do not have the resources to solve every one of your adult children’s problems
8. Start Saving Now • Start saving now • The best time to start saving was 20 years ago • The second best time to start saving is today
Start saving now • Think through your goals • If you want to get out of debt, have an adequate retirement, and save for education and missions for yourself and children (or whatever the goal), you must start now! • You must think long-term now • “Let the solemnities of eternity rest on your mind” (D&C 43:34) • You cannot put off saving • Time value of money takes just that--time • The Law of the Harvest is still in effect
9. Take Responsibility for Your Learning • Take responsibility for your learning and your finances • Our goal is to be wise stewards over the things God has blessed us with • The prophet Malachi said: • Bring ye all the tithes into the storehouse, . . . and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven(Malachi 3:10, 3 Nephi 24:10).
Take Responsibility (continued) • The prophet Malachi promised that God will open the windows of heaven • However, there is no promise that the windows of heaven will be financial blessings or that paying tithing will eliminate all our financial problems • We still are stewards over what we have and are, and must learn to live in this increasingly challenging financial world • We have been commanded to “seek learning, even by study and by faith” (D&C 88:118) 47
Take Responsibility (continued) Interesting statistics: • Average per household debt in the U.S. is $14,500 excluding mortgage debt in 2007 • Credit card users pay 12-20% more than cash users • 40% of American families spend more than they earn • The typical family pays $1,200 per year in interest • About 60% of all active credit card accounts are not paid off monthly • Most couples indicate that finances are a major stress on their marriages Source: available upon request 48
Take Responsibility (continued) • How do to you learn 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 49