Personal Financial Stability
This is the fourth article in a series of five on Christian marriage. This series contains material used in marriage counselling classes at Toronto, Canada.
The brethren engaged in this work are: Laurence Elder M.D. of Greenwood assembly, active in a varied work among assemblies. H. E. Kay M.D., Eglinton assembly, prime mover in Bethany Lodge. Fraser MacKenzie, Leaside assembly, Director of Boys’ Camp at Mini-Yo-We. Derek Park, Greenwood assembly, Manager of Mutual Funds, Company, Financial Counsellor. Angus Henderson, Elder in Bendale assembly, Christian business man.
One of the problems facing many of us today is the successful planning and allocation of our personal incomes. As part of our Christian testimony it is important that we be successful and careful with the income that the Lord puts into our hands. However, my experience has been that many of us do not look upon successful money management as an important facet of our lives and testimony. Certainly we are looking forward to Christ’s imminent return and therefore we might never need those cash reserves which we will discuss. However, not knowing the time of His return and being aware of our individual financial obligations, I feel that it makes good sense to plan in a realistic manner.
The purpose of this article is to put into your hands a simple but workable solution, but, firstly you must agree on three basic foundational facts concerning money.
(A.) Money Is Important
Money is important because one cannot exist without it. When we are born, money is needed to pay for hospital, doctor and nursing expenses. It is necessary to clothe, shelter and educate us during our early years. Then it is needed throughout our adult years until our death — when again it is needed to pay funeral expenses: provide for our loved ones and in some cases to pay for succession duties. Money is like an automobile which was designed for transportation and pleasure, but because many have not learned to control the power of their automobile it has brought death, injury and despair into their lives. So it is with money which was designed to provide the necessities and pleasures of a healthy, full life. But people have ignored the immense power of money and as a result it too has brought death by suicide: physical and mental injury through alcoholism: drug addiction: despair by broken marriages, all these and many more brought about by the incorrect application of their personal incomes. Uncontrolled debt is a cancer of modern society that can bring nothing but unhappiness. Financial solvency guarantees peace of mind and a state of wellbeing.
(B.) A Plan For Your Money Is Equally Important
The following quotation is from the Royal Bank of Canada News Letter, December, 1953: “Having a plan on paper is the only way we know of to tackle the problems of getting out of debt, making ends meet, acquiring the things you want, achieving security and saving money.” The plan you wish for is one that will help you decide where you want your money to go, send it there, and show you the score. The important thing is for everyone to decide what is worth most to him, and then lay plans to get it. A moderate income wisely used, will enable a man to live reasonably well, to build adequate financial protection for his family, and to provide for his own old age a time relatively free from financial worries, but such a happy state of affairs does not come about by chance: it must be planned.
(C) A Plan For Your Money That Works Is Most Important
1. SAFETY (Your hard saved cash cannot be lost through a recession or depression of an economy, for example, a bond or bank account).
2. EASE (Can be saved in small amounts on a regular systematic basis).
3. FLEXIBILITY FOR CHANGING CIRCUMSTANCES (Death, disability, increase or decrease of income).
4. PROFIT (Good return: consistent with absolute safety, minimum taxes on profit).
DO YOU AGREE?
Now We Recommend That A Well Balanced Financial Program Should Consist Of The Following:
1. A BANK ACCOUNT: For everyday expenses and a reserve for minor emergencies.
2. PROTECTION DOLLARS: Adequate life insurance to replace an income lost on the death of the breadwinner. Term Insurance is an ideal vehicle for many families.
3. A GUARANTEED INVESTMENT SAVINGS PLAN: A long term systematic savings plan which guarantees a specific amount of cash at a definite time in life. For example, to purchase a business or a new home. Sufficient money for education and eventual retirement. A nice liquid cash reserve. This can be achieved through bonds, trust company certificates or investment corporations which offer guaranteed savings plans.
4. GROWTH DOLLARS: An investment of large sums of cash in equities designed to keep pace with economic changes and to share in the nation’s long term growth. For example, stocks; mutual funds; mortgages; real estate and any other good speculative investments.
Of all the reasons for saving money — the most important is to accumulate working capital. You do not become financially secure on the money you work for; it is the money that works for you that makes the difference.
90% of those with incomes fail with their money. They do not fail at spending money. Some do not fail at saving a little money for a little while — then spending it, but they do fail at having money out to work for them.
No one really plans to fail, it just happens — and here is how it happens. The financial failure pays all his bills and living costs first — then tries to save out of what is left over, and usually, there is nothing left over. DO YOU AGREE? The financially successful says, “A part of all I earn is mine to keep.” He puts himself at the head of the line and pays himself first every pay day. Then he arranges a plan to pay the landlord, grocer, milkman, doctor, dentist, creditors, etc. on time. When you pay yourself first, your plan becomes your passport to financial security. DO YOU AGREE?
Now we can apply our master plan 10%; 70%; 20%. This formula will work whether your income rises or decreases and here is how it works. After paying our Federal Taxes; Provincial Taxes and our Tithes, we should save a total of 10% of our Net Income. This total should be the sum of our Company Pension Plan contributions; credit union savings, purchase of bonds from salary deductions, savings portion of Life Insurance Premiums. Our living costs of 70% should be the sum total of every expense excepting payments on bank loans, to finance companies, personal loans from individuals and second mortgages. These exceptions fit into our 20% debt liquidation. If we have no debts, this 20% should be saved in a saving’s account at the bank to be used on future purchases with cold cash.
The Four Essential Laws For Building Financial Security Are:
1. KEEP A part of each dollar your earn, keep it to work for you.
2. COUNSEL With honest men who successfully handle money.
3. CONTROL Spending — separate desires from necessities.
4. CONTINUE Remind yourself each day to stick to your plan, to become financially stable.
The writer trusts that these simple ideas have proven helpful. Oh! one more ingredient is very necessary — your desire to be successful with your money.