Financial preparedness—Introduction

1. Financial preparedness—Introduction • Greg Easton, Nampa 8th Ward, a CFO and MBA • What I’m not—a financial planner, investment advisor • Why are you here tonight? • What do you hope to learn? • Not likely to learn anything new, the trick is to change your behavior • Elder Bednar quote, “But what we know is not always reflected in what we do.” --More Diligent and Concerned at Home, October 2009

2. Temporal and spiritual • President Mckay story from his mission…”Will this buy me any bread?” • All things are spiritual… • D&C 29:34 Wherefore, verily I say unto you that all things unto me are spiritual, and not at any time have I given unto you a alaw which was btemporal… •  35 Behold, I gave unto him that he should be an aagent unto himself; and I gave unto him commandment, but no temporal commandment gave I unto him, for my bcommandmentsarecspiritual; they are not natural nor temporal, neither carnal nor sensual. September 1830 • Financial doctrine and principles • The law of the harvest • 1 Timothy 5:8 “If any provide not for his own, and specially for those of his own house, he hath denied the faith…”

3. What is financial preparedness? • Preparedness means: the state of being ready • Ready for what? The unexpected: unemployment, sickness, medical emergencies, disability, death • I can sleep when the wind blows… • This is about taking personal responsibility

4. Achieving financial preparedness • Understand the current state • Set goals • Develop plans to reach goals • Hold each other accountable (if not your spouse, who?)

5. Understand the current state • The math is easy… • Personal financial statements • Balance sheet • Assets = Liabilities + Equity • Value of belongings = debt + net worth • Income statement • Income – Expenses = Surplus or Deficit • Are you living paycheck to paycheck? • Are you falling further behind? • The sum of surplus or deficit over time determines savings and debt • Wealth versus Income • You can earn a lot of money and not be financially prepared

6. Understand the current state • You must start by measuring where you are today!!! • Find a template on line…providentliving.org, use a spreadsheet, bank statement, credit card statement • Get the facts and organize them • Ask a friend or professional for help • Boat analogy • Are you riding high in the water? Have you sprung a small leak? Are you about to capsize? • If you don’t have income, you don’t have a boat

7. Set goals • “Where there is no vision, the people perish (starve, go bankrupt).” Proverbs 29:17 • What is important to your family? • The purpose of the firm or business is to maximize shareholder value or profits

8. Eternal finance 101 • Fortunately this doesn’t matter much in eternity, • Luke 18:25 “For it is easier for a camel to go through a needle’s eye, than for a rich man to enter into the kingdom of God.” • But what is our purpose? • To become like our Father in Heaven • Take an eternal perspective • D&C 6:7 “He that hath eternal life is rich.”

9. The prophet Jacob on riches • Jacob 2:17 Think of your abrethren like unto yourselves, and be familiar with all and free with your bsubstance, that cthey may be rich like unto you. •  18 But abefore ye seek for briches, seek ye for the ckingdom of God. •  19 And after ye have obtained a hope in Christ ye shall obtain riches, if ye seek them; and ye will seek them for the intent to ado good—to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted.

10. Set short and long term goals • First plug the hole—must live within our means • Emergency savings—the storm will come • Short term savings—start small • Cash Savings of 1 week’s expenditures, 1 month’s, 3 month’s… • Food storage of 1 week’s necessities, 1 month’s, 3 month’s… • Long term savings • Education—an investment in you and your children • Insurance—health, auto, home, life • Retirement • Ignoring the future won’t make it go away, hope is not a strategy

11. Debt reduction and elimination • Get out of debt • Start with the consumer debt—credit cards (typically higher interest) • Man in our stake who lost his job in his 50’s after 20 years

12. Who would voluntarily give up their agency? • As a parent I often think my kids have too much agency, I want to restrict theirs, but not mine! • Debt is a relinquishment of our agency • When is it justified… • A modest home, education, basic transportation • Be realistic and honest • Just because you can afford the house doesn’t mean you should buy it • Just because someone will lend you the money doesn’t mean you need to spend it, even if it is for one of those three things • Just because you can go to school doesn’t mean it makes dollars and cents/sense • Student loans can be an anchor as easily as an enabler • (story of couple who can’t go on a mission because of loans)

13. The danger of debt • “Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys no food; it wears no clothes; it is unhoused and without home…it has neither wife, children, father, mother, nor kinfolk to watch over and care for; it has no expense of living; it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” –President J. Reuben Clark

14. Develop plans to reach goals • Without a plan or process you won’t succeed • A family effort—joint ownership of the plan • Who, What, When, Where, Why… • BUDGET

15. Plans to increase income • How to increase income? • Work—there is no adequate substitute • Education and training • Willingness to take responsibility • LDS Jobs and employment office • Save and invest

16. Plans to reduce expenditures • Though not as exciting, learning to manage expenditures is more important than managing income • Packing lunches • Buying bulk • Clipping coupons • Reducing contracts • 14 day meals plans • Reduce services…etc, etc, etc… • Needs versus wants • “We can’t afford it, even though we want it!” or “We can afford it, but we don’t need it—and we really don’t even want it!” Elder Robert D. Hales

17. Don’t let pride get in the way • Ignore the Joneses…”Thou shalt not covet” Exodus 20:17 • Don’t worry about what others may think of you • In the long run…the chicken comes home to roost, you can’t spend more than you have indefinitely • "There is no dignity quite so impressive, and no independence quite so important, as living within your means." — Calvin Coolidge • Delayed gratification • It will taste better and be more enjoyable if you didn’t borrow to get/do it

18. Plan to give back/share • Tithes and offerings, it all comes from God… • Charity is an essential part • ”I am afraid the only safe rule is to give more than we can spare…If our charities do not at all pinch or hamper us,… they are too small.  There ought to be things we should like to do and cannot do because our charitable expenditures excludes them.” CS Lewis from Mere Christianity • If you wait until you have enough, you’ll never pay tithing or give generously

19. Hold each other accountable • We take the sacrament every week, not just annually • A time to reflect, review, commit to change • PDCA, Target Actual Please Explain, Return & Report • Must keep a record on paper or digital • Get the facts and organize them • What holds us back? • Make this a family matter of prayer

20. Teach your children • Break the cycle • Set them up for success

21. Why is it so hard? • It requires… Communication & coordination Compromise - working it out Foresight and planning Sacrifice Kindness, patience Forgiveness Discipline Practice

22. Additional resources • http://www.lds.org/topics/welfare/leader-resources/topics?lang=eng#7 • All is Safely Gathered In: Family Finances • One for the Money: Guide to Family Finance • www://providentliving.org • “Becoming Provident Providers Temporally and Spirtually” –Elder Robert D. Hales April 2009

23. Questions and answers (maybe!)