Key Terms

Financial Stewardship

(The Church of Jesus Christ of Latter-day Saints, 2017a)

In the parable of the talents, Christ teaches us that we must take care of what we have been given. The Lord allows us to be caretakers—or stewards—over His gifts to us. To those who are faithful with His gifts, Christ promises, “Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord” (Matthew 25:21) (New Testament, King James Version, 1611).

As part of our stewardship, we are encouraged to be wise with our finances. President Gordon B. Hinckley taught:

“I urge you … to look at the condition of your finances. I urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.

“This is a part of the temporal gospel in which we believe. May the Lord bless you to set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your [families] and peace in your hearts” (Hinckley, 1998).

As you strive to use your money wisely, your faith in Christ can increase, paving the way for future blessings.

Finances in Relationships

(The Church of Jesus Christ of Latter-day Saints, 2017a)

Whether you are preparing for marriage or are single, divorced, or widowed, wise financial stewardship can help you be ready for future relationships. Many new couples are burdened by debt and poor spending habits brought into the relationship, which can cause a difficult beginning to their marriage. Striving to develop good spending habits, build up savings, and reduce or eliminate debt will invite the Spirit into your relationship and create a bedrock for a successful marriage.

One of Satan’s most prevalent and powerful tools for destroying families is financial carelessness and its accompanying stress. Because families are central to Heavenly Father’s plan (see The Family: A Proclamation to the World), it is important that we avoid blame, distrust, and anger in our homes. Whether you are married or single, wise financial stewardship can bring loved ones closer to each other and to God, and can be a safeguard from evil; a unified approach to financial stewardship can ultimately bring gratitude, harmony, and peace.

Elder Marvin J. Ashton taught, “Management of family finances should be mutual between husband and wife in an attitude of openness and trust. Control of the money by one spouse as a source of power and authority causes inequality in the marriage and is inappropriate. Conversely, if a marriage partner voluntarily removes himself or herself entirely from family financial management, that is an abdication of necessary responsibility” (Ashton, 2006).

Spouses often come from different cultural, economic, and religious backgrounds. They may have different traditions, child-rearing techniques, and spending habits. One spouse may be naturally interested in tracking expenses and following a budget, and the other may find it tedious and burdensome. This may spark disagreements. However, embracing each other’s differences and truly listening with love and humility will foster an environment of unity. If you are single, it is important to be honest with yourself and to involve the Lord in your financial stewardship decisions.

Many couples believe that the solution to their financial problems is increasing their income. However, a divided approach to managing money can be far more damaging to a relationship than low income or lack of financial resources.

Family Councils

(The Church of Jesus Christ of Latter-day Saints, 2017a)

Elder M. Russell Ballard shared the following about family councils: “I believe councils are the most effective way to get real results. Additionally, I know councils are the Lord’s way and that He created all things in the universe through a heavenly council, as mentioned in the holy scripture. “Until now, however, I have never talked in general conference about the most basic and fundamental—and perhaps the most important—of all councils: the family council. “Family councils have always been needed. They are, in fact, eternal. We belonged to a family council in the premortal existence, when we lived with our heavenly parents as their spirit children. 

“A family council, when conducted with love and with Christlike attributes, will counter the impact of modern technology that often distracts us from spending quality time with each other and also tends to bring evil right into our homes. “Please remember that family councils are different from family home evenings held on Mondays. Home evenings focus primarily on gospel instruction and family activities. Family councils, on the other hand, can be held on any day of the week, and they are primarily a meeting at which parents listen—to each other and to their children. “I believe there are at least four types of family councils:

• First, a general family council consisting of the entire family.

• Second, an executive family council consisting of a mother and father.

• Third, a limited family council consisting of parents and one child.

• Fourth, a one-on-one family council consisting of one parent and one child.”

(Ballard, 2016)

A regular executive family council between husband and wife is the perfect setting to discuss financial stewardship. If you are single, choose a parent or other family member, roommate, mentor, or friend and hold a regular and honest council with the person about your finances. If you are married, you will probably need to have important discussions with your spouse throughout this course. After this course, holding regular family councils will help you continue to become more unified and more self-reliant. 

If your family is not used to discussions between parents and children, consider easing into these conversations. It doesn’t have to happen all at once. Try bringing up some deeper conversations when you share a meal or work on a project together. Sometimes there can be fears about losing respect or creating undue conflict, but open communication can help relationships grow closer as family members gain a further understanding of each other's lives. 

Parents sharing their financial constraints can help their kids understand why they live the way they do. Often this eye-opening experience can help children have more appreciation for the sacrifices their parents make so they can enjoy the life they have. Improving communication in this area is a way to build trust and strengthen parent-child relationships. This can also create a sense of accountability or motivation for parents to strive to be good financial stewards.

Being Honest About Money Problems

(ChatGPT, 2024)

Being honest about money problems is crucial for maintaining healthy relationships and financial well-being. Open communication about financial challenges fosters trust and understanding between individuals, whether it's within a family, partnership, or among friends. When people are transparent about their financial situation, it allows for better collaboration in finding solutions and making informed decisions. 

Suppressing or hiding money issues can lead to stress, misunderstandings, and strained relationships. Money management should be a shared responsibility wherever possible. Transparency between husbands and wives in financial matters can feel intimidating but it can illuminate the ways to improve more effectively than having one spouse managing everything individually. 

Honesty about financial struggles also encourages proactive problem-solving, helping individuals seek support, guidance, or professional advice when needed. Acknowledging and addressing money problems honestly is a fundamental step toward building strong, resilient financial foundations and fostering positive connections with others.

Elder Boyd K. Packer once said, “Your wife is your partner in the leadership of the family and should have full knowledge of and full participation in all decisions relating to your home” (in Conference Report, Apr. 1994, 26; or Ensign, May 1994, 21).

Get on the Same Page

(ChatGPT, 2024)

Foster a collaborative approach to financial decision-making. Involve both partners in discussions about major purchases, investments, and budgeting. Recognize and respect each other's financial perspectives and priorities. Aim for compromises that align with both individuals' values and goals. By working together to make financial decisions, couples can avoid conflicts and create a sense of shared responsibility for their financial well-being.

President Spencer W. Kimball stated, “We do not want our LDS women to be silent partners or limited partners in that eternal assignment! Please be a contributing and full partner” (“Privileges and Responsibilities of Sisters,” Ensign, Nov. 1978, 106).

Furthermore, President Howard W. Hunter said, “A man who holds the priesthood accepts his wife as a partner in the leadership of the home and family with full knowledge of and full participation in all decisions relating thereto. … The Lord intended that the wife be a helpmeet for man (meet means equal)—that is, a companion equal and necessary in full partnership” (in Conference Report, Oct. 1994, 68; or Ensign, Nov. 1994, 50–51).

Agree on Spending Limits

(ChatGPT, 2024)

Couples should prioritize establishing spending limits in their budget as it serves as a fundamental foundation for financial harmony and stability in their relationship. Setting clear and agreed-upon spending limits helps promote open communication about financial goals, priorities, and expectations. It fosters a sense of shared responsibility and ensures that both partners are actively involved in making financial decisions. 

There is no right or wrong answer when it comes to spending limits. An honest reflection of your current financial situation is the best place to start. It may be overwhelming for couples to notify each other about every spending decision. By having spending limits, couples can avoid potential conflicts arising from overspending or differing financial habits. This collaborative approach not only strengthens the financial health of the partnership but also builds trust and understanding between individuals. Ultimately, it allows couples to work together towards common financial objectives and navigate their financial journey with transparency and mutual respect.

Continue Your Education

(ChatGPT, 2024)

Education is one of the most powerful tools for developing healthy relationships with money. Invest time in educating ourselves about personal finance and exploring each other's financial values and priorities. Attend financial literacy workshops together, read relevant books, or consult with a financial advisor. Ensure that both partners have a clear understanding of the financial goals they are working towards. Aligning goals helps in creating a unified vision for the future and promotes a sense of purpose in managing finances together. Being wise about seeking proper education from reputable sources is very important. Consult with trusted individuals in your life as you explore the various ways in which you can broaden your education. 

Self Reliance

(The Church of Jesus Christ of Latter-day Saints, 2017a)

President Dieter F. Uchtdorf taught, “The Lord doesn’t expect us to work harder than we are able. He doesn’t (nor should we) compare our efforts to those of others. Our Heavenly Father only asks that we do the best we can. … Work is an antidote for anxiety, an ointment for sorrow, and a doorway to possibility. … When our wagon gets stuck in the mud, God is much more likely to assist the man who gets out to push than the man who merely raises his voice in prayer—no matter how eloquent the oration” (Uchtdorf, 2009).

When we become spiritually self-reliant, it is our duty to help others also become spiritually self-reliant. In the Doctrine and Covenants, we read, “And if any man among you be strong in the Spirit, let him take with him him that is weak, that he may be edified in all meekness, that he may become strong also” (D&C 84:106) (The Church of Jesus Christ of Latter Day Saints, 1835). Similarly, in the New Testament, Peter writes, “As every man hath received the gift, even so minister the same one to another, as good stewards of the manifold grace of God” (1 Peter 4:10) (The Holy Bible, King James Version, 1611).

When we become temporally self-reliant, it is our duty to help others also become temporally self-reliant. One of the best ways to help others become self-reliant is serving and giving to others. President Marion G. Romney taught: “There is an interdependence between those who have and those who have not. The process of giving exalts the poor and humbles the rich. In the process, both are sanctified. The poor, released from the bondage and limitations of poverty, are enabled as free men to rise to their full potential, both temporally and spiritually. [Those who have more], by imparting their surplus, participate in the eternal principle of giving. Once a person has been made whole, or self-reliant, he reaches out to aid others, and the cycle repeats itself” (Romney, 1982).

Council with the Lord

(The Church of Jesus Christ of Latter-day Saints, 2017a)

Amulek taught the poor among the Zoramites to “cry unto [the Lord] over the crops of your fields, that ye may prosper in them. Cry over the flocks of your fields, that they may increase” (Alma 34:24–25) (The Book of Mormon, 2013). As you counsel with the Lord about your temporal needs and challenges and work toward financial self-reliance, He will bless and strengthen you. Counseling with the Lord about your finances means praying to Heavenly Father and asking for guidance about financial matters. 

(ChatGPT, 2024)

Reflect to align your financial choices with personal values and spiritual beliefs. You can turn to faith for wisdom and discernment, seeking clarity on how to steward your resources responsibly. Through prayer, you may find strength in facing financial challenges, gratitude for what you have, and inspiration for charitable actions. Aligning with the Lord in matters of finance can provide a sense of peace and assurance, fostering a belief that you are not alone in navigating the complexities of financial management. Ultimately, counseling with the Lord allows you to integrate your spirituality into your financial journey.

Prayerful Consideration

As you have been learning about being a wise financial steward by incorporating family councils, being honest and open with your finances, and involving the Savior in your money management, prayerfully consider how these principles can best be applied to your unique situation. 

Financial Plan

(ChatGPT, 2024)

A financial plan is a comprehensive roadmap that you create to manage your finances effectively and work towards specific goals. It encompasses key elements such as setting financial goals, monitoring net worth, creating a budget, establishing an emergency fund, developing an investment strategy, managing debts, securing appropriate insurance coverage, and planning for retirement. This structured document helps you make informed decisions about your money, align your spending and saving with your aspirations, and adapt to changing circumstances. A financial plan shouldn’t be viewed as a static document that outlines perfectly the rest of your life, but should be adaptable and ever-changing. By regularly revisiting and adjusting the financial plan, you can ensure that you stay on course toward achieving your financial objectives and maintaining long-term financial well-being.

A financial plan offers numerous benefits that contribute to overall financial well-being and peace of mind. Some key advantages include:

• Clarity and Organization: A financial plan provides a clear overview of your financial situation, including income, expenses, assets, and liabilities. This organization helps you better understand your financial standing and make informed decisions.

• Goal Achievement: By outlining specific financial goals and creating strategies to reach them, a financial plan serves as a roadmap for you to achieve your aspirations, whether it's buying a home, funding education, or retiring comfortably.

• Budgeting and Spending Control: A financial plan includes a budget that allows you to track your income and expenses. This helps in identifying areas for potential savings, controlling spending, and ensuring that resources are allocated efficiently. When implemented properly, a budget should be viewed as empowering and positive rather than restrictive and negative. 

• Risk Management: Assessing and managing risks, such as emergencies, health issues, or unexpected financial setbacks, is a crucial component of financial planning. An emergency fund and appropriate insurance coverage are part of this risk management strategy.

• Investment Guidance: A well-constructed financial plan includes an investment strategy tailored to your goals and risk tolerance. This guidance can lead to sound investment decisions, potentially maximizing returns and minimizing risks.

• Debt Reduction: For those with debts, a financial plan offers a systematic approach to managing and reducing liabilities. It provides a roadmap for prioritizing debts and creating a repayment plan.

• Retirement Security: Planning for retirement is a critical aspect of financial planning. A well-thought-out retirement strategy ensures that individuals can retire comfortably and maintain their desired lifestyle.

• Adaptability to Changes: Financial plans are not static. They can be adjusted to accommodate life changes, such as marriage, the birth of a child, job changes, or unexpected financial challenges, ensuring continued relevance and effectiveness.

Elements of a Financial Plan

A comprehensive financial plan is typically comprised of several key elements. These elements may vary depending on your specific needs, goals, and circumstances, but commonly include:

• Financial Goals: Identifying short-term and long-term financial objectives, such as saving for retirement, buying a house, or funding education.

• Budgeting: Understanding sources of income and tracking expenses to ensure that income covers expenses and leaves room for savings and investments.

• Emergency Fund: Setting aside funds to cover unexpected expenses or emergencies, typically equivalent to three to six months' worth of living expenses.

• Debt Management: Assessing and managing existing debts, such as loans or credit card balances, and developing strategies for repayment to minimize interest payments.

• Investments: Develop an investment plan aligned with financial goals, risk tolerance, and time horizon. This may include asset allocation, diversification, and selection of specific investment vehicles such as stocks, bonds, mutual funds, or other investments.

• Retirement: Estimating future retirement expenses, determining retirement income needs, and implementing strategies such as contributing to savings accounts.

• Risk Management & Insurance: Making plans to avoid financial hardship to protect your wealth. Transferring risk through insurance (e.g., life, health, disability, property) and ensuring adequate coverage to protect against unexpected events.

• Estate Planning: Creating a plan for what you leave behind and how your loved ones can fulfill your last wishes.

• Regular Review and Adjustment: Periodically reviewing and adjusting the financial plan in response to changes in goals, financial circumstances, or external factors such as economic conditions or tax laws.

By addressing these elements comprehensively, you can build a solid financial foundation and work towards achieving your financial objectives effectively.

SWOT Analysis 

A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a tool used to identify and evaluate the Strengths, Weaknesses, Opportunities, and Threats of a financial plan. It's commonly used to assess your current position and to address ways in which you can improve in the future. A SWOT analysis is subjective in nature and is meant to act as a snapshot of information from which discussions and further decisions can be made. Typically the information in a SWOT analysis is not highly detailed and is more focused on short, bullet-point discussion items. Even though everyone can interpret the SWOT elements differently, there are some structured fundamentals that should help guide the development of a SWOT analysis. Below is a breakdown of each component with some examples:

• Strengths: These are internal factors that contribute positively to your financial situation. Strengths might include things like: 

• stable income streams 

• family harmony 

• low debt levels 

• a well-formulated budget 

• good risk management 

• high cash reserves 

• strong investment portfolio performance 

• Weaknesses: These are areas in which there can be some internal improvement. Identifying weaknesses allows for the development of strategies to address and mitigate them. Weaknesses could encompass aspects such as: 

• high levels of debt 

• low liquidity 

• poor investment choices 

• strained relationships

• insufficient savings

• lack of financial literacy 

• over-reliance on a single source of income

• Opportunities: Opportunities are items that are not currently implemented in your financial strategy but could be realistically achieved with some effort and focus. Recognizing these opportunities enables you to consider various ways to enhance your life. Opportunities may arise from various sources such as:

• potential for investment growth 

• new income streams

• focussed effort on improving relationships 

• excess income to be utilized 

• save excess income for emergency funds or other goals

• opportunities to reduce spending 

• Threats: Threats are typically external forces that could jeopardize your plan regardless of what you do on your own. Identifying threats allows for proactive planning to minimize their impact through strategies like risk management, contingency planning, or diversification of income sources and investments. Some threats can include:

• economic downturns 

• market volatility 

• inflation 

• regulatory changes 

• unexpected expenses (health issues, theft, etc.) 

• natural disasters (drought, disease, floods, etc.)

• job insecurity 

A SWOT analysis in the context of a financial plan helps you assess your current financial situation, identify areas of strength and weakness, pinpoint growth opportunities, and recognize potential threats to financial stability. This analysis can be helpful in areas beyond a financial plan and serves as a foundation for developing effective financial strategies and making informed decisions to achieve long-term financial goals. An example table of a SWOT analysis can be found below.

Budget

(Boies, n.d.)

A budget is a very important part of your overall financial plan. It is one of the few parts that you will interact with on a regular basis. A budget is a plan you write down to decide how you will spend your money each month and helps you make sure you will have enough money every month. Without a budget, you might run out of money before your next paycheck.

A budget shows you:

• how much money you make

• how much you spend and what you spend your money on

A budget helps you decide:

• what you must spend your money on

• if you can spend less money on some things and more money on other things so you can reach your financial goals

For example, your budget might show that you spend $100 on clothes every month. You might decide you can spend $50 on clothes. You can use the remaining $50 to make extra debt payments or save towards a goal.

How can I use my budget?

A budget is something you may interact with daily as you make decisions on spending but should be revisited monthly to make sure you are on track with your goals. Your budget can help you stay on top of your expenses and save money for the future. You should consider making savings one of your expenses, right after tithing, where circumstances allow. You might find ways to spend less money and you can use your budget every month:

• At the beginning of the month, make a plan for how you will spend your money that month. Write what you think you will earn and spend.

• Track all of your transactions to raise awareness and understand where your money is going. Try to do this every day.

• Spend some time each week to review your budget and check on progress.

• At the end of the month, see if you spent what you planned.

• Use the information to help you plan the next month’s budget.

Things to Keep in Mind When Getting Started With Your Budget

(Boies, n.d.)

Determine a Time Span for Your Budget

You can create your budget for a week, month, academic year, or calendar year though a month is most common. If you are currently attending college or career school, you may want to consider creating a monthly budget for an academic term, such as your fall semester. Keep in mind that your income may vary from month to month, and not all of your expenses will be the same each month. Larger expenses (such as car insurance and books) and seasonal expenses (such as a trip home during the holidays or a higher electricity bill in summer when the air conditioning is on) need to be incorporated into your budget. 

Choose a Tool to Help You Manage Your Budget

To create a budget, you’ll want to use a tool for tracking your income and expenses. You can use pen and paper, a simple automated spreadsheet, or a budgeting app/website. Many banks offer budgeting tools, so see what is available and works best for you.

Make Your Budget Realistic

(ChatGPT, 2024)

Budgeting for realistic and actual spending habits involves taking a close and honest look at your financial behaviors to create a budget that aligns with your lifestyle. Be honest about your financial goals and priorities, allocating resources accordingly. Creating a budget that mirrors your real spending habits allows for a more accurate and practical financial plan, increasing the likelihood of successful money management. If this is your first time budgeting, you may find it challenging, but as you persevere you will get better at understanding your financial situation and developing tracking systems that work for you.

How do I Create A Budget?

(Boies, n.d.)

Creating a budget may sound complicated, but all you need to do to get started is set aside some time and get organized—the benefits will make the effort worthwhile. The following steps will help you set up your budget and manage your finances by helping you track your income and expenses. First, estimate how much money you will have coming in each month. It can be helpful to gather your pay stubs and other income documents. Here are some tips for assessing your income:

• Your income may come from sources such as your pay from work, financial contributions from family members, or financial aid (scholarships, grants, work-study, and loans).

• If you’re working while in school, review your records to determine how much your take-home pay is each month. If you earn most of your money over the summer, you may want to estimate your yearly income and then divide it by 12.

• Include income from any financial aid credit balance refunds—money that may be left over for other expenses after your financial aid is applied toward tuition and fees.

Monthly Income Tracking Example

What if I don’t get paid every month?

(Boies, n.d.)

Some people do not get paid every month but income can have patterns that allow you to make estimates. If you recently had a job change, estimate on the safe side by planning for less income than you may receive. It is better to start low because you can always increase as needed, but if you start with high estimates, you may run into issues. 

If you expect things to be like they have been in the past, do this:

• add all the money you earned last year

• divide that number by 12. This is about how much money you will have for each month

For Example

If last year your total income added up to $30,000.
$30,000 ÷ 12 = $2,500
This means on average, you had about $2,500 each month.

If you don’t have records of how much money you have earned in the past, do your best to estimate and plan accordingly. When are you most busy during the year? Are there particular seasons where you earn more money than others? A budget isn’t a set, immovable object you cannot change. It is a living breathing plan that can and should be adjusted as your circumstances change.

(Boies & Lord Fairfax Community College, n.d.)

Expenses

Now, write down your expenses. Expenses are what you spend money on. It can be helpful to gather your bank statements or other information about your spending. To estimate your monthly expenses, you’ll want to start by recording everything you spend money on in a month. This may be a bit time-consuming but will definitely be worthwhile in helping you understand where your money is going and how to better manage it. After that, gather your bank records and credit card statements that will show you other expenditures that may be automatically paid.

If you are currently attending college or career school or getting ready to go, you’ll also need to estimate your college costs. In addition to tuition and fees, you’ll want to make sure to include books and supplies, equipment and room materials, and travel expenses. Find details on what’s included in the cost of college and tips on how to reduce college costs.

Once you’ve identified your expenses, you should group them into two categories—fixed expenses and variable expenses.

• Fixed expenses stay about the same each month and include items such as rent or mortgage payments, car payments, and insurance. These obligations are generally non-negotiable until you realize that you are spending too much money on rent and take steps to find a cheaper place! When creating a monthly budget, divide the amount due by the number of months the bill covers. For example, take your yearly $1,200 insurance bill that’s paid in two $600 installments six months apart, and divide it by 12 to know you need to set aside $100 per month.

• Variable expenses are those that are flexible or controllable and can vary from month to month. Examples of variable expenses include groceries, clothing, eating out, and entertainment. You’ll want to examine these expenses to make sure they stay under control and don’t bust your budget at the end of the month.

When building your budget you should address your fixed expenses, prioritizing tithing and savings first, then use the remaining amount to spread over your variable expenses. 

We will use the illustrations below of a jar, some rocks, and sand to show the wisdom of setting money aside first for the Lord and for our future self (see Stephen R. Covey, A. Roger Merrill, and Rebecca R. Merrill, First Things First: To Live, to Love, to Learn, to Leave a Legacy [1994], 88–89). The jar represents our income: a resource of limited size. We each have jars of different sizes, but the principle discussed here is the same for everyone. The rocks and the sand, when placed in the jar, represent the ways we can use our money. In this example, the big and small rocks represent our long-term priorities—setting aside money for the Lord and our future self—and the sand represents our current needs and wants. Let’s place the items into the jar using the more common approach to financial stewardship.

Notice that when you pour the sand in first, there is not enough room for the rocks to all fit. Now let’s place the items in the jar using the more self-reliant approach to financial stewardship.

Notice that if you place the rocks in first, there is still room for all of the sand. 

Below is an example of monthly expenses. Notice how tithing and savings are included amongst all of the other categories. 

Monthly Expenses Example

Weekly Budgeting For Variable Expenses

(ChatGPT, 2024)

Budgeting for variable expenses on a weekly basis involves planning for costs that fluctuate regularly, such as groceries, dining out, entertainment, and miscellaneous purchases. Start by identifying these variable expenses and estimating their weekly amounts based on past spending patterns. Set realistic spending limits for each category to ensure that you stay within your overall budget. Consider using cash envelopes or designated accounts for variable expenses to maintain discipline. Regularly review and adjust your weekly budget as needed, accommodating changes in income or spending priorities. Tracking your variable expenses weekly allows for better control and awareness of your financial habits, making it easier to adapt to fluctuating circumstances and maintain a balanced budget over time.

Tithing, Fast Offerings, and Saving for Emergencies

(Boies, n.d.)

It can be helpful to list Tithing, Fast Offerings, and Savings at the top of your list of expenses in your monthly budget. Do your best to pay the Lord and yourself first every month. Your savings can be used as an emergency fund to help you deal with unexpected expenses. The ideal amount of an emergency fund typically covers three to six months of your expenses.

Why should I try to save money?

It can be hard to save money. It is very hard when your expenses go up and your income does not. Saving money is very important. Here are some reasons to try to save money even when it is not easy.

• Emergencies – Saving small amounts of money now might help you later. Everyone has expenses they do not expect such as car or home repairs, natural disasters or sickness.

• Expensive things – Sometimes, we have to pay for expensive things – like a home, a car, a trip, or a security deposit on an apartment. You will have more choices if you have money to pay for those expensive things.

• Your goals – You might want to pay for college classes. Maybe you need to visit family in another country. You may want to go on a fun vacation and explore the world. You can plan for these goals and save money. Then you will likely have more money available to cover the expense when it occurs.

How else can I save money?

You can try these ways to help save money:

• For one month, write down everything you spend. Small expenses, like a sandwich or smoothie, can add up to a lot of money. When you know where you are spending your money, you can decide what you might not want to buy or where you can decrease expenses.

• Pay with your credit card only if you can pay the full amount when the bill comes. That way, you do not pay interest on what you owe.

• Pay your bills when they are due. Enrolling in auto-pay is a great way to simplify and make sure you are covering your financial obligations. Otherwise, set up reminders so you stay on top of your bills. That way, you will not owe late fees or other charges.

• Keep the money you are saving separate from the money you spend. Consider opening a savings account in a bank.

• If you keep cash at home, keep the money you are saving separate from your spending money.  Keep all your cash someplace safe that is fire and water-resistant in case of a disaster.

For Example

What I did not buy this month:

Balance Your Budget

(Boies, n.d.)

Now that you’ve identified your sources of income and expenses, you’ll want to compare the two to balance your budget. To do so, you simply subtract your expenses from your income.

If you have a positive balance, your income is greater than your expenses. In other words, you’re earning more money than you’re spending. If you have a positive balance, you shouldn’t start looking at new ways to spend your money. Instead, focus on putting the extra money toward your savings to cover your emergency fund or to support future goals such as buying a car. Also, if you have a positive balance but you borrowed student loan funds, pay back some of your loans and consider borrowing less in the future.

If you have a negative balance, you are spending more money than you have. You’ll want to balance your budget and ensure your expenses don’t exceed your income. Balancing your budget may include monitoring your variable expenses, reducing your expenses, and/or finding ways to increase your income. Spending less can be a lot easier than earning more. Consider eating out less frequently and making your own lunch. Rent books rather than buying them, or buy books to download to your computer. Use a shopping list when grocery shopping, and buy only what you need. Ask yourself before buying anything, “Do I really need this?”

Think about how you spend money, besides paying your bills. For example, do you buy lunch every day? After a month, that lunch money could add up to an expense you can and should plan for. Tracking these common expenses can raise your awareness of how much money you spend over time and will help you decide if that is the best use of your money.

Try to have a zero-based budget where your income is perfectly offset by your savings and expenses. This ensures that you are being a good steward of your money by assigning a purpose to every dollar you earn.

Maintain and Update Your Budget 

(Boies, n.d.)

Now that you’ve created your budget, you’ll want to make sure it remains a living document and you update it over time. Here are some smart practices to keep in mind:

• Review your budget frequently but every month at a minimum. Regular review and maintenance of your budget will keep you on top of things and may help you avoid being blindsided by something unexpected.

• Forgive yourself for small spending mistakes and get back on track. Most people overspend because they buy things on impulse. The next time you’re tempted to make an impulse buy, ask yourself the following questions:

• What do I need this for?

• Can I afford this item?

• If I buy this item now, will I still be happy that I bought it a month from now?

• Do I need to save this money for a financial goal?

• Will this item go on sale? Should I wait to buy it?

• Does it matter if I buy brand-name or can I get by with generic?

If you take a moment to think about what you’re buying, you’re more likely to make a choice that fits your budgeting goals.

Other Things To Consider

Frugal vs. Cheap

(ChatGPT, 2024)

You may have heard the words “frugal” and “cheap”. While they sound similar, there is a difference between the two. The difference between being frugal and cheap lies in the underlying mindset and approach toward spending money. 

Being frugal involves making thoughtful and intentional choices to maximize value and minimize waste. Frugal individuals prioritize efficiency, seeking quality items at reasonable prices and making wise investments in items that contribute to long-term savings. 

On the other hand, being cheap often implies a reluctance to spend money altogether, even at the expense of quality or essential needs. Cheap individuals may prioritize immediate cost savings without considering the long-term value or the impact on overall well-being. 

Frugality is about making wise financial decisions, while cheapness tends to focus solely on cutting costs without considering the broader context of value and quality.

The Envelope System

(The Church of Jesus Christ of Latter-day Saints, 2017a)

The cash envelope system is simple: immediately after being paid, you place the amount of money you have allotted to spend in each budget category into its own envelope.

For example, let’s say you have budgeted 400 for the “groceries” category this month. When you receive your pay for the month or for the next few weeks, deposit that amount (in cash) into an envelope labeled “Groceries.” No money—and this means no money—comes out of that envelope except to pay for food. If you go to the market and find you’ve left the envelope at home, go home and get the envelope! Keep a written record (in a simple notebook) of all expenses, so that you can later review it during your family council to remind you where your money is going.

In another envelope, place the budgeted amount for your transportation expenses. You will take from this second envelope when appropriate the portion needed for those costs, and track each expense in your notebook.

Divide each of your budget categories in this way: rent or mortgage payment in one envelope; utilities in another; tithing and fast offerings in another; medical; insurance; and so on—each in its own envelope.

Each time you get paid, deposit the appropriate portion of your monthly budgeted amount into each envelope so that the total amount placed in each envelope each month is the amount predetermined in your written budget.

Do not spend more than you have budgeted. When the envelope is empty, you are done! If you must spend more in that category, you will have to take it out of another envelope. For the first few months, this will require adjustments. Within that period you should gain a more accurate picture of whether your initial budgeted numbers are adequate—you’ll learn the real average over a couple of months.

Some use the envelope system for everything. Others use this cash-only system for those categories that tend to tempt them to overspend, or for which it is easy to lose track or lose control, like food, restaurants, entertainment, gasoline, and clothing. Any leftovers should go toward your financial priority.

Digital Systems

(The Church of Jesus Christ of Latter-day Saints, 2017a)

If seeing extra cash tempts you to spend more than you otherwise would, then using a debit card may be your best option. As with the cash envelope method, a debit card draws from money already in your bank account.

When using a debit card, it is critical to track your expenses because, unlike the cash-envelope system, a debit card does not provide hard boundaries between budget categories. You can record your expenses with a pen and paper or with a mobile phone or computer application.

Numerous financial management apps are available for cell phones or other mobile devices. These apps can store and organize information for you, and you can then access it from your home computer or other devices, as well.

Spend some time this week researching the best apps available in your language and region, using “money management,” “personal finance tools,” or “budgeting apps” as search terms. Many very good ones are free or cost very little.

Remember, to keep your information secure, access your personal financial information only from your own devices, not from public computers.

How does a budget fit into a financial plan?

(ChatGPT, 2024)

A budget is a crucial component of a comprehensive financial plan. It serves as a roadmap for managing and allocating financial resources to achieve specific financial goals. Here's how a budget fits into a financial plan:

• Income and Expenses: A budget helps you track your income sources and categorize your expenses. It provides a clear overview of where your money is coming from and where it's going.

• Expense Control: By analyzing your budget, you can identify areas where you may be overspending. This allows you to make informed decisions about cutting unnecessary expenses and reallocating funds to prioritize your financial goals.

• Savings and Investments: A budget allows you to allocate a portion of your income to savings and investments. This ensures that you are building an emergency fund, saving for specific goals (like buying a home or funding education), and investing for long-term wealth accumulation.

• Debt Management: If you have debts, a budget helps you allocate funds for debt repayment. It enables you to create a systematic plan for reducing and eventually eliminating debt, contributing to your overall financial health.

• Financial Goals: Your financial plan likely includes various short-term and long-term goals. A budget helps you allocate resources effectively to achieve these goals. Whether it's saving for a vacation, building an emergency fund, or planning for retirement, a budget ensures that you're making progress toward your objectives.

• Cash Flow Management: A budget helps you manage your cash flow by ensuring that you have enough funds to cover both regular and unexpected expenses. This prevents financial stress and allows for better financial stability.

• Financial Awareness: Creating and following a budget promotes financial awareness. You become more mindful of your spending habits, financial priorities, and the impact of your financial decisions on your overall plan.

In summary, a budget is a practical tool that aligns your day-to-day financial activities with your broader financial goals. It provides the discipline and structure necessary to make informed financial decisions, ultimately contributing to the success of your overall financial plan.

Prayerful Consideration

In learning about a financial plan and budgeting, prayerfully consider how these principles can best be applied to your unique situation. 

References 

Ashton, M. J. (2006). One for the Money: Guide to Family Finance. The Church of Jesus Christ of Latter-day Saints. https://www.churchofjesuschrist.org/bc/content/shared/content/english/pdf/language-materials/33293_eng.pdf

Ballard. (2016). Family Councils. Liahona, 63.

Boies, C. (n.d.). Personal Finance. Creative Commons Attribution. Retrieved January 23, 2024, from https://library.achievingthedream.org/lfccpersonalfinance/chapter/request-access/

Boies, C. & Lord Fairfax Community College. (n.d.). Personal Finance. Creative Commons Attribution. Retrieved January 23, 2024, from https://library.achievingthedream.org/lfccpersonalfinance/chapter/making-a-budget/

ChatGPT (Version 3). (2024). [AI]. Open AI. https://chat.openai.com/auth/login

Hinckley, G. B. (1998). To the Boys and to the Men. Ensign, 51–54.

New Testament, King James Version. (1611). The Church of Jesus Christ of Latter-day Saints. https://www.churchofjesuschrist.org/study/scriptures/nt?lang=eng

Romney, M. G. (1982). The Celestial Nature of Self-Reliance. Liahona. https://www.churchofjesuschrist.org/study/general-conference/1982/10/the-celestial-nature-of-self-reliance?lang=eng

The Book of Mormon: Another testament of Jesus Christ. (2013). The Church of Jesus Christ of Latter-day Saints.

The Church of Jesus Christ of Latter-day Saints. (1835). Book of doctrine and covenants: Carefully selected from the revelations of God, and given in the order of their dates. The Church of Jesus Christ of Latter-day Saints.

The Church of Jesus Christ of Latter-day Saints. (2017a). Personal Finances for Self-Reliance. The Church of Jesus Christ of Latter-day Saints. https://www.churchofjesuschrist.org/manual/personal-finances-for-self-reliance/1-becoming-a-wise-and-faithful-steward/learn-maximum-time-45-minutes?lang=eng

The Church of Jesus Christ of Latter-day Saints. (2017b). Personal Finances for Self-Reliance. The Church of Jesus Christ of Latter-day Saints. https://www.churchofjesuschrist.org/manual/personal-finances-for-self-reliance/1-becoming-a-wise-and-faithful-steward/learn-maximum-time-45-minutes?lang=eng

The Holy Bible, King James Version. (1611). The Church of Jesus Christ of Latter-day Saints. https://www.churchofjesuschrist.org/study/scriptures/nt?lang=eng

Uchtdorf, D. F. (2009). Two Principles for Any Economy. Liahona, 56–57.