On the Path to Improved Financial Health – Step 5: Putting It All Together

(Part 5 of a 5-Part Series) 

In this final installment in the series I want to talk about putting everything previously shared together. As I shared in my book, Keeping Your Church Alive: Advice for Pastors, Leaders and Active Members, just as churches must manage the resources they have been provided, individuals must manage their limited resources well. Everyone must prioritize their spending. Goals need to be set annually; without doing this, it will be hard to achieve your financial goals.

For example, if you have debts, how much of the debt can you realistically pay down? By setting this amount, you will generate a timeline on when the debt is eliminated and then you will be able to shift from paying off debt to spending your funds in different ways. As I have previously stated, you also need to determine how much you are going to try to save in an emergency fund. Every family needs to build this fund so that unexpected events can be planned for; we often do not like to think that negative things may happen; however, it is best to prepare for the worst but hope for the best. In addition to setting targets on reducing debt and saving for emergencies, don’t forget about saving for your retirement. Most people hope to be able to retire at some point in their life. Putting off saving for retirement makes it more and more unlikely that you will be able to retire when you want to retire with the standard of living you want. Social Security cannot be relied upon to meet your needs; you need to take control of meeting your retirement savings’ needs or else you won’t have the retirement you would like.

Additionally, if you have large expenses to prepare for such as for college for a child or grandchild, you need to start setting aside funds early to reduce your reliance on loans to fund your child’s education. Otherwise, when (or if) the child graduates with a degree, either the child or you will have a large student loan bill to deal with. Student loan debt is something you definitely want to avoid since unlike many other debts they are very difficult to eliminate through bankruptcy protection. Some may disagree with what I am about to share; however, I think everyone needs to set aside some funds for a vacation each year, even if you have debts to deal with. You should balance this with a realistic plan to eliminate debt and save for emergencies. After working for an entire year without a vacation you will appreciate having a vacation and getting the refreshment that it can provide; don’t neglect protecting your physical and mental health or else you will not be able to enjoy the fruits of your labor.

As I have shared in an earlier installment, you need to track your expenses on a regular basis. I believe in doing this daily since it is very easy to do, takes a very short amount of time and allows you not only to track your expenses so that you know where your money is going, but will also allow you to budget properly in the various categories that are relevant to you. You can enter your expenses into a spreadsheet such as Microsoft Excel or some other software so that you are aware of exactly where your funds are going. I like to write my expenses on paper first and then transfer these figures to a spreadsheet at the end of each month. As you track your expenses it is likely that there are some categories that may need adjustment. For example, if you have unexpected expenses in some categories you may have to adjust your spending in other areas or else you could experience additional problems. The converse is also true, if there are categories where expenses are much lower than anticipated you can shift funds to other areas that will help you to achieve more of your financial goals.

In last week’s article, I talked about insurance management. This can be a topic that is confusing for many people. How deductibles apply, what is and what is not covered and the impact on your premium if you make changes to your policy are important to know. However, many people do not ask a lot of questions about their insurance coverage. If you have questions get them answered. Talk to insurance professionals. If your question is about life insurance talk to those knowledgeable about the type of insurance you have questions about. There are no dumb questions, if you don’t ask the questions it is unlikely you will get the answers you need. There are many resources out there to take advantage of to help you to learn. Some types of insurance are life, homeowners’, disability, long-term care, health, dental, vision, tenants and auto. Don’t stay in the dark about the protection you are entitled to or think you are entitled to. Get the questions that you have answered by knowledgeable professionals. Become well-informed so that you know what questions to ask; this does not only apply to insurance but to other investments that you may make.

If you have causes that you believe in you will need to set aside funds for those causes. For example, since I am a Christian, I set aside at least 10% of my income for the work of the church; it is a privilege and not an obligation to share how God has blessed me. However, just as you manage your funds properly, give only to charities, including churches and other types of houses of worship that manage their funds wisely. Don’t give your funds to organizations that don’t manage your gifts properly.

The last thing I want to share with you is that you need to avoid excess. Sometimes people have gotten into financial trouble due to things that were unavoidable, but others have gotten into financial challenges due to spending money on products or services that should never have been purchased. For example, if you need a new car, buy one that is affordable to you; just because you want a certain type of car it does not mean that is the car you should purchase. The same holds true for clothing; if you can only afford a suit that costs $150, don’t spend $400 on a suit just so you can impress other people; live within your means. Finally, I think most people like to eat out at their favorite restaurants. However, when we eat out too much we are wasting money that could be spent in wiser ways; you might want to consider cooking more at home and spending more time with your family doing so; you will probably be in a much better financial situation. I pray this series of articles has helped you on your journey toward financial success and that God will bless you on your journey.

Wayne J. Vaughan, author of Keeping Your Church Alive: Advice for Pastors, Leaders and Active Members