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BYU Management SocietyIndianapolis Chapter

The Why’s, What’s

and How’s of

Personal FinanceJuly 31, 2014

Bryan Sudweeks, Ph.D., CFAFrom the BYU Marriott School of Management website on

Personal Finance at http://personalfinance.byu.net

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Who I Am• Motto: “Learn, Do, Become”• Previously managed $3.2bn in financial assets

in emerging markets• Took a professional track position at the

Marriott School• Teach asset management, modeling and

valuation, international finance, and personal finance

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Increasing Personal Freedom• I have a friend from the Philippines

• He is concerned because the Philippine Saints are losing their personal freedom through poor money management due to• Poor spending habits• Excessive debt • Lack of saving for missions and retirement• Lack on knowledge by Church leaders on what

to teach members• We have the same problem

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Personal Goals for Tonight• 1. Share a few thoughts on personal finance

that will make a difference in your lives• 2. Have you take just one thought and

implement it into your life• 3. Point you in the direction of good resources

that may be helpful in your quest for greater learning in financial self-reliance

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Abstract• Leaders and parents should be learning,

living and teaching the doctrines (“why’s”), principles (“what’s”), and applications (“how’s”) of personal finance. This way they can help themselves, their families, their ward members and others become more free and to be better followers of our Savior Jesus.

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Education Week 2013

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Education Week 2013

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Objectives

A. Our perspective

B. The “why’s” (doctrines)

C. The “what’s” (principles)

D. The “how’s” (application)

E. Ideas to learn it and live it

F. Blessings for those who live it

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A. Our Perspective

• What is perspective?• Wikipedia.org defines perspective as “one’s point of

view, the choice of a context for opinions, beliefs, and experiences” (“perspective,” May 1, 2007).

• While points of view can be different, the historian Will Durant shared the need for a “correct” perspective. He wrote of the human need “to seize the value and perspective of passing things. . . . we want to see things now as they will seem forever—‘in the light of eternity’” (The Story of Philosophy, New York: Simon and Schuster, 1927, p. 1).

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Perspective (continued)

• Our perspective is that “personal finance” is simply part of the gospel of Jesus Christ• It is putting Christ first in our hearts and lives• It is knowing the true value of things, not what the

world is trying to sell you• It is using our resources carefully and wisely

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B. The “Why’s” (Doctrines)• Why does God want us to learn personal

finance?• The “why” questions are the really important

questions in life--the hard questions of the heart• It is important that we view different

perspectives as we seek to answer this question. Possible perspectives include:

• Spiritual• Temporal• Family• Individual

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• 1. Spiritual: To bring us to Christ• Elder C. Max Caldwell said:

• 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 - poor financial habits, 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 (“What Think Ye of Christ?,” Ensign, Feb. 1984).

Why’s (continued)

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• 2. Temporal: to help us become wiser stewards over our resources and blessings• Elder Joe J. Christensen said:

• 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 (“Greed, Selfishness, and Overindulgence,” Ensign, May 1999).

Why’s (continued)

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• 3. Family: To help us return with our families back to Heavenly Father’s presence• President David O. McKay stated:

• “No other success can compensate for failure in the home” (quoted from J. E. McCulloch, Home: The Savior of Civilization (1924), 42; in Conference Report, Apr. 1935, 116).

• President 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 [2000], 134).

Why’s (continued)

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• 4. Individual: To help us learn and accomplish our divine missions for which were sent here to earth• Elder Gene R. Cook said:

• 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. May the Lord bless you in your decisions at this important time in your lives (“Trust in the Lord”, Ensign, Mar. 1986).

Why’s (continued)

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C. The “What’s” (Principles)• Elder Richard G. Scott commented:

• Joseph Smith’s inspired statement, “I teach them correct principles, and they govern themselves,” still applies. The Lord uses that pattern with us. You will find correct principles in the teachings of the Savior, His prophets, and the scriptures—especially the Book of Mormon. . . Your consistent adherence to principle overcomes the alluring yet false life-styles that surround you. Your faithful compliance to correct principles will generate criticism and ridicule from others, yet the results are so eternally worthwhile that they warrant your every sacrifice (Richard G. Scott, “The Power of Correct Principles,” Ensign, May 1993, 32).

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What’s (continued)

1. 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 (1 Nephi 17:36), the creator of worlds, men, and all things (D&C 93:10), the preserver of our life and then supplier of our breath (Mosiah 2:21), the giver of our knowledge (Moses 7:32) the grantor of our life (Mosiah 2:26), and the giver of all we have and are (Mosiah 2:21).

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What’s (continued)

2. Stewardship: We are stewards over all that the Lord has, is, or will share with us• The Lord through the Prophet Joseph Smith

stated: • It is expedient that I, the Lord, should make

every man accountable, as a steward over earthly blessings, which I have made and prepared for my creatures. (D&C 104:13)

• 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).

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What’s (continued)

3. 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).

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What’s (continued)

4. Accountability: We are accountable for every choice we make• The Lord stated:

• Verily I say, men should be anxiously engaged in a good cause, and do many things of their own free will, and bring to pass much righteousness. For the power is in them, wherein they are agents unto themselves. (D&C 58: 27-28)

• 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).

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What’s (continued)

• On the questions of what is really ours, Elder Neal A. Maxwell stated:• The submission of one’s will is really the only

uniquely personal thing we have to place on God’s altar. The many other things we “give,” brothers and sisters, are actually the things He has already given or loaned to us. However, when you and I finally submit ourselves, by letting our individual wills be swallowed up in God’s will, then we are really giving something to Him! It is the only possession which is truly ours to give! (italics added, “Swallowed Up in the Will of the Father,” Ensign, Nov. 1995, 22).

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D. The “How’s” (Application)• The final step is the “how’s” of personal

finance. hat are the things we have been counseled to do• Let me just share a few of them from scriptures and

Church leaders

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How’s (continued)

• 1. Communicate • Communication on financial matters is critical

• Key areas of communication are:• 1. Personal and family goals

• What do you want to accomplish and what are you working toward?

• 2. Key financial milestones:• Emergency fund: 3-6 months income• Budgets: Weekly, monthly and annual• Short-term savings: vacations, autos, etc.• Long-term savings: retirement, missions,

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How’s (continued)

• Family finances are a shared responsibility• Management of family finances should be full and

equal, and mutual between a husband and a wife. Control of the money by one spouse as a source of power and authority causes inequality in a marriage and is inappropriate. Conversely, if a marriage partner voluntarily removes himself or herself from family financial management, that is an abdication of necessary responsibility (Elder Marvin J. Ashton, One for the Money, Intellectual Reserve, 2006, p. 3).

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How’s (continued)

• 2. Pay the Lord First• When we pay tithes and offerings we are only

giving Him what is rightfully His (remember we get to keep 90%)• Tithing is the law upon which all our blessings

are predicated. Pay a full tithing and be generous with offerings, and the windows of heaven will be opened.

• “Prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it (Mal. 3:10). 28

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How’s (continued)

• The Lord requires the heart• He requires the first 10%, not the last• Paying tithes and offerings first shows we put God

first in our lives• “And when we obtain any blessing from God, it

is by obedience to that law upon which it is predicated” (D&C 130:21).

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How’s (continued)

• 3. Manage Your Money and Use a Budget• A budget is the single most important tool in helping

families achieve their financial goals• It is giving, as Dave Ramsey says, “every dollar

a name” • It is planning where your money goes, instead of

wondering where your money goals• It is the “spiritual creation” before the “physical

creation”, planning before spending, and it teaches learning, choices, prioritization, and accountability

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How’s (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” (Spencer W. Kimball, April Conference, 1975, pp. 166-167).

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How’s (continued)

• 4. Pay Off and Get Out of Consumer and (eventually) Mortgage Debt• We have been commanded to stay out of debt for

only the past 6,000 years (ever since 2 Kings 4:7).• Can the truth of God go forth “boldly, nobly and

independent” by people who are in debt to others and can’t control their spending?

• When we go into debt, we give others power over us • “The borrower is servant to the lender (Prov.

22:7).

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How’s (continued)

• President Ezra Taft Benson shared:• “The Lord desires his Saints to be free and

independent in the critical days ahead. But no man is truly free who is in financial bondage” (Ezra Taft Benson, “Prepare Ye,” Ensign, Jan. 1974, p. 69).

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How’s (continued)

• 5. Prepare for Emergencies and Build a Reserve• The principle is to “be prepared,” and covers both

financial and temporal preparedness• “If ye are prepared ye shall not fear” (D&C

38:30)• Financial preparedness should start with a cushion

for rough times of roughly 3 to 6 months’ worth of living expenses be set aside in a liquid account• Emergency funds are for very specific purposes

—lost job, hospital or medical bills, major home or car repairs, or other unexpected events (which always happen)

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How’s (continued)

• Temporal preparedness would include many different areas including:• Appropriate food storage• Other emergency essentials in case of need• Continuing job training to keep job skills

current to stay ahead of job needs• Increased learning in other skills to reduce cash

expenses around the home

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How’s (continued)

• 6. Save for Long-term Goals• Begin saving now for long-term goals

• Home and education• It is appropriate to borrow as necessary for

education and home, but limit debt for both. A mortgage is the likely largest financial obligation you will take on, and it will be a burden on your shoulders until the day it is paid.

• Follow President Hinckley’s advice to “get a modest home and pay off the mortgage” (Ensign, May 1998).

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How’s (continued)

• Other goals may include:• Retirement

• Understand your options and use them wisely• Save for retirement—get the company match• Let time be your ally by starting early

• Children’s education and missions• If you choose, begin saving for your children’s

missions and education• Save for other long-term goals

• Starting early beats starting late every time

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How’s (continued)

• 7. Protect Yourself and Family Through Adequate Insurance• Elder Marvin J. Ashton counseled:

• “Appropriately involve yourself in an insurance program. It is most important to have sufficient medical, automobile, and homeowner’s insurance and an adequate life insurance program. Costs associated with illness, accident, and death may be so large that uninsured families can be financially burdened for many years” (Marvin J. Ashton, “Guide to Family Finance,” Liahona, Apr. 2000, 42).

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How’s (continued)

• Key insurance types:• Auto and homeowners insurance

• Both required by law• Make sure liability limits are sufficient

• Life insurance• Have sufficient to take care of your family• You do not need the most expensive insurance

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How’s (continued)

• 8. Teach your children and family these principles• Teach family members why we want to be

financially responsible• Honest and integrity are part of the gospel plan

• Teach the principles of personal finance early• Emphasize hard work, frugality, and saving • Involve them in creating personal budgets and

in contributing to the family budget as well

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How’s (continued)

• Stress the importance of education• Education is the key that unlocks the door to

opportunity• Stress the importance of obtaining as much

education as possible

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E. Ideas to Learn It and Live It• Ideas to learn it, 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

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Education Week 2013

Learn It: LDS Provident Living Website

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Learn It: Provident Living Website (continued)

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Learn It: The MSM Personal Finance Websitewww.personalfinance.byu.edu

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Learn It: The MSM Website (continued)

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Learn It: The MSM Website (continued)

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Ideas to Live It• Following are ideas to help live the gospel• 1. Understand doctrines

• Elder Packer said: • True doctrine, understood, changes attitudes

and behavior. The study of the doctrines of the gospel will improve behavior quicker than a study of behavior will improve behavior (Boyd K. Packer, “Little Children,” Ensign, Nov. 1986, 16).

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Live It (continued)

• Living wisely is simply part of the gospel of Jesus Christ• These are not just nice things to do, but are

commandments of God• It changes the perspective• Obeying is no longer a question of money,

but a question of faith and duty• These are not temporal commandments (D&C

29:35)• There is no separation between the temporal

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Live it (continued)

• 2. Catch the vision:• A. The vision of who you are

• You are a child of God with unlimited potential to do good (Gal. 3:26).

• “No doctrine is more basic, no doctrine embraces a greater incentive to personal righteousness . . . as does the wondrous concept that man can be as his Maker” (Bruce R. McConkie, The Promised Messiah: The First Coming of Christ (Salt Lake City: Deseret Book, 1978), 133).

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Live it (continued)

• B. The vision of what you want• Do you know what you want?

• President Ezra Taft Benson wrote:Every accountable child of God needs to set goals, short- and long-range goals. (Ezra Taft Benson, “Do Not Despair,” Ensign, Nov. 1974, 65).

• Elder M. Russell Ballard said:• When one learns to master the principles of

setting a goal, he will then be able to make a great difference in the results he attains in this life (italics added, Preach my Gospel, Intellectual Reserve, Inc., 2004, p. 146). 51

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Live it (continued)• C. The vision of what you can become and do

• Elder Ted R. Callister said:• “With increased vision comes increased

motivation” (“The Power in the Priesthood in the Boy,” Ensign, May 2013).

• Nelson Mandela said:• “Once a person is determined to help

themselves, there is nothing that can stop them“ (Nelson Mandela).

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Live it (continued)

• 3. Decide to decide today• Make the decisions now and commit to them now!

• Decide now what you will and will not do, and be done with those decisions once and for all

• Follow a prophet who said to “decide to decide” (Spencer W. Kimball, “Boys Need Heroes Close By,” Ensign, May 1976, 45).

• Seek the Lord’s help in making these decisions• There is no one who loves you more

• Commit to the Lord and follow through• “Commit thy way unto the Lord; trust also in

Him; and He shall bring it to pass” (Psalms 37:5)

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Live it (continued)

• President Spencer W. Kimball said:• We hope we can help our young men and young

women to realize, even sooner than they do now, that they need to make certain decisions only once. . . . We can push some things away from us once and have done with them! We can make a single decision about certain things that we will incorporate in our lives and then make them ours—without having to brood and re-decide a hundred times what it is we will do and what we will not do. . . . My young brothers [and sisters], if you have not done so yet, decide to decide! (Spencer W. Kimball, “Boys Need Heroes Close By,” Ensign, May 1976, 45).

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Live it (continued)

• 4. Do it willingly (because we have to)• The prophet Joseph Smith, on his way to Carthage,

knew that he would not return.  ”I am going like a lamb to the slaughter, but I am calm as a summer’s morning; I have a conscience void of offense towards God, and towards all men. . . . And it shall yet be said of me—he was murdered in cold blood (D&C 135:4).• He brought his will in subjection to the will of

Heavenly Father

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Live It (continued)

• Isn’t that a purpose of life, to bring our wills in line with the will of the Father?• We know we will either “bend the knee” willingly

of our own free will and choice, or we will be compelled to do it when He comes again (Mosiah 27:31)• Either way, we will come to recognize Christ• How much better it is to do these things

willingly because we have faith in Christ and are seeking to obey His commandments

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Live it (continued)

• 5. Share your goals with others• Let others know what you are doing

• Embarrassment sometimes is more powerful than guilt in motivating us to accomplish more

• Share your goals with family and friends• Let them know of your successes and

failures• As we let others know what we desire to

accomplish, they can help us and give us motivation to accomplish our goals

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F. Blessings of Living the Gospel• As we do the things we have been commanded,

the Lord has given wonderful promises:• The Lord will stand by you (D&C 68:6)• None shall stay you (D&C 1:5)• The Savior will go with you and be in your midst

(D&C 49:27)• Nothing shall prevail against you (D&C 32:3)• Power shall rest upon you (D&C 39:21)• He will uphold you (D&C 93:51)• You shall have greater treasures that the treasures

of the earth (D&C 19:37-38)• He will take care of your flocks (D&C 88:72) 58

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Blessings (continued)

• Other blessings:• He will send you the Comforter (D&C 79:2)• He will go before your face. He will be on your

right hand and on your left (D&C 84:88)• His angels will be round about you (D&C 84:88)• You shall have great faith (D&C 39:12)• You will be able to keep God’s laws (D&C 44:5)• You shall have revelations ((D&C 28:8)• Your sins will be forgiven 31:5, 36:1, 60:7, 62:3)• You shall have eternal life (D&C 14:7)• You shall be made truly rich--he that hath eternal

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Blessings (continued)

• The challenge:• We must be willing to give up what we want now

(which is spending) for the bigger goal that we want in the future (which is life eternal)

• We must not let what the world says is important (money and power) overpower what we really know is important (charity and the gospel of Christ)

• We must not sell our birthrights (our long-term goals) for a mess of pottage (our short-term wants)

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Education Week 2013

• Personal Finance is simply living the gospel of Jesus Christ• It is like learning charity, attending church,

serving others, or doing missionary work. • Leaders and parents should be learning, doing,

and teaching the “why’s”, “what’s”, and “how’s” of personal finance to their ward members and families, which are the doctrines, principles and application of personal finance

Conclusions

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Conclusions (continued)

• Why does God want us to learn personal finance? It is important that we understand the why’s, or the doctrines• The key is to take different perspectives to answer

this critical “why” question1. Spiritual: To bring us to Christ2. Temporal: To help us become wiser stewards3. Family: To help us return with our families back to Heavenly Father’s presence4. Individual: To help us accomplish our divine missions for which we each were sent here to earth

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Conclusions (continued)

• There are four “what’s” or principles on which our perspective is based:• 1. Ownership: Everything is the Lords• 2. Stewardship: We are stewards over all the Lord

has, is, or will bless us with• 3. Agency: The right to choose is one of God’s

greatest gifts to man• 4. Accountability: While we are free to make our

choices, we will be held accountable for those choices and should choose wisely

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Conclusions (continued)

• There are 8 different “how’s” that we should emphasize, the application. They are:• 1. Communicate• 2. Pay the Lord first• 3. Manage your money and use a budget• 4. Pay off and get out of consumer and mortgage

debt• 5. Prepare for emergencies and build a reserve• 6. Save for long-term goals• 7. Protect yourself and your family through

adequate insurance• 8. Teach your children and family

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Conclusions (continued)

• Our responsibility first is to learn about personal finance• There are a number of very good resources to help

bishops, individuals and families• The LDS Provident Living website• The Marriott School Personal Finance website

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Conclusions (continued)

• Our responsibility then is to live it• We shared some ideas to help you get motivated to

follow the doctrines, principles, and applications of personal finance• 1. Understand doctrine• 2. Increase your vision• 3. Decide to decide• 4. Do it willingly• 5. Share your goals with others

• Finally, we shared the promised blessings. They are numerous and are only accessed through obedience to the commandments of the Jesus Christ 66

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Set Some Goals• Lets take a few minutes to think about the

items discussed• What one thing can you do to become more

financially self-reliant tonight?

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Conclusions (continued)

• Although times are tough, a prophet has said:• I testify to you that our promised blessings are

beyond measure. Though the storm clouds may gather, though the rains may pour down upon us, our knowledge of the gospel and our love of our Heavenly Father and of our Savior will comfort and sustain us and bring joy to our hearts as we walk uprightly and keep the commandments. There will be nothing in this world that can defeat us. My beloved brothers and sisters, fear not. Be of good cheer. The future is as bright as your faith (italics added, Thomas S. Monson, “Be of Good Cheer,” Ensign, May 2009, 92). 68