or the sake of local churches and pastors’ households, it is essential that pastors manage their finances well. Most pastors in America today are not preparing well for retirement: According to the National Association of Evangelicals, the majority of pastors have less than $20,000 in retirement accounts. Most pastors are not prepared for unexpected expenses, having less than $2,000 in non-retirement savings. Most pastors have almost $40,000 in non-mortgage debt (credit cards, auto loans, student loans)—an amount often higher than their annual salary.
If you identify with one or more of these facts, then you are probably one of the 90 percent of pastors who feel financial stress in your family and church work. Addressing the cost of discipleship, Jesus gave this analogy: “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish’” (Luke 14:28–30).
Here Jesus used a commonly held financial truth to reveal a spiritual truth. To what extent do we practice this commonly held financial truth Jesus and his audience assumed? How well have we laid a strong financial foundation for a lifetime of ministry?
Some Good News
The good news is that whatever your current financial condition, you can take practical steps to make it healthier. While the task of building a healthy financial life may seem overwhelming, the most important step is simply to start. While getting into an unhealthy financial position can happen quickly, it can often take a long time to work your way out. Here are three things to start doing something now to help secure a strong financial future.
Get Organized. The most basic building block of a healthy financial life is the budget. If you simply gather together all your expenses, income, and debts onto a spreadsheet and live by an accurate budget, you will be in a healthier financial position than 68 percent of Americans who do not maintain a budget. There are many excellent resources that can help you develop this budget, from websites to books. Getting organized will help you have an honest and realistic picture of your current financial situation. When you have an accurate budget, you have a foundational tool that will help you set goals and priorities for your financial future. Check the resources at the COMPASS Initiative for help. Getting organized will also help you avoid missed or late payments on your debts. Late payments not only result in a costly late payment fees, but they often will hike your interest rate.
Start Saving. You may be part of the majority of American pastors who have less than $20,000 in retirement savings or less than $2,000 in an emergency fund. While the task of funding your retirement may seem impossible, do not allow that to cause you to take no action. Simply starting to do something now is a significant step to preparing for retirement. The Church of the Nazarene’s Pensions and Benefits website has information to help you set up a 403b retirement account, as well as the forms needed to allow your church to make payments to it on your behalf. In addition to saving for retirement, saving towards an emergency fund will help when you face unexpected expenses and can prevent you from having to use a credit account. A survey by CareerBuilder.com last year found that 75 percent of Americans live paycheck to paycheck. When you live paycheck to paycheck, it steals your ability to handle unforeseen expenses. Those unforeseen expenses then become debts, since they often get added to already existing credit card balances.
Cut Expenses. Where will you find this money to start saving? Most likely you do not have extra money lying around. Instead, you will have to find this money by cutting some of your current expenses. While some monthly expenses are fixed (mortgage payments, student loan payments), many are variable and can be reduced. For example, choose a smaller data plan for your smartphone, set your home thermostat one degree higher in the summer and one degree lower in the winter, make your own morning coffee instead of buying it at a coffee shop. Admittedly, these changes may cause some level of discomfort; however, they will help you build a solid financial foundation. The reward will be watching your emergency fund and retirement accounts grow, which will insure a healthier financial future built on a solid financial foundation.
You Don’t Have to Feel Overwhelmed. Regardless of your financial situation, you do not have to feel overwhelmed by your finances. These three simple steps—get organized, start saving, cut expenses—are practical steps anyone can use to take control of his or her finances and move into a brighter financial future. These steps can help pastors ensure that they can afford to fulfill the call of God upon their lives for a lifetime of ministry.