With sound principles and diligent effort, financial mastery is in your reach.
WHEN Samantha E. Jones (BS ’08) was laid off last year from her human resources job in the Bay Area, she was upset but not frantic. Though just a year out of BYU’s business management program, she already had enough savings to get by for many months. “I could have moved back home with my parents, but because of that cushion I was able to stay independent.”
Samantha followed the advice of Bryan L. Sudweeks (BA ’80), associate teaching professor in the Marriott School of Management. He tells his students that as soon as they graduate and secure a full-time job, they should begin saving 20 percent or more of their income. Those savings will give them security, peace, and solvency, even if they take a hard financial hit.
Each year Sudweeks, who was an investment professional for two decades before coming to BYU, helps hundreds of students and people outside of BYU understand how to prepare for and learn from financial storms. His ideas, often presented in a context of debunking myths, are an amalgam of sound financial practices and gospel principles.
Myth 1: It’s Only Temporal
Many Latter-day Saints view money management as a temporal concern that doesn’t reflect on their spirituality. Actually, says Sudweeks, wise stewardship of our dollars is an important tool for developing faith, hope, and charity. It teaches discipline and self-control, which are essential to becoming more like the Savior. He asserts that living within our means, avoiding debt, and building a reserve are commandments with spiritual results. When we obey, we feel peace and security; plus we’re better able to help build the kingdom of God. When we disobey, we lose our freedom and become slaves to debt.
For those already enslaved, Sudweeks suggests that the Lord is willing to help if we exercise faith and make a commitment to change. He believes that the Lord’s words in Doctrine and Covenants 104, originally addressed to the Church as a whole, can apply to individuals and families today: “Behold it is my will that you shall pay all your debts. . . . And inasmuch as you are diligent and humble, and exercise the prayer of faith, behold, I will soften the hearts of those to whom you are in debt, until I shall send means unto you for your deliverance” (D&C 104:78–80).
Myth 2: Money Management Is Mostly a Man’s Responsibility
Sudweeks says this myth does a lot of damage to family finances, marriages, and women’s financial well-being. For three important reasons, women should be even more vigilant than men about finances: they live longer, they’re often more conservative in their investments, and most have less money saved for retirement because they tend to work outside the home for fewer years.
“Husbands and wives should be equal partners in all things, including finances. Control of money by one spouse or failure of a spouse to be involved in finances are both harmful to family finances and to marriages,” says Sudweeks.
Myth 3: If I Pay My Tithing, My Finances Will Just Work Out
Many Latter-day Saints take comfort in the verses that promise great blessings if they pay their tithes and offerings. In Malachi 3, the Lord says: “Bring ye all the tithes into the storehouse, . . . and 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).
While the promise is unequivocal, it does not specify that the blessings will be financial, says Sudweeks. And heavenly promises do not always protect us from our own irresponsible behavior. We’re stewards over all we have, not just the 10 percent we give to the Lord. “If we want to reap financial blessings we must learn and live by the financial realities of our time,” he says. “That means gaining the skills to navigate our increasingly challenging and technical financial world.”
Myth 4: Parents Should Help Their Adult Children Financially
Many parents feel responsible to solve their adult children’s financial problems—especially in recessionary times. Sudweeks says it can be OK to help out in narrowly defined circumstances, but generally parents will find that the more support they give, the more support their children will need. Instead, parents should insist their adult children solve their own financial problems. Teaching that philosophy begins in childhood, when parents should teach age-appropriate financial principles and gradually give children increasing responsibility.
This isn’t always easy. Parents should decide how much they can and want to help their children for worthy goals such as education and missions. Sudweeks and his wife teach their children financial responsibility by matching whatever amount the child saves in a joint savings account for these goals. That way they are contributing to worthy goals, but leaving the main responsibility for the financing of those goals to their children.
Sudweeks advises parents to ask themselves if they are financial “enablers.” “Do we cosign for our kids on loans? If the bank thinks they’re not making enough to support payments, why do we think we’re smarter than they are?” he says. “Until we’re serious enough about finances with our kids, they may not learn.”
Myth 5: Help Is Too Expensive
Many people with middling incomes find it difficult to find financial advice that doesn’t eat up their precious few investment dollars with fees or bombard them with hard-sell pitches for branded products. Sudweeks and his colleagues at the Marriott School of Manangement have created an alternative that is broad, easily accessed, and free: a personal finance Web site. The three-year-old endeavor (personalfinance.byu.edu) teaches beginning, intermediate, and advanced lessons in personal finance—with a gospel perspective. The sample budgets, financial calculators, tax planning templates, and personal finance manuals can help any individual or family create a customized personal financial plan at no cost. Many people are intimidated by learning how to manage money, but Sudweeks says the basic principles are easy to learn and are explained clearly on the Web site.
Weathering the Storms
In the Book of Mormon, Sudweeks points out, the Jaredites had two problems with their ships: no light and no navigation. The Lord solved the first problem by touching the 16 stones that then radiated light. He solved the second one by sending storms that blew the vessels toward the promised land.
“The Lord was in both the stones and in the storms. The Lord is in our storms today,” says Sudweeks. He believes we can learn from the current tempest by getting our financial houses in order. That way the next time a storm comes, we’ll be even better prepared. “The Lord is trying to teach us the things through our finances that will take us to the promised land. If we learn, we’ll become stronger and even more valiant and more willing and able to serve.”
Seven Ways to Bolster Your Budget
Budgeting doesn’t mean you don’t spend money but rather that you spend it on the things that are most important to you. Bryan L. Sudweeks (BA ’80), associate finance professor, offers a few ideas for reducing your expenses so you can create a budget that will help you reach your financial goals.
1. Identify your largest expense, brainstorm ideas, then set specific goals to reduce it.
2. If you have a mortgage, investigate cutting your total cost by refinancing or paying it off quicker.
3. Trim food expenses by eating out less often, taking lunch to work, and buying fewer processed foods.
4. Reduce utility bills by adjusting your thermostat to allow higher temperatures in the summer and lower ones in the winter.
5. Keep your car for 150,000 miles instead of replacing it more often. Purchase less-expensive cars that get better gas mileage and are cheaper to insure. Get along with one car if you can.
6. Call your credit card companies and ask for a lower interest rate or move your balances to a lower-rate card.
7. Lower entertainment and vacation costs by camping more, enjoying movie nights at home, and taking less-expensive vacations closer to home.