Post # 88 – Personal Finance for Self- Reliance # 4

Lesson # 4 Creating a Budget

Dear Family and Friends

This week’s topic in our personal finance for self-reliance class is creating a budget. Our Foundation principle is Live a Balanced Life. The financial principles and skills are: 1. Build a Budget and 1. Balance a budget.

As always, we reviewed our Foundation Principle from last week: Repent and be Obedient. The Financial Principles and Skills from last week: 1. Change your approach to managing money. 

And 2. Pay Tithes and Offerings—First! We were asked how we did with our assignments during this past week: A. Did I practice and share our foundation principle with someone? B. did I track my income and expenses? C. did I discuss about tithes and offerings with my family during our family council? And D. did I contact my action support partner?

I am afraid I have not been the best partner in these activities. I always remember way too late at night or way too early in the morning to contact anyone☹ I am going to ponder ways that I can continue to improve as I continue to practice forming these important habits in my daily life. I pay my tithes and offerings each month, but it isn’t something that we talk about in the home. My children are inactive and they do not pay tithing.

I guess I might struggle a bit because I do not have someone that I can face to face talk to about these things during the week, and I do not have the opportunity to hold a family counsel with my family. Planning and managing my finances I think I am learning to do fairly well, but the other things I kind of struggle a bit with. I wanted to include a quick review of the things that we have covered so far in this class:

Week 1Self-reliance is a principle of salvation ● ● ● Track expenses ● ● ● Counsel with the Lord ● ● ●

Week 2 Exercise faith in Jesus Christ ● ● ● Track expenses ● ● ● Counsel about income and expenses ●

Week 3 Repent and be obedient ● ● ● Track expenses ● ● ● Counsel about tithes and offerings ● ● ● ●

Week 4 Live a balanced life ● ● ● Build a budget ● ● ● Counsel about budgeting ● ● ● ● ● ●

Next week we will continue with:

Week 5 Solve problems ● ● ● Choose a budgeting system ● ● ● Counsel about budgeting ● ● ● ● ● 

These are the weekly questions for our personal evaluation – to evaluate ourselves on how we did with our assignments each week.

○ What experiences did you have practicing or sharing the My Foundation principle?

○ How is counseling with the Lord helping you?

○ What did you learn from tracking your income and expenses?

 ○ How is working with an action partner helping you?

MY FOUNDATION: LIVE A BALANCED LIFE —

We were asked to ponder this question: How do I keep the daily demands of life in balance?  They showed the following video: “Of Regrets and Resolutions,” available at srs.lds.org/videos. I found the video here:

https://www.lds.org/media-library/video/2012-10-1060-of-regrets-and-resolutions?lang=eng&category=principle-13-live-a-balanced-life

I included the transcript for the video -- OF REGRETS AND RESOLUTIONS

PRESIDENT DIETER F. UCHTDORF: Isn’t it true that we often get so busy? And, sad to say, we even wear our busyness as a badge of honor, as though being busy, by itself, was an accomplishment or sign of a superior life. Is it? I think of our Lord and Exemplar, Jesus Christ, and His short life among the people of Galilee and Jerusalem. I have tried to imagine Him bustling between meetings or multitasking to get a list of urgent things accomplished. I can’t see it. Instead I see the compassionate and caring Son of God purposefully living each day. When He interacted with those around Him, they felt important and loved. He knew the infinite value of the people He met. He blessed them, ministered to them. He lifted them up, healed them. He gave them the precious gift of His time. (Dieter F. Uchtdorf, “Of Regrets and Resolutions,” Ensign or Liahona, Nov. 2012, 22)

 What did the Savior do to achieve a balanced life? He purposefully lived each day. The people with whom He interacted with on a daily basis felt as if they were important and they felt loved by Him. He knew who they were and where they had come from. He saw them as His Father saw them. He lifted them up and healed them. He blessed them and ministered to them. It was His precious time He gave to them. What a precious gift to give. We too have this great gift of time that we can give to those around us.

We read: Mosiah 4:27:”See that all these things are done in wisdom and order; for it is not requisite that a man should run faster than he has strength.” and 2 Nephi 9:51: “Do not spend money fir that which is of no worth, nor your labor for that which cannot satisfy,”  and the following  quotes by Elder M. Russell Ballard:

“Just do the very best you can each day. Do the basic things and, before you realize it, your life will be full of spiritual understanding that will confirm to you that your Heavenly Father loves you. When a person knows this, then life will be full of purpose and meaning, making balance easier to maintain.” M. RUSSELL BALLARD, “Keeping Your Life in Balance,” Liahona, Sept. 2012, 50

 and then this one from President James E. Faust:

“Balance in large measure is knowing the things that can be changed, putting them in proper perspective, and recognizing the things that will not change.” JAMES E. FAUST, “The Need for Balance in Our Lives,” Ensign, Mar. 2000, 5

 We were asked to answer this question: What things can be simplified or eliminated from our lives so we can experience more joy? We can work on changing those things that we have the power to change. Like the ones from our worksheet on creating a budget.

 Then we read the following quotes by Elder Dallin H. Oaks --

“Many breadwinners worry that their occupations leave too little time for their families. . . . However, I have never known of a man who looked back on his working life and said, ‘I just didn’t spend enough time with my job.’” DALLIN H. OAKS, “Good, Better, Best,” Ensign or Liahona, Nov. 2007, 105

“The number of good things we can do far exceeds the time available to accomplish them. Some things are better than good, and these are the things that should command priority attention in our lives.” DALLIN H. OAKS, “Good, Better, Best,” Ensign or Liahona, Nov. 2007, 104

We were asked to think about how we are living our lives and then to imagine you are 25 years older and you are still living the same way. Complete the two statements below about your life:

I just didn’t spend enough time --- visiting my children and my grandchildren.

I spent too much time  -- to myself, being without a car other than to go to get a ride to work and back.

We were asked to write one or two things you can do to bring more balance in our life so we can avoid any future regrets.

1. I can figure out ways that I can see my children and my grandchildren whether I have a car or not.

2. I can see about purchasing a small reliable car to get around without causing a problem for others.

 We were asked to Commit to do the following actions during the week: □ Act on your idea to bring more balance to your life. □ Share with your family or friends what you have learned about finding balance.

Remember the financial house I tried to build, but it would not copy over to my blog page? 

Picture the fifth floor --the roof/ attic area with these in it: 
CONTINUE TO GIVE AND TO BLESS OTHERS Teach your children • Lift the poor • Press forward in Christ

then the forth or top floor: SAVE AND INVEST FOR THE FUTURE Savings, home ownership, education, retirement

the third floor: ELIMINATE DEBT

the second floor: PROTECT YOUR FAMILY FROM HARDSHIP 1-month emergency fund, 3- to 6-months’ savings, insurance

the first floor: PAY TITHES AND OFFERINGS

the foundation is built on: FAITH IN JESUS CHRIST • UNITY WITH SPOUSE COMMITMENT TO SELF-RELIANCE

the walls are built of hard work and following a budget

and this is our: FINANCIAL STEWARDSHIP SUCCESS MAP

Why do you think “budget” is a wall on the Financial Stewardship Success Map instead of a layer? I believe that all the things are attached to work and budgeting on each floor.

In our group  we discussed one of the most vital tools for building financial security and becoming self-reliant: creating and effectively using a budget. A budget is a plan. Using a budget, you plan how you will use your money for a certain period of time. Following a budget will help you and your family take control of your temporal life, put off the natural man (see Mosiah 3:19), and invite the Spirit into your home. Budgeting can also help you to protect your family from hardship as you use it to allocate money for building an emergency fund, paying down debt, and saving for future expenses

. Creating and following a budget is an act of faith. We cannot predict the future, and costs often arise unexpectedly. It is important to remember that a budget must be flexible—continually adjusted and improved. When you create a budget this week, remember that it will need to be consistently reviewed and revised during your regular family councils. If you go over budget, don’t give up! It may take several months of adjustments before you have an effective budget.

1.       BUILD A BUDGET this was an activity that we did with our self-reliance group for this week. We practiced creating a budget.  We were asked to estimate the asked-for amounts based on what we know and what we have learned from tracking our income and expenses. One of our commitments this week will be to repeat this exercise with real numbers using the table at the end of this chapter. To build a budget, we need to start with our income.

 Step 1 -- fill in the first cell of the “Income” column with your estimated monthly net income. Net means what you actually take home.

 Step 2 --- The next step to creating a budget is to classify and estimate your expenses. You have been tracking your expenses and placing them in the categories you created in chapter 1. Now we will split our expenses into two types: “Fixed” and “Variable.” Below are some examples.

FIXED EXPENSES (F)	VARIABLE EXPENSES (V)
Mortgage/rent	Utility bills
Car payment	Groceries
Insurance payment	Eating out
Tithing	Fuel and transportation
Emergency fund	Home supplies
Other bills	Entertainment

Fixed Expenses

 Fixed expenses are for a definite amount and do not change. Most of these expenses will be monthly, but there may be some that occur more or less frequently. Fixed expenses cannot directly be controlled by spending habits; instead, fixed expenses are controlled by assessing your situation and making changes. A good way to identify fixed expenses is to ask, “Does this expense occur regularly, and is this expense the same amount each time?” Common examples include a mortgage, rent, a car payment, and certain expenses like internet, cable, or cell phone bills. There are also fixed expenses that aren’t necessarily monthly; sometimes expenses occur annually, semiannually, or quarterly. 

For example, if you pay car insurance every 6 months or life insurance every 12 months, this is a fixed expense. To convert this fixed expense to fit your budget, divide the amount you pay by the number of months between payments. While you may not pay this bill monthly, you will set aside the necessary portion each month so you can pay the bill when it is due.

We were asked to write our fixed expenses in the sample budget provided. Write an F in the “Type” column and estimate the amount of the expense in the third column. As you add expenses, keep a running balance of how much income is left in the “Balance” column. See the example budget for help.

Variable Expenses

 Variable expenses are not the same amount each month. There are some variable expenses that are not directly controlled by your spending habits. For example, expenses like your utility bills (water, gas, electric, and so on) fluctuate based on usage. However, even though the monthly amount may vary, you can still budget for these. When it comes to budgeting, the most important variable expenses are the ones you have the most control over. These are directly controlled by your spending habits. A good way to identify many of these expenses is to ask yourself, “Do I buy this from a store (or online)?” For many variable expenses, you fcan make the choice to spend more or less in these areas. Examples include groceries, fuel, eating out, cell phones, and entertainment.

This was another activity that we did in class:

We were asked to write our variable expenses in the sample budget. Write a “V” in the “Type” column and estimate the amount of the expense in the third column. As you add expenses, keep a running balance of how much income is left in the “Balance” column. See the example budget for help.

Sample Budget Activity (Using Estimated Values)

DESCRIPTION	TYPE	INCOME	EXPENSE	BALANCE
income	n/a	1539.24
Mortgage	F		250.00	1289.24
Car payment	F		400.00	899.24
Shed  rent	F		60.00	829.24
Tithing	F		250.00	579.24
Groceries	V		200.00	379.24

Balance

Example Budget

DESCRIPTION	TYPE	INCOME	EXPENSE	BALANCE
Income	F	1,000
○ Tithes and offerings	F		110	890
○ One-month emergency fund	F		50	840
○ Insurance	F		80	760
○ Rent	V		300	460
○ Utilities	V		30	430
○ Groceries and food	V		230	200
○ Debt payments	V		80	120
○ Transportation	V		50	70
○ Entertainment	V		30	40
○ Miscellaneous	V		40	0

Balance                                                                                                                0

2. BALANCE A BUDGET

 As you put together your budget, you may find that you have more in expenses than income. If this is your situation, you are not alone. And this is a problem you can solve. There are two ways to fix this challenge: Earn more income or spend less money. For now, let’s discuss how we can use a budget to help us spend less by learning how to control how much we spend on our wants.

We watched this video in our group this week where President Uchtdorf is telling about the marshmallow experiment: “Continue in Patience” available at srs.lds.org/videos.

https://www.lds.org/media-library/video/2010-09-18-continue-in-patience?lang=eng

After you watch, you can read through the transcript I have included the transcript for you below:

In the 1960s, a professor at Stanford University began a modest experiment testing the will power of four-year-old children. He placed before them a large marshmallow and then told them they could eat it right away or, if they waited for 15 minutes or so, they could have two marshmallows. He then left the children alone and watched what happened behind a two-way mirror.

Some of the children ate the marshmallow immediately. Some could wait only a few minutes before giving in to temptation.

 Only 30% were able to wait. What started as a simple experiment with children and marshmallows became a landmark study suggesting that the ability to wait, to be patient, was a key character trait that might predict later success in life.

I remember when I was preparing to be trained as a fighter pilot, we spent a great deal of all of our preliminary military training in physical exercise. We ran and we ran, and we ran some more. I began to notice something that frankly troubled me. Time and again, I was being passed by men who smoked, drank, and did all manner of things that were contrary to the gospel and in particular to the Word of Wisdom.

I remember thinking wait a minute. Aren't I supposed to be able to run and not be weary? I asked myself was the promise true or was it not? The answer didn't come immediately. But eventually I learned that God's promises are not always fulfilled as quickly or in the way we might hope.

Patience means staying with something until the end. It means delaying immediate gratification for future blessings. The work of patience boils down to this. Keep the Commandments. Trust in God, Our Heavenly Father. Serve Him with meekness and Christ-like love. Exercise faith and hope in the Savior. And never give up.

How are you like these children at times? Sometimes, I just want a marshmallow😊 but most of the time I am really good at waiting and working for things. Which child are you? I think I would lean more towards the child who waits for two marshmallows.

Next, Step 1. -- we were asked to analyze our current spending patterns. This exercise is really informative, and it shows you just where you are spending your money == if you are honest with yourself and with God. This is the way mine looks.

How do I feel about my spending	I Spend Too Little	I feel very good about my spending	I spend too much
Eating out at restaurant	xx
Groceries			xx
Snacks and drinks	xx
Entertainment		xx
Rent or mortgage		xx
Utilities		xx
Clothing	xx
Household items	xx
Transportation		xx
Insurance		xx
Cell phone		xx

For Step 2. We were asked to pair up with our action partner or spouse, then we were to identify where in our budget we could spend less and then write down our ideas:

THE COMMISSION PREDICAMENT

My husband gets paid on commission, so one paycheck is never the same as the last one. And sometimes there is a gap between receiving a paycheck at all! We’ve learned to just ‘go in order’: pay the most important bill first, then the next most important. Everyone has to decide what ‘most important’ means to them.

We were asked to discuss budgeting in our family council. We can understand the importance of this through Elder Hales teachings below:

Elder Robert D. Hales taught, “[One] important way we help our children learn to be provident providers is by establishing a family budget. We should regularly review our family income, savings, and spending plan in family council meetings. This will teach our children to recognize the difference between wants and needs and to plan ahead for meaningful use of family resources” (“Becoming Provident Providers Spiritually and Temporally,” Ensign or Liahona, May 2009, 9).

During your family council this week, work together with your spouse to create your family budget. If you are single, or if you would like additional help, counsel with a friend, parent, family member, mentor, or group member. 
I no longer have a spouse and I can’t really counsel with my family, so I am sharing the information I have learned in this group with each one of you. Below I have included the sample of a family council discussion, just in case you may want to use it with your own family.

SAMPLE FAMILY COUNCIL DISCUSSION Be sure to begin and end with a prayer to invite the Spirit.

 Part 1: Review ○ How much do you spend in each category?

○ How is budgeting an act of faith?

 Part 2: Plan ○ Create a budget using the instructions in this chapter. Fill out the “My Budget” table.

○ Are you being realistic about each budget category?

○ If needed, where can you spend less in your budget so that it is balanced or so that your spending aligns more closely with your needs or values?

We were asked to Individually think about what you have learned today and consider what the Lord would have you do. Read the scripture or quote below and write responses to the questions.

“Organize yourselves; prepare every needful thing” (D&C 88:119).

What are the most meaningful things I learned today?   

What will I do as a result of what I learned today?   I will create my budget and begin to use it on a more regular basis.

These are my commitments for the upcoming week:

 Ⓐ I will practice and share this week’s My Foundation principle.

Ⓑ I will create a budget using the “My Budget” table.

Ⓒ I will discuss my budget during family council.

Ⓓ I will contact and support my action partner.

Well dear Family and Friends, we have come to a close of this week’s session of personal finance for self- reliance. I hope and pray that in sharing these things with you that you too, can become financially stable and build your budget and follow it diligently😊 remember these things that were learning come directly from the Lord through His prophets, seers and revelators whom were chosen by Him to teach these things to each one of us.

This is a booklet called One For the Money, it is a guide to family finance. You can check it out here: https://www.lds.org/bc/content/shared/content/english/pdf/language-materials/33293_eng.pdf

There is also a pamphlet called All is Safely Gathered in Family Finances: https://www.lds.org/bc/content/shared/content/english/pdf/language-materials/04008_eng.pdf here are a few good quotes I thought I would share with all of you. I hope you enjoy them.

“A budget is people telling their money what to do instead of wondering where it went.” – John Maxwell

“If there is any one thing that will bring peace and contentment into the human heart, and into the family, it is to live within our means. And if there is any one thing that is grinding and discouraging and disheartening, it is to have debts and obligations that one cannot meet.” -Heber J. Grant

“I am convinced that it is not the amount of money an individual earns that brings peace of mind as much as it is having control of his money. Money can be an obedient servant, but a harsh taskmaster.” -N. Eldon Tanner

“Many people think a budget robs them of their freedom. On the contrary, successful people have learned that a budget makes real economic freedom possible.” -N. Eldon Tanner

“Those who structure their standard of living to allow a little surplus, control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage” -President N. Eldon Tanner (“Constancy Amid Change”)

“Interest never sleeps nor sickens nor dies; … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” -J. Reuben Clark

“Let us use the opportunity we have to speed up repayment of mortgages and to set aside provisions for education, possible periods of decreased earning power, and emergencies the future may hold.” -Ezra Taft Benson

You will find a family budgeting worksheet here: https://www.lds.org/bc/content/shared/english/pdf/callings/welfare/72727_FamilyBudgetWorksheet_pdf.pdf

There are more resources on family finances here: https://www.lds.org/topics/family-finances?lang=eng

FamilyBudgetandExpenseRecord.xls :  http://www.mormonshare.com/wp-content/uploads/2014/08/FamilyBudgetandExpenseRecord.pdf

DFM-Monthly-Budget-Worksheet.pdf:  http://www.debtfreemormon.org/wp-content/uploads/2014/08/DFM-Monthly-Budget-Worksheet.pdf

I  hope that you are enjoying learning about finances with me. This upcoming week we are working on creating a budget – so let’s each create!! I have included a couple more things for your use in figuring out your budget. These sites have some printables for your use. I wanted to be sure you had enough information before you get started😊 as always, until my next post, keep on studying your scriptures and please make it a great week!!!