Post # 98 – Personal Finances for Self-Reliance 6

Lesson # 6 Protecting Your Family From Hardship

Dear Family and Friends

In today’s post I will be sharing lesson six in our personal finances for self-reliance group with each of you. We talked about how to protect out families from hardship, but first we reviewed last week’s commitments:

Last Week’s Commitments

Practice and share last week’s My Foundation principle. – Solve Problems

Choose a budgeting system.

Discuss sticking to a budget during family council.

Contact and support my action partner

 

For this week -- My Foundation Principle – Use Time Wisely Financial Principles and Skills 1. Protect your family from hardship. 2. Build a one-month emergency fund. 3. Acquire adequate insurance

What challenges did you have with keeping your commitments this week? I chose to use a digital budgeting system -- using it a was challenging for me. I am still working on finding just the right one to use. I was a little unsure of putting my banking information on line, those in my group have helped me understand the process a little better. I will try again, if I can’t make it work I’ll go back to using my check register for recording my spending.

What are the things you learned from striving to keep your commitments during the week. I have learned – that I am not to old to learn new things😊 and that I can still solve my problems even if it is in an out-of-the-box way.

Here are questions for this section for you: ○ What experiences did you have practicing or sharing the My Foundation principle? ○ What budgeting system did you choose, and why?  What features of the system are most important to you?

Why is time one of God’s greatest gifts? Watch: “The Gift of Time,” available at srs.lds.org/videos.  What did you learn from Sister Benkosi?

THE GIFT OF TIME If you are unable to watch the video, you can read this script.  You can find the video here: https://www.lds.org/media-library/video/2014-06-1120-the-gift-of-time?lang=eng&_r=1

KOFI: Hello, Sister Benkosi. How are you? SISTER BENKOSI: Are you okay, Kofi? KOFI: Oh, Sister Benkosi. I’m so busy. I have to work and serve and help my family . . . and then my football, too. I have no time! SISTER B.: Kofi, you have all the time there is. KOFI: What? SISTER B.: My boy, God has given us a great gift—our time. We must do with it what matters most. KOFI: But how, Sister Benkosi? You have always done so much. You have succeeded with your family, with your business. You have served and blessed many, like me. I don’t know how you do it. SISTER B.: Do you really want to know? If you will sit still and listen, I will tell you my secret. Every morning I rise before the sun. I dress and wash my face and hands. I read the scriptures. Then I make a list of what I should do that day. I think of who I might serve. I pray to know God’s will. And I listen. Sometimes the names or faces of people come to mind. I add them to my list.

KOFI: Is that how you always know just who needs your service? SISTER B.: Yes, Kofi. And I pray for strength and wisdom. I pray that God will “consecrate [my] performance.” It says that in 2 Nephi 32. I thank Him. I promise to do my best. I ask that He will do what I cannot. Then I look at my list. I put a 1 by the most important thing, then a 2. KOFI: How do you know the priorities? SISTER B.: I listen when I pray! Then I go to work. I look at number 1 and try to do it first, then number 2. Sometimes things change. The Holy Ghost tells me to do something else. That is good. I work very hard, but I have peace. I know God will help me. So, with my list and the Spirit, I do what matters, Kofi. KOFI: That sounds simple and hard at the same time. SISTER B.: You are right! When I finally prepare for bed, I pray. I report to Heavenly Father. I tell Him how the day went. I ask questions. I ask what I can do better. I listen. I often feel His love. I know He magnifies what I try to do. Then I have peace, Kofi, and I sleep. KOFI: That is good, Mamma Benkosi. I want this peace. I want to use my time. I want to work and serve better.

“For behold, this life is the time for men to prepare to meet God; yea, behold the day of this life is the day for men to perform their labors.” ALMA 34:32 Here is a quote by President Brigham Young:   

“Time is all the capital stock there is on the earth. . . . If properly used, it brings that which will add to your comfort, convenience, and satisfaction. Let us consider this, and no longer sit with hands folded, wasting time.” BRIGHAM YOUNG, in Discourses of Brigham Young,  sel. John A. Widtsoe (1954), 214

We did this activity in our group and I wanted to share it with each of you.

Step 1: With a partner, read the five steps you can take each day to use your time well.

Step 2: On a separate piece of paper, list your tasks. These should be important tasks for your work, for school, for church, or for family service—not just daily chores. Pray about and prioritize your list. Step 3: Tomorrow you should set goals, act, and report how you’ve used  your time.

 Commit to do the following actions during the week. □ Practice these steps every day to use your time more wisely. Report each night to Heavenly Father in your prayers.  □ Share what you’ve learned today about using time wisely with your family or friends.

➊ LIST TASKS --- Each morning, make a list of tasks to do. Add names of people to serve.

➋ PRAY-- Pray for guidance. Review your list of tasks. Listen. Commit to do your best.

➌ SET PRIORITIES=== On your list of tasks, put a 1 by the most important, a 2 by the next most important, and so on.

➍ SET GOALS, ACT--- Listen to the Spirit. Set goals. Work hard. Start with the most important task and work down the list.

➎ REPORT--- Each night, report to Heavenly Father in prayer. Ask questions. Listen. Repent. Feel His love.

TODAY’S DISCUSSION: 2 PROTECT YOUR FAMILY FROM HARDSHIP

CONTINUE TO GIVE AND TO BLESS OTHERS Teach your children • Lift the poor • Press forward in Christ

SAVE AND INVEST FOR THE FUTURE Savings, home ownership, education, retirement

ELIMINATE DEBT

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

PAY TITHES AND OFFERINGS

FAITH IN JESUS CHRIST • UNITY WITH SPOUSE COMMITMENT TO SELF-RELIANCE

FINANCIAL STEWARDSHIP SUCCESS MAP

 1. PROTECT YOUR FAMILY FROM HARDSHIP

 Preparation is a powerful gospel principle. The Lord promises that “if ye are prepared ye shall not fear” (D&C 38:30). After our obligation to pay the Lord first through tithing and other offerings, our second obligation is to work to protect our families from hardship. We can do this only if we develop a long-term perspective. In this chapter we will learn two steps to protect our families from financial hardship: 1. Develop a one-month emergency fund 2. Acquire adequate insurance

2. BUILD A ONE-MONTH EMERGENCY FUND

  By tracking your expenses for at least four weeks, you should have now identified the amount of money required for one month’s worth of living expenses. Your one-month emergency fund should equal this amount. For your one-month emergency fund, you should save cash in a safe and accessible place such as a bank account. Do not use this money for anything other than emergencies. If you have an emergency and must use money from your one-month emergency fund, immediately begin putting money back into the fund until it is full. Later, after you have paid down all of your consumer debt, you will begin to save enough money to cover your expenses for three to six months (we will cover this step in chapter 9).

 We were asked to take a few moments to look at the Financial Stewardship Success Map. Why do you think that protecting your family from hardship is the second priority after paying tithes and offerings? Because you never know when a hardship of one kind or another may occur so it’s important that we are prepared ahead of time for when it does come.

You should work to build a one-month emergency fund as fast as possible. Put any extra money you have toward your emergency fund until it is complete. Even if you have debt, make only the minimum required debt payment until you have built a one-month emergency fund. To help speed up this process, you may want to find extra or better work, sell some things you can live without, or eliminate some unnecessary expenses. This is a tough one for me at this time in my life. I am at the age that it is harder to find new work. Also, with my cancer treatments on a regular basis as well as needing time off for regular occurring tests. And then there is the fact that I am not qualified or trained to do anything else. So, for me to find better paying work wouldn’t be a good option. I do not own anything worth selling, so that would not be a very viable option either.

3. ACQUIRE ADEQUATE INSURANCE

  How would it impact you or your family financially if one of you became very ill or disabled, or perhaps even passed away? What would be the financial impact of something like a house fire or a serious car accident? These types of hardships happen, and if we are not prepared, they can cause major financial problems. A good source of protection against possible hardship is insurance. Insurance is an arrangement in which an organization (typically an insurance agency) guarantees to compensate an individual for specific hardships in exchange for a fixed payment.

President N. Eldon Tanner taught, “Nothing seems so certain as the unexpected in our lives. With rising medical costs, health insurance is the only way most families can meet serious accident, illness, or maternity costs. . . . Life insurance provides income continuation when the provider prematurely dies. Every family should make provision for proper health and life insurance” (“Constancy amid Change,” Ensign, Nov. 1979, 82). Which you can read here: 

https://www.lds.org/study/ensign/1979/11/constancy-amid-change?lang=eng

Constancy #1: Pay an honest tithing. Constancy #2: Live on less than you earn. Constancy #3: Learn to distinguish between needs and wants. Constancy #4: Develop and live within a budget. Constancy #5: Be honest in all your financial affairs.

 What blessings can come to your family from having a one-month emergency fund?  Why should you build an emergency fund before paying down debt?

 Why is insurance so critical? What blessings can come from having adequate insurance?

Benefits of Insurance

 Insurance can help protect you from the financial devastation that accidents and other hardships can bring.

In our group we were asked to review the two scenarios below. Then to discuss how insurance was beneficial in these situations.. Scenario 1: You were in an automobile accident and it was your fault. Your car was severely damaged, as was the other driver’s. Both you and the other driver suffered some injuries and had to receive medical care. The total cost to repair both vehicles and to pay the medical bills ends up being over 15,000.

	WITHOUT INSURANCE	WITH INSURANCE
Total cost	15,000	15,000
Cost covered by insurance	0	12,000
Cost you must cover	15,000	3,000

Scenario 2: A 45-year-old father has worked as an electrician and has earned 3,500 per month. He is the sole provider for his wife and three children. He injured his back and will no longer be able to work as an electrician. He won’t earn any money until he can get a different job, which may require school or other training.

	WITHOUT INSURANCE	WITH INSURANCE
Total Cost	0	0
Cost covered by Insurance	O	3,000
Cost you must cover	0	3,000

Types of Insurance

 You do not need to insure all things—that is why you are building an emergency fund and other savings. However, it is critical that you protect yourself from hardship that could be financially devastating. President Marion G. Romney taught that “we have . . . been counseled [to] have a reserve of cash to meet emergencies and to carry adequate health, home, and life insurance” (“Principles of Temporal Salvation,” Ensign, Apr. 1981, 6).

There are many types of insurance, but the four most common are these: ○ Property insurance: Property insurance, such as homeowners, renters, and automobile insurance, can help cover the cost to replace or repair property in the event of serious damage, theft, or destruction. ○ Health insurance: Health insurance can help cover the cost of health care, from covering well-care visits and treating illness to paying for major medical events. Depending on your location, health care may be a government service and your need for health insurance may vary. ○ Life insurance: Life insurance provides a family with a sum of money if an insured family member dies. ○ Disability insurance: 

Disability insurance guarantees that a portion of the insured person’s income will be paid if he or she becomes disabled and is unable to work for an extended period of time.

In our group we were asked to pair up with our spouse or action partner, and share our understanding of property, health, life, and disability insurance. Discuss what types of insurance coverage would be important to have in our circumstances.

Insurance Costs

 Now that we have a basic understanding of insurance and some of its potential benefits, let’s discuss some of the costs. The two primary types of costs or expenses associated with insurance are the premium and the deductible. A premium represents the price of the insurance—or the money you pay directly (often monthly or annually) to the insurance company in exchange for the coverage. A deductible represents the amount of money that you pay toward your expenses (such as medical expenses or automobile repair costs) before the insurance company will cover the remaining costs.

Cost-Benefit Analysis

 When comparing insurance plans, you are essentially trying to compare what the plan could potentially cost you versus what it could potentially provide in coverage. It may be helpful to compare best-case to worst-case scenarios.

Annual Minimum Cost (The Best-Case Scenario)

To calculate the annual minimum cost, simply multiply your monthly premium by 12 months (12 x the monthly premium), or look at the annual premium if you are billed just once a year. This scenario assumes that you do not have an insurable event in the year.

Annual Maximum Cost (The Worst-Case Scenario)

To calculate your annual maximum cost, add your annual minimum cost to the annual deductible ([12 x the monthly premium] + deductible). This scenario assumes that the expenses of the insurable event exceed your annual deductible. With this information you can now compare the expense ranges of different plans. The following example demonstrates a way that you can compare plans.

We did this CALCULATOR EXERCISE in our group, which I m very glad of because I am not very good with numbers. I was very grateful for the help. If you find it easy to figure these things, you are in good shape.

Read through the following scenario as a small group. Each person in the group should use his or her calculator, as directed. Help each other as needed and ensure that every person is able to get the right answer.

 Imagine that you are comparing two renter’s insurance plans: a plan with a high deductible of 2,000 that costs 10 each month, and a plan with a lower deductible of 500 that costs 40 each month.

 Calculate: Each person in the group should calculate the annual minimum and maximum costs for each plan. Write your answers below. $500.00 @ $40.00 per month 480 low deductible // $2,00.00 @ $10.00 per month 120 high deductible

 Calculate: How much money will the high-deductible plan save you in the best-case scenario (assuming you pay only the annual minimum cost)? Write your answer below. Answer: 480 – 120 = 360

 Hint: (Low-deductible plan annual minimum cost) – (High-deductible plan annual minimum cost)

ANNUAL MINIMUM COST ANNUAL MAXIMUM COST

Annual Minimum Cost	Annual Maximum Cost
High-deductible plan	12 x 10 = 120	120 + 2,000 = 2,120
Low-deductible plan	12 x 40 = 480	480 + 500 = 980

High-deductible plan Low-deductible plan

 Notice that in the best-case scenario, the high-deductible plan will save you 360. This means that even if you have to cover up to 360 in renter property-related expenses out of your own pocket, it is still less expensive to go with the high-deductible plan, for this situation. However, this is not true in the worst-case scenario.

 Calculate: How much money will the lower-deductible plan save you in the worst-case scenario (assuming you had to pay the annual maximum costs)? Write your answer below. Answer: 2,120 – 980 = 1,140

 Hint: (High-deductible plan annual maximum cost) – (Low-deductible plan annual maximum cost)

 In the worst-case scenario, where you had to pay out the maximum annual cost, you would save almost twice as much (over 1,000) by choosing the lower-deductible plan. As you try to decide between insurance plans and options, consider your situation or that of your family in order to choose the plan that best fits your needs.

Considering Other Benefits

 In the activity we just completed, we were evaluating one type of property insurance plan (renters’ insurance). We can use the same kind of process when comparing other types of insurance. However, there are often other factors to consider, beyond just the potential minimum and maximum costs.

 Here are some additional questions to ask when analyzing different insurance plans: ○ What services or events are covered? ○ What are the types and limits of the coverage? ○ What is the reputation of the insurance provider? ○ Are there discounts you might qualify for? ○ How likely is it that you would pay close to only the minimum out-of-pocket expenses? ○ How likely is it that you would have to pay the maximum out-of pocket expenses?

ANNUAL CHECKUP

I used to sell insurance, and I know that rates rise over time. I don’t sell insurance anymore, but I compare rates across insurance plans every year to make sure I am getting the best deal. Every November I review my plans and get quotes from other companies. This keeps my costs as low as possible.

We were asked to discuss the emergency fund and insurance in our family council. I do not have family council with my family. I live with my daughter and her family  -- they do not do family councils in their family. I try to encourage them, but so far we’re not there yet😊

  In your family council this week, discuss ways to build your one-month emergency fund. Also determine which insurance plans are important for your family and investigate insurance policies. You may want to use the “Sample Family Council Discussion” outline below.

Be sure to begin and end with a prayer to invite the Spirit.

 Part 1: Review ○ How are you doing on following your budget? ○ Do you have adequate insurance? What insurance policies do you need in your circumstances?

 Part 2: Plan ○ If you don’t have adequate insurance, which insurance coverage should you obtain? Conduct a cost-benefit analysis of the plans available (see pages 97–98). ○ What can you do to quickly build your one-month emergency fund?

SAMPLE FAMILY COUNCIL DISCUSSION

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.

“Prepare thy work without and make it fit for thyself in the field; and afterwards build thine house” (Proverbs 24:27). What are the most meaningful things I learned today?   

What will I do as a result of what I learned today? I will keep working towards my emergency fund. I will check on life insurance. And I will also work on improving my time management skills😊

MY COMMITMENTS Ⓐ I will practice and share this week’s My Foundation principle. Ⓑ I will begin building my one-month emergency fund and research applicable insurance options.

Ⓒ I will discuss my emergency fund and insurance plans in my family council.

Ⓓ I will contact and support my action partner.

Well my dear Family and Friends, we are at the end of this lesson and this post. I do hope that in sharing today’s lesson you have learned as much as I have in attending the group. If you are all financially stable, you are well on your way. I thought that I had been doing pretty good, but I have learned that I was not doing things in the way the Lord would have me do them.

Now that I am learning His ways of financial preparation and the ways that He would have me manage my finances to attain self-reliance, I know that I will be on the right track and I will eventually attain self-reliance😊 as I hope and pray that each of you will as well. As always, keep praying, studying your scriptures, and working diligently towards self-reliance through your personal finances. Remember who you are!! Until my next post, everyone please make it a wonderful week!!