Whenever I tell someone of another faith-and often when I tell my LDS friends-that I wrote a book about financial planning for Latter-day Saints they ask, “What is the difference between financial planning for Mormons and for other people?”
The differences aren’t dramatic and some would argue that some people of other faiths face the same issues, but most people will recognize most or all of these differences as distinguishing us from our friends.
1. Tithing: Of course, Latter-day Saints are not the only ones to pay tithing nor even to pay a ten-percent tithe religiously, but the fact is that relatively few people give a full ten percent of their income to their church. When considering the implications of tithing on financial planning, families should remember that the portion of their income available for a mortgage might not be as high as national standards would suggest. Despite frugal living and the savings from living the Word of Wisdom, a modest dose of caution is in order.
2. Children: It should be noted that our Catholic friends may well have a claim to having “invented” large families, but we’ve joined the club. Large families create a variety of planning issues, especially with respect to saving for college. The flip side of the coin is that Brigham Young University is an extraordinarily good deal for Latter-day Saints and a squarely good deal for our friends of other faiths who choose to attend.
3. Missions: In addition to putting our kids through college, we also want to send them on missions. At present, a mission for young men costs about $10,000. While the historic cost of a mission has not risen at the rate of U.S. Inflation, the monthly cost has been adjusted to reflect rising costs and could increase in the future. With the earlier ages for missions, especially for young women-whose missions today cost about $7,500-we need to be saving for missions as well as college.
4. Retirement: While virtually everyone hopes to retire, what Mormons plan to do in retirement differs from the plans of most of our friends. We’re encouraged to spend our healthiest years in retirement serving missions. Serving one or more missions in retirement needn’t add material costs to retirement, but serving will require planning. By arriving in retirement debt free and owning a home, serving a mission is within reach for most.
5. Debt: Some financial planners discourage debt on principle, but many encourage their clients to maintain “a healthy” level of debt, especially mortgage debt. Our LDS leaders have acknowledged that most people can’t hope to acquire a home without a mortgage and have not discouraged us from doing so. That said, we have been encouraged to work toward getting completely out of debt.
6. To do good: The Prophet Jacob makes clear that if we seek for wealth, we should do so “for the intent to do good-to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted.” There are countless people of other faiths who share this belief, but using our resources for the benefit of others is a key principle of our faith, too.
While a good financial planner of any faith can help you with your financial planning, be sure to highlight the LDS issues that may seem natural to you, but may not be naturally assumed by your advisor.
Devin Thorpe is the author of Building Wealth for Building the Kingdom, which addresses these and other financial topics; you can connect with Devin on his blog at BuildingWealthForBuildingTheKingdom.com, on Twitter or Facebook. Be sure to share your experiences in the comments below.
MichaelApril 8, 2013
As President Gordon B. Hinkley taught, "Learn to live on less than you earn." Should young people take out loans to "establish a credit history"? Of course not. What other pitfalls await? One that lures many is student loan debt. Student loan debt has become a crisis in America and, amazingly, is now greater than credit card debt. For students who choose this route, the risks are enormous. Statistically, about half will drop out of college before they graduate. About half who do graduate are, these days, not finding jobs in the discipline where they earned their degrees. So, a total of 75% must then find other work, but still pay back burdensome loans. Debt can seriously affect quality of life.