Thinking Straight about Money
By Jeffry Sessions

Many of us think that if we had a million dollars drop on our doorstep it would help solve our money problems. Winning the Readers Digest Sweepstakes is not the answer (OK, I will admit that it would help… short term).  However, it is true that many lottery winners, after a few years, find themselves back in much the same financial circumstances with one addition — lots of regret. If they had a few key spending and savings guidelines (many times called “A Personal Financial Constitution”) in place, chances are they would still be well off.

In some ways, we can all be regarded as lottery winners. First of all, those of you who are reading this are on the earth in a place and time when we are enjoying an unusual amount of abundance and prosperity.  Consider, if we earned approximately $40,000 a year with a 4% pay raise, we will experience, in 10 years, almost $500,000 passing through our paycheck.  Over one’s lifetime, it would not be unusual to see several million dollars pass through our checkbook. That seems to make us winners indeed.

I believe that many times we don’t take the time to decide how we are going to manage our money when we get it. What was once a want now becomes a need and so it spirals upward (or downward — however you look at it).

Additionally, many of us have overextended ourselves through unwise or uninformed choices. For example, suppose we are buying a new car and the salesperson asks us if we wish to have tinted glass and an accent stripe on the side of the car. We are told that these additions will “only add $15 a month to our payment”. Well, over a 60-month period that decision just cost us an additional $900.00. If you were asked if you wanted to spend an additional $900.00 up front you probably would have declined the accessory.

I have found no quick fix when it comes to handling money effectively. However, I know that as we make efforts to understand correct financial principles, and then be accountable on how we spend our resources, we will find greater peace and confidence in our lives.

Manage Yourself Like a Company

We as individuals can apply a financial principle that successful companies use to manage their money. Most successful businesses have financial policies and procedures that determine how they will spend their money. Why shouldn’t we?

With a Personal Financial Constitution we can have standards or guidelines that will help us make future financial decisions and then apply those principles through regular accountability reviews. I would suggest creating a written “constitution” about how you (individually and/or as a family) intend to more effectively handle your finances. It will require some time and effort to create, but it can be a tremendous help if we wish to work to resolve our financial concerns and effectively plan for our future.

I know a couple who has decided that, given their modest income, it is very important to keep a firm control on their spending. Their financial constitution includes a belief that they should meet every Saturday morning and review how they have spent their money during the previous week.

“We have learned that we stay out of Target and Wal-Mart unless we have a specific reason to go… with a list”, they said. They have applied actions to their beliefs. This is a tremendous key to one’s success.

If we were to describe the Constitution of the United States, we could easily find many metaphors: an owner’s manual, a reference guide on how to run a country, a job description for presidents, legislators and judges, etc.

Likewise, a Personal Financial Constitution provides ongoing direction, a written document outlining not only our beliefs or philosophy about the handling of our money but an action plan that asks us to be accountable for our beliefs. Experience tells us that these two elements must exist if there is to be any lasting change.

Your Financial Constitution Template

The template below is intended to give you areas to consider, refine and make your own. There are some areas that you will want to include and others that you will want to modify or delete entirely. The goal is to make the template fairly inclusive — yet you must refine it as you read, discuss, put in draft form and eventually “publish” as your own.

Go through it fairly quickly and delete those paragraphs or sentences that don’t apply or resonate with you. Then highlight those areas that you think captures what you want to include in your constitution and write out a draft.

As you go deeper into this process, you should take the time to think deeply about what you believe and want to have happen with your personal finances. As you do so you should come to some conclusions on how you will manage your money. The goal is to produce the best results with a reasonable amount of effort. Don’t get bogged down with this. Take some time and discuss it with other family members, talk about it over a couple of family home evenings or make it a topic at the dinner table. You soon will create a level of clarity which will be extremely important to your feelings of success and personal fulfillment.

Our Financial Constitution

Part One: What We Believe about our Finances

• We believe in the value of being wise stewards over our finances. We must be careful with how we treat the money that comes to us.

• We are always willing to learn, grow and take action on the decisions we make with our money.

• We are committed to be lifetime learners of principles of correct financial management and seek to apply them as quickly as possible. We will evaluate how we are doing regularly and make whatever changes to enjoy the blessings of following those principles.

• We are humble and willing to change our attitudes, behaviors and traditions about how we handle our money (as we see that what we are doing is not getting us the results we want).

• We are always working to be careful and prudent consumers.

• We keep our covenants to be obedient. We are committed to follow the counsel given to us by our leaders to the best of our ability.

• We are honest in all our financial dealings.

• Money is a means and not the goal in all we do.

• We will use our money to bless people’s lives.

• We will always pay the Lord first and expect, by patience and faith, to receive His promised blessings.

• We recognize that we don’t have the answers to all of the decisions we make so we seek help through reading, consulting others and responding to the feelings that come to us as we prayerfully seek solutions to important financial decisions.

• We believe we will do all we can to get out of debt.

• We will do all we can to plan for large purchases and pay cash for them.

• We will look forward to retirement and save for the day we will be able to use these funds to allow us to serve the Lord in our retirement years.

• We believe that if something is too good to be true it probably is.

• We believe that we must plan for the future and put money aside regularly for long-term savings and food storage.

• We will pay our obligations and taxes on time and not expect or shift the burden of our debts to others.

• We will review our finances regularly and carefully follow our budget.

• We will not dwell on our past mistakes. But we will remember what got us into trouble in the first place and avoid them.

• We believe that to be effective in managing our money we should review and follow our financial constitution and therefore experience beneficial, lasting results in our lives.

Part Two: Application of our Family Constitution

It is one thing to have a correct understanding or even commitment to follow correct principles and beliefs. It is another to do all we can to make our goals and wishes a reality. The first part is only a wish or a philosophy without any faith or action. This part will ask you to do something about what you feel and believe. You do this by attaching specific action steps (an application linked to your beliefs) that will make what you want to have happen a reality.

Suppose we selected five items from the above list and wanted to make this our Family Constitution. It might look like this:

I — We Believe:

We are wise stewards over the Lord’s money.

Application:

1. We will create a budget and track how we spend the money that comes to us accounting for each dollar that comes.
2. We will review every Saturday morning how we are doing (for the first two months then review every odd Saturday) on how we are spending our money.
3. We will review our Family Financial Constitution at least quarterly for the first year.

II — We Believe:

We are careful and prudent consumers.

Application:

1. We will make a list of what we need and then be patient on purchases that we want. If we don’t find what we really need at a reasonable price, then we will wait for them to go on sale.
2. We will distinguish between wants and needs and will look for quality as well as items that are a good value. We will talk about what we feel is a need before we buy.

III — We Believe:

We will follow counsel to work to get out of debt and stay out of debt.

Application:

1. We will make a list of our debts and then create a schedule to pay them off.
2. We will review this list on the first Saturday of every month.

IV — We Believe:

We must plan for the future and set aside money for our retirement.

Application:

1. We will set aside $25.00 a month to purchase food storage
2. We will have $150.00 a month withdrawn from our paycheck to go to the matching company retirement account.

A word of caution:

This will be an enlightening and very helpful experience if you want it to be. As mentioned, we’re talking about a lot of money that will be passing through your checking account in the years to come. This is a process that gets better every time you review it. Take the time to work on it. Think about it. You will find that as you create on paper what your beliefs are about managing your money — with a written plan to apply your beliefs.  It will be a tremendous resource to you. You will feel a greater level of motivation, confidence and peace as you carefully design your future.