ECONOMISTS say that their discipline is a study of man's attempts to satisfy unlimited wants with scarce resources. The gospel worker has considerable experience at this kind of economic activity in his attempts to meet his family's wants with the limited resources at his command. The demands are multiple, in that he is expected to maintain a middle-class standard of living, to be available throughout his district with what that implies in transportation, to provide for the education of his family, and to change his place of living several times during the course of his working life. To survive financially during the years when his children are growing out of their shoes is no small task. In recent years the challenge has been increased by the fact that many college graduates have student loans to repay. The problem is further complicated since the new graduate's earning capacity is at the lowest point when he has the greatest needs.
Despite the challenge, some families are able to make the available funds provide a lot more of the essentials than others do. Since there are differences in results from the same income, there must be reasons for these differences. To discover the reasons we need to know what the principles are at the root of success and the causes of failure in family finance. Why is it that some are able to satisfy their family needs within the available re sources and some are not? "One family may require for its support twice the amount that would suffice for another family of the same size." --The Adventist Home, p. 374.
There are some families that plan and some that hope. It is reasonable that those who consciously prethink the alternatives have a better chance of success than those who wander aimlessly, expecting somehow to come out. A fairly large proportion of financial difficulties . . . seems to arise from a failure to plan. Certainly a good number of failures would be avoided through planning. There are relatively few planned failures, but innumberable unplanned ones. Robert W. Johnson, Financial Management, fourth ed. (Rockleigh, N.J.: Allyn & Bacon, 1971).
It is very important that a family develop a plan for financial survival. The planning scheme proposed here has four phases. As a unit the family should predetermine their goals, then develop a budget. Next, provision must be made to record expenditures, and a regular check should be made to see whether the plan is succeeding.
This proposal is not new, but one all too often overlooked.
Many, very many, have not so educated themselves that they can keep their expenditures within the limit of their income. ... All should learn how to keep accounts. Some neglect this work as nonessential, but this is wrong. All expenses should be accurately stated. --The Adventist Home, p. 374.
A systematic approach where records are checked in some way against a plan is fundamental to success in family finance.
1. A family financial plan first calls for joint development of goals. To achieve maximum success it is necessary for the members of the household to cooperate. A system imposed by one member of the family will not achieve the degree of success that is possible.
There must be a meeting of minds within the entire . . . unit. This can be achieved only when each ... is expected to think through what the unit objectives are, is led, in other words, to participate actively and responsibly in the work of defining them. Peter F. Drucker, Richards, & Neilander, Management by Objectives, Readings in Management, p. 320 (Cincinnati: South-Western Publishing Company).
2. A budget is the basis for success. After goals have been jointly agreed upon in the various areas of family endeavor education, living standards, transportation, savings, et cetera, then expenditure amounts should be predetermined. The family should prethink the categories of expense within the context of the total funds available. Each major category of expense should be included in the plan. We should look beyond food, clothing, housing, transportation, tithe and offerings, and household operation to education, savings, home ownership, and a sum for each to do with as he pleases. We have been encouraged to economize in the other categories so that we will have an amount for savings and be able to purchase a home. "Had Brother and Sister B been economical managers, denying them selves, they could ere this have had a home of their own and besides this had means to draw upon in case of adversity." --The Adventist Home, p. 395. Savings is a must in Adventist family finance.
What happens in our planning when we have added up total outlay and it exceeds total income, as it probably will? The economist defines this problem by explaining that man is a wanting animal, that by nature he has unlimited wants. We have all discovered the other portion of the economic proposition, that man has limited resources at his command. Your problem is not unique then; it is present in all human endeavor. We must find methods of choosing between alternative wants and provide incentives for economizing.
There is counsel in abundance in the writings of Ellen G. White about Adventist families that had not learned to economize.
I was shown that you, my brother and sister, have much to learn. You have not lived within your means. You have not learned to economize. If you earn high wages, you do not know how to make it go as far as possible. You consult taste or appetite instead of prudence. . . . Dollars slip from your pocket very easily. --Testimonies, vol. 2, pp. 431, 432.
In looking at expenditure we often look at the smaller items where there may be more to be gained by examining the larger categories in terms of total dollars. Money can be unnecessarily spent in any category of expense. Some people purchase trinkets that, are soon discarded, others must be the first to have a new item, thus contributing to what the economist identifies as innovation profits.
We should examine closely some of the seemingly fixed expenses. Planned economies can be made, but are often overlooked in mortgage and automobile payments. Interest rates play an important part in these economies. Shopping for a 6 percent mortage as opposed to 9 percent can make a difference of up to $600 per year. It is also foolish to pay credit-card rates of interest at 1.5 per cent per month, or 18 percent per year, when you can borrow at the bank for less than half that rate.
What is called for is balance in expenditure, not overemphasizing any one aspect of family life and leaving a margin for savings. The kind of balance needed is described so aptly in The Adventist Home.
Many things are needed in the family for convenience and comfort. The lack of appreciating order and system in the arrangement of family matters leads to destructiveness and working to great disadvantage.
We cannot make the heart purer or holier by clothing the body in sackcloth or depriving the home of all that ministers to comfort, taste, or convenience.
God does not require that His people should deprive themselves of that which is really necessary for their health and com fort, but He does not approve of wantonness and extravagance and display. Page 379.
3. Keep adequate records and use them. The third essential in a system of planned family finance is a method of allocating funds and keeping record of the expenditures. It is here that the system often breaks down because the family's resolve to improve its finances is accompanied by an enthusiasm that will not usually be sustained. There are some simple ways of recording expenditures that can be used effectively. Some items, including tithe and offerings, auto payment, house payment, utilities, and savings, can be written by check. You should sit down a few days before the due date and write these checks, at the same time you will be developing a permanent record.
For those expenses that call for payment throughout the period, cash can be allocated to whichever parent is the appropriate one to care for that type of expenditure. The food budget, for instance, can be kept in a separate compartment in a purse. Records can thus be kept without detailed entries, the balance on hand indicating the amount expended.
The family financial plan does not need to encompass an elaborate record-keeping system. Some have tried to record each expense and became discouraged with the task. There are many approaches that can be taken to recording expenditures that fulfill the requirements without undue complication. What is essential is that we know where funds have been spent. To keep record of every cent is a waste of time, but there must be a means of determining where the money has gone. When we know what our expenditures are, we have a means of checking actual against plan. A systematic approach where records are checked against a plan is fundamental to success in family finance.
4. Control. This final step in the plan for family finance is what the accountant calls control. It involves checking to see whether we are on course and modifying either the plan or the actions if we are not where we planned to be. At some regular interval, probably every three months, we take stock of how we are doing. We check actual against plan and modify as needed. For any family that views finance as a matter of common concern, and where there is an effort to communicate, this approach, when modified to fit personal preference, should bring results.
