Spring is a time of new beginnings. With that in mind, it can be a good time to take a look and see if your finances might need a little “spring cleaning.” In this issue readers will find articles that address concerns around managing your finances and planning for the future.
With this second issue of Tomorrow in 2019, we are pleased to welcome, Rev. Lauren Lisa Ng as our guest writer. As Director of Leadership Empowerment at the American Baptist Home Mission Societies, Lauren brings a fresh perspective to the topic of financial wellness. In her article, Financial Wellness, Deconstructed: Three Simple Lessons to Help Build Confidence Around Money, she discusses the path from financial literacy to financial empowerment and how it leads to financial wellness.
Next, you’ll find recommendations for how often you should review your retirement plan. When Was the Last Time You Checked Your Retirement Plan provides helpful tips on the life stages that often trigger a review of your retirement goals and prompt you to make any necessary changes.
Using Technology to Manage Your Finances offers useful information about the many online programs and mobile apps available to assist you with financial tasks such as budgeting, tracking spending, paying bills, making deposits, tracking investments and, aggregating your accounts.
How Rising Interest Rates Affect Your Finances is a timely article that addresses questions you may have as you read stories and watch the news concerning ongoing debates around interest rates. How do interest rate fluctuations affect your savings and investments? Here, we try to explain what it all means to you.
Finally, Ask the CFP returns with Get a Head Start: How You Can Prepare for the 2019 Tax Year. Many Americans were surprised by the effect that the new tax laws had on their finances as they prepared their 2018 tax returns. In this article you’ll find tips on actions that you can take now to prepare for your 2019 tax return.
At MMBB, we’re here to offer wise guidance that helps you feel confident and in charge of your financial future. It is our great privilege to serve you.
Louis P. Barbarin, CPA
Chief Executive Officer
By Rev. Lauren Lisa Ng
Growing up the child of a minister and freelance artist, money was always tight. As an adult, I managed to marry an entrepreneur and become a minister myself. It’s as if I was trying to make things difficult! Yet despite these penny-pinching parameters, I was taught the basics of financial literacy, even at a young age. I knew when something was a necessity versus a frivolity. I understood the discipline required in order to save towards something big. Before I left for college, my parents made sure I could balance a checkbook and manage a credit card.
A recent conference on the subject of clergy financial wellness helped me to appreciate the path from financial literacy to financial empowerment, which in turn, can lead us on the path to financial wellness. Indeed, the subject matter around finances can be dense, but perhaps there are simple lessons to be learned as we seek to build confidence around the issue of money, especially as it pertains to clergy and congregations.
Numbers Are Your Friend
I used to have a way with numbers until Mr. G., my seventh-grade math teacher came along. All it took was one humiliating moment as I stood motionless before the blackboard wracked with tears, his voice booming in front of everybody: “What is it that you DON’T understand?!”
Needless to say, I’m now extremely careful about how I speak to my children about math. I want them to be confident and fluent in numerical language. I may not be naturally drawn to numbers, but despite my rough start, I’ve learned to work with them—even appreciate them.
Getting acquainted with numbers in our personal lives helps us get comfortable with them in our contexts for ministry. So often we don’t permit numbers into the conversation, whether we’re talking clergy compensation, church debt, or a sharp decline in giving. We might allow ourselves to be intimidated by numbers or allow others to misuse them as weapons of intimidation. We may think they’re boring or that any focus on them pulls the vitality out of actual ministry work. It’s time to kill the stigma around “money talk” in our churches. We must learn to work with numbers, get up close to them, and cohabitate with them. Jesus sets a great example for us, often using illustrations about money to make his point.
Numbers aren’t there to intimidate us or bore us out of our minds. They’re a willing, vital participant in the conversation if only we allow them in.
She Works Hard for the Money (But the Money Also Works Hard for Her)
My first experience with a budget was on the job, right out of college. I was given a $30,000 project budget to manage and yet I’d never even created a personal one of my own. Since I was handed this budget and told how to spend it, my understanding was that budgets were restrictive, confining, and dull; a simple roadmap for what was to come.
Compare this to my later experience of serving on the Finance Committee of the American Baptist Home Mission Societies’ Board of Directors. Due to the expertise and mission-mindedness of the finance staff, the numbers came alive. They told a story. All of a sudden, digits auto-translated in my literary mind, turning into letters, words, and phrases. Line items were gospel-inspired passions and priorities. General ledger codes (GL) were categorized strategies by which these priorities could be carried out most effectively. Prior year budget was a recent snapshot of the areas of impact God had led us to pursue. 3-5 years prior was a testimony of God’s story unfolding over time. Current year budget was our present, real time discernment of the work to which God was calling us. Year-to-date (YTD) was the first bold steps we’d taken to seeing it through.
Things became even more interesting when I realized that not only does money tell a story, it can be moved around to further the mission. Numbers aren’t glued eternally onto the page, after all. It’s called currency because it’s meant to move.
When my family is in desperate need of a vacation for connection and renewal, we move money from one bucket to another to help enable that vacation to happen. When a friend is going through a crisis, we pinch from other areas to free up funds to support them through a tough time. When a heavy wind storm knocks down a tree that destroys our fence, we move dollars around to get it cleaned up and repaired.
Monies redesignated, reassigned, or reallocated have the power to bring areas of priority into existence. The same goes for churches. As we strive to be nimble and responsive to the needs and passions of our communities, how might we rethink the ways we’ve traditionally allocated our funds and consider some changes for the sake of significant and meaningful impact?
Money isn’t just a means to an end or the vehicle by which ministry happens. Money can also be the current that guides the ministry itself.
Wellness Begets Wellness
My husband and I recently downloaded a financial management app to help with our personal finances. This handy little tool allows us to keep track of what’s flowing into our accounts and what’s going out. It helps us identify spending trends and save on a weekly or monthly basis to meet a goal. In addition to this app, we maintain a yearly budget and identify times throughout the year to revisit it and make adjustments as needed. We also utilize a suite of MMBB financial services to help us manage our current financial snapshot and plan for the future, including the financial future of our three young children.
If you were to have asked me ten years ago about the state of my finances, I would’ve responded with a blank stare. But through patient planning, regular conversations with MMBB, and the willingness to ask lots of questions, I’ve arrived at a place where I understand my financial well-being within the context of a larger economic landscape. I feel confident to make sound decisions while engaging in thoughtful dialogue with finance professionals. I am hopeful about my financial future and the promise it holds for my family.
This sense of financial literacy and empowerment has a direct impact on my ministry. Not only am I able to engage in mission-minded work with finances as a critical component of the conversation, but I’m able to assume a posture of transparency, humility, and inquisitiveness that encourages those same virtues among my ministry partners. If I am at ease with money talk in my home, I can more easily discuss it with regards to my ministry. If I increase my understanding of my personal finances, I have the tools to do the same in my ministry. If I can achieve a level of personal financial stability, my spirit is freer to respond to God’s call upon my life, even when it involves uncertainties.
Finally, when we embark on the path toward financial wellness, we gain the ability and confidence to be more generous. Acquainting ourselves with numbers, learning to read the narrative within a budget, and exploring financial management resources like the ones MMBB provides, all help to build our financial literacy which leads to financial empowerment, ultimately increasing our capacity to give, and give freely, as the Lord has done for us.
An ordained minister with the American Baptist Churches, USA, Lauren Lisa Ng serves as Director of Leadership Empowerment at the American Baptist Home Mission Societies. In this role, she convenes a team of experts in the field of Christian leadership and cultivation.
Lauren earned her Master of Divinity from American Baptist Seminary of the West and her BA in English and Creative Writing from Oberlin College. She was ordained in 2005.
Her 20+ years of professional experience include serving as Network Strategist for the American Baptist Home Mission Societies (ABHMS), serving on development staff with American Baptist International Ministries, as an Advisor for American Baptist Women in Ministry, as a Board Member of ABHMS and, a Trustee of Bacone College. Lauren also served for 5 years as Associate Pastor of First Chinese Baptist Church in San Francisco. Lauren is married to Daniel Kushner and together they have three children, ages 12, 10 and 8.
Financial experts recommend that you review your retirement plan at least once a year or after you experience any major life changes. If you haven’t looked at your retirement plan in the past 12 months, now may be the perfect time.
Have you experienced any major life changes since the last time you looked at your retirement plan? Life changes such as marriage or divorce, buying or selling a house, having a baby or sending your children to college all have an impact on your ability to save. Did you or your spouse change jobs or receive a promotion? Has there been a significant change in your health? Or perhaps you inherited a large sum of money that changed your net worth? Changes that affect your current and future financial situation should all be considered when you review your retirement plan.
This is also a good time to review the beneficiary designations on your retirement accounts to ensure that they reflect your current wishes. It is especially aimportant if your marital status has changed. With most employer-sponsored plans, your spouse is automatically your plan beneficiary unless he or she waives that right in writing.
Once you take any life changes into consideration, you might want to reassess your retirement savings needs. Have your retirement goals changed? Do you want to travel in retirement, relocate, perhaps start your own business or work part-time? Have you or your spouse’s healthcare needs changed? Once you have clarified your goals, do you need to adjust your savings or investment strategy?
In today’s fast paced world, we use technology in almost every area of our lives. So, it makes sense to use technology to manage our personal finances. With the correct tools and skills, it has become easier for anyone to manage their money with an online program or mobile app.
Using technology to manage your finances simplifies many tasks by helping you to organize, manage your accounts and stay in control of your entire financial picture. There are many areas where you can leverage the power of technology to automate financial tasks such as budgeting, tracking your spending, paying your bills, making deposits, tracking your investments, aggregating your accounts and shopping.
With the rise in popularity of online banking, it’s now possible to pay bills, check your account balance, transfer money, deposit checks, and pay other people from your desktop or mobile device. You can also set reminders and automate payments so that you never miss a payment or make a late payment, resulting in an adverse effect on your credit score.
There are many personal finance tools available that allow you to aggregate your financial accounts and track any activities in them. This type of tool connects your accounts like bank, mortgage, investment portfolio, retirement and credit cards in one place so that you can easily access important information on personal spending, cash flow, savings, and investments. Using an account aggregation tool will also assist you in creating a realistic budget because you will see your typical cash flow and expenses for each month.
Shopping may not be top of mind when it comes to using technology to manage your finances. Nevertheless, online retailers allow you to save both time and money by reducing costs like travel and providing the ability to compare prices offered by several different vendors. Add in free shipping, coupons and loyalty/rewards programs and it’s no wonder that e-commerce websites and apps are some of the most popular and affordable ways to shop for anything from apparel to groceries.
With so many money management tools out there, it can be difficult to decide which one is best for you. To assist consumers, the website Investopedia.com has compiled their list of the top personal finance apps of 2019. Here are a few of their picks:
The Mint app for managing your money: According to Investopedia.com, the free Mint app from Intuit Inc. is an effective all-in-one resource for creating a budget, tracking your spending and getting smart about your money. You can connect all your bank and credit card accounts, as well as, your monthly bills, so all of your finances are in one convenient place.
Mint lets you know when bills are due, what you owe and what you can afford to pay (based on your available funds).The app can also send you payment reminders or warn you if you’re approaching budget limits. Based on your habits, Mint even gives you specific advice to gain more control over your spending. The free credit score is a nice bonus, too. Learn more at www.mint.com.
You Need a Budget app for getting out of debt: You Need a Budget (YNAB) is unlike any other budgeting app you’ve used before. YNAB helps you stop living from paycheck to paycheck, pay down debt and “roll with the punches” if something unexpected comes up. It’s built around a fairly simple principle—every dollar has a “job” in your personal budget, be it for investment, for debt repayment or to cover living expenses.
You Need a Budget doesn’t force you to create budgets around money that you don’t have – it forces you to live within your actual income. If you get off track, YNAB helps you see what you need to do differently to balance your budget. The built-in “accountability partner“ keeps you on your toes. Although users pay a monthly or annual fee ($7 a month or $84 a year) for YNAB, many feel the service and support are worth it. Learn more at www.youneedabudget.com.
The Wally app for tracking expenses: Instead of manually logging your expenses at the end of the day (week or month), Wally lets you simply take a photo of your receipts. And, if you use geo-location on your device, it even fills in that info, saving you several steps.
Wally is a clean, streamlined app that’s extremely convenient and easy to use. It’s a great choice if you’d like more insight into where your money is going. Learn more at wally.me.
Today’s technology makes managing money, sticking to a budget and saving easier than ever before. Before deciding on any tool, you should research financial programs and mobile apps because new offerings are available all the time.
No matter where you are in your life, rising interest rates will have an impact on your finances. Whether you are at the beginning of your financial journey, are mid-life, nearing retirement or retired, the changing interest rate environment will affect you.
If you pay attention to the financial news, you will have noticed that the Federal Reserve has been gradually raising interest rates since December 2015. A change in interest rates is the result of many economic factors and often is unpredictable. Nevertheless, a changing rate environment can also be an opportunity to reassess your financial plan. If you do not have a financial plan, this is a good time to create one. A financial plan will help you to keep the focus where it should be— on your long-term goals. Reviewing your financial plan will also ensure that your investments are properly diversified so the impact of an increase in interest rates is well thought out in advance and does not prompt a reactionary response. Therefore, as rates rise, it is worth re-assessing your interest rate exposure.
Let’s examine the downside and upside of rising interest rates. First, we’ll look at the downside of rising rates.
There are also upsides to rising rates.
You will also need an action plan to be sure that you make the most of the rising interest rate environment. To start, review your financial plan and interest rate risk with your financial planner. Next, assess your interest rates for both deposits and debts; what you are earning on your investments as well as what you are paying for loans. Should you be shifting your funds to a higher earning deposit account? Review your debts and understand which accounts are variable and which are fixed. If you have variable rate debts or loans, should you be shifting to a lower rate account? Lastly, don’t rush to sell your fixed income holdings just because rates are rising. Fixed income investments serve as a balancing factor to equity investments and are part of a diversified portfolio, if the economy falters and rates fall, your bond portfolio could increase in value.
By James R. Cook, CFP®, MMBB Financial Planning Specialist
If you are like most Americans, you may not have thought about how the new tax laws would affect your tax return and refund. After filing their 2018 tax return, many people were surprised; some received a smaller refund or no refund at all while others received a larger refund. Still others were faced with a tax bill and perhaps even penalties. Listed below are some things that you can do now to prepare for your 2019 tax return.
Income tax withholding
Ideally, you should have adjusted your federal income tax withholding as soon as the new tax law went into effect to account for potential changes. Most of us do not have the knowledge or skill to do this on our own. You may want to seek assistance from a tax professional or CERTIFIED FINANCIAL PLANNER™ professional. Or, if you choose to do it yourself, the IRS has updated its withholding calculator (https://www.irs.gov/individuals/irs-withholding-calculator). Use this calculator to determine the amount that should be withheld from your paycheck, and then complete a new W-4 Form and give it to your employer to adjust your withholdings. This action will ensure that you’re withholding the correct amount from your paycheck going forward.
Estimated tax payments
Since ordained ministers are exempt from federal tax withholding, they, along with some retired individuals, are required to pay their federal taxes using estimated quarterly tax payments. It’s up to you to make estimated quarterly tax payments or you will face a penalty when you file your income tax return. The estimated tax payment system ensures that you pay the bulk of your anticipated tax liability throughout the year. IRS form 1040-ES allows you to use your expected income to calculate how much you’ll have to pay in estimated taxes throughout the year. The total yearly amount may be broken down into four quarterly payments due for the tax year 2019 on April 15, June 17, September 16 and January 15 of the following year. Another consideration is state income tax. Unless you live in a state (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming) with no income tax, you will probably need to make estimated tax payments to your state as well. Keep in mind that due dates for state payments may not be the same as for federal payments. You should check with the appropriate tax agency in your state.
If you have not already done so, make sure that you consult with a tax professional or CERTIFIED FINANCIAL PLANNER™ professional to see the full effect the new tax law will have on your situation. Make sure that you are paying enough in taxes, so you are not hit with penalties and interest next year.