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MINISTERS' ESTIMATE OF HOUSING ALLOWANCE

To _________________________ From______________________ (Church) (Minister)

Subject: Housing Allowance for _______ (year)

The amounts below are an estimate of the payments I expect to make during _______ (year) to provide a home.

1.Payments on purchase of house (including down payment, mortgage principal payments, interest, taxes) or rent on leased properties

2.Garage rental (if not included above)

3.Utilities (gas, electricity, water, etc.)

4.Insurance

5.Repairs and maintenance

6.Purchase of furnishings

7.Other housing expenses ________________________________

Date_____________________Minister's Signature___________________________

Financial Management

Whether we like it or not, ministers are held to a higher expectation of financial management than other people, and often our financial documents become more a matter of public record than those in other professions. Because church members can have access to salary information, people often know a great deal about our financial status (at least our salary); however, how we manage our finances is up to us. We all know people who have had relatively low-paying jobs throughout their careers, yet they retire with plenty of money to sustain them because they have managed well. We also know those who have made comfortable livings, but always seem to struggle financially.

Many ministers change churches often. This possibility provides an additional incentive for ministers to manage well. Ministers should be prepared for an unexpected job change. Generally, every move is expensive, even if a significant raise is involved. Additionally, many ministers live in church-owned housing for a portion of their careers and are slow to accumulate home equity. Sometimes they don't have a home paid for at retirement, which causes undue hardship in later years.

Ministers should plan carefully and conservatively in order to adequately meet the demands of ministry and to insure flexibility in responding to difficult situations. The following areas deserve careful attention.

Insurance – Almost everyone needs insurance unless he/she has significant personal wealth to cover life's potential catastrophic situations. Good health insurance is a must and is often provided by the church or can be purchased in a group plan with other ministers. Life insurance is also very important unless (1) you are not married and have no dependents or (2) the house is paid off, your children have completed college, and you have adequate money set aside for retirement. The primary goal of life insurance is to provide for your death and burial needs and to provide for your dependents. How much life insurance do you need? Some people say 5-10 times your annual salary; however, this depends on your situation. Basically, you need life insurance to cover your net income minus the social security benefits that your family would receive if you died. You should have enough life insurance to cover the following: (1) sending your children to college; (2) paying off the mortgage or continuing to pay the mortgage; (3) money for burial expenses; (4) short term loans such as automobile or credit cards; and (5) money for your spouse's retirement if he/she were depending on your retirement. If your spouse is employed in a good career, your life insurance needs are less. In summary, there are no set rules for life insurance; moreover, life insurance needs are constantly shifting as your life situations change.

Retirement – Every minister should plan adequately for retirement by beginning to save early and remaining consistent.

Estate Planning – Being a good steward of your resources includes what you leave when you die; therefore, every minister should have a planned estate. This may include a will or trust. Most of us have more assets than we think, and we want to assure that they go to those we want to have them rather than losing them on estate taxes and other fees. Additionally, if you have children, you must be sure that your children will be adequately cared for.

Managing Debt – Our culture is one that makes debt seem inevitable. With the exception of a mortgage payment and an occasional period of car payments, debt should be kept to a minimum or should not exist. Since most credit cards have astronomical interest rates, balances should be paid off monthly, and debit cards are strongly encouraged since they do not build up debt! Remember that debt is easily accumulated and difficult to pay off. Many ministers have used credit cards for living expenses early on in their careers and eventually find themselves in mid-life having to deal with years of poor management.

Save Your Money – Make the habit of paying yourself, and invest your money wisely. Save until you feel that you are sacrificing.

Take Advantage of Tax Deductions – Numerous tax deductions are available for ministers, and you should take advantage of all of them. Keeping records for a housing allowance is tedious; but it does pay off. Similarly, paying yearly to an IRA or other investment is well worth the discipline required.

Allow Time to Manage Your Money – Everyone should take time monthly or quarterly to manage his or her money. This involves seeing how your investments are doing, shifting retirement allocations, raising retirement deductions, or otherwise reallocating your money.

Keep Good Records – Find time to keep good financial records because good record keeping ultimately pays off. For instance, keeping up with receipts related to upgrades on your house allows you to count these expenses against the profit of your house should you sell it.

Live Within your Means – Whatever your salary, always live within (or under) your means. In other words, spend less than you make. When you realize that you are spending more than you make, you must take immediate action to bring your expenditures under income.

Make Purchases Wisely – Spend money for purchases only when needed. Avoid upgrading for cosmetic reasons. Upgrading cars too often or always buying new cars results in never having any discretionary money.

Save Windfalls – When you receive extra money such as an income tax deduction, money for a funeral or wedding, for publishing an article or judging a festival, try saving the money. Also consider putting raises into your retirement account. Doing this early on in your career will help you avoid having to save greater amounts of money later in your career when time is working against you.

Evaluate Social Security – Social Security benefits are constantly being changed, i.e., younger and middle-aged people should not expect to receive full benefits until age 67 or later. Continually monitor your benefits throughout your career. Plan to retire without Social Security. If available, it will be a bonus.

Charitable Contributions – As a minister, practice good stewardship to your local church and to other charities. You should set an example for others. etirement

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