How Do I Set Up An Annual Spending Plan?
Lesson4.How Do I Set Up an Annual Spending Plan?
Overall Objective: At the conclusion of this lesson, students will:
- Make their own annual spending plan
- Know how to identify several common problem areas in financial planning
Preparation
- Understand Reading 4: N. Eldon Tanner, “Constancy Amid Change,” Ensign, Nov 1979, 80.
- Print out Lesson 4T: How Do I Set Up an Annual Budget Teacher Material if desired.
- Print off one copy of the Annual Spending Plan for each student
- Materials Needed: Copies of the scriptures
For this class, if you can have tables available, that would be useful. Students will be working on their planned spending and debt for a little while.
Note: There is purposely more material in this lesson than you can teach in the forty minutes of class. Please prepare well and listen to the Spirit as it helps you to know what the members of your class need the most. Remember that the true test of teaching is not the quality or polish of the lesson, but whether what we teach helps people to live the gospel better and to apply things learned in their lives.
President Gordon B. Hinckley provided additional counsel concerning teaching by the Spirit when he said:
"We must...get our teachers to speak out of their hearts rather than out of their books, to communicate their love for the Lord and this precious work, and somehow it will catch fire in the hearts of those they teach."(Teachings of Gordon B. Hinckley (1997), 619–20.)
Suggested Lesson Development
Counsel from our Leaders
In the February 27, 2008 memo to all Wards and Stakes in the Church, the First Presidency counseled:
Dear Brethren and Sisters:
Reports of fraud schemes and unwise investments prompt us to again counsel members with respect to prudence in managing one’s financial affairs. We are concerned that some Church members ignore the oft-repeated direction to prepare and live within a budget, avoid consumer debt, and to save against a time of need. . . We encourage leaders to regularly teach and reemphasize these principles.
Sincerely, the First Presidency
- How do we prepare and live within a budget, avoid consumer debt, and save against a time of need? (We follow the things we have been taught).
Elder M. Russell Ballard commented:
There are no shortcuts to financial security. There are no get-rich-quick schemes that work. Perhaps none need the principle of balance in their lives more than those who are driven toward accumulating “things” in this world. . . In my judgment, we never will have balance in our lives unless our finances are securely under control. (M. Russell Ballard, “Keeping Life’s Demands in Balance,” Ensign,May 1987, 13)
- What can we do to get that balance in our lives and to get our finances under control? (We can do the things we are learning here.)
Planning Your Spending: The Spiritual Creation
A wise individual commented:
The key to most people’s problems in personal finance is that they spend their money too late. They spend their money when they want to instead of spending it when they should. If people will spend their money a year in advance, they will know what their income is, what their needs are, and they can make the necessary changes to their spending to follow the prophets’ counsel to live within their needs and to save for their personal and family goals. (Keith Russell, phone conversation, February 27, 2008)
- What dothink about “spending your money a year in advance?” (It is a great idea and a great habit to get into.)
- What is the difference between planning your spending and a spiritual creation? (It is very similar.)
- Could this “spending in advance” be a type of spiritual creation? (Yes.)
- What can planning our spending a year ahead help us to do? (Plan for purchases that we might not ordinarily think about, help us stay out of debt, become better planners, think through our spending better, not do impulsive buying, etc.)
- What do the scriptures teach? (That we should plan. Christ counseled:
For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish (Luke 14:28-30).
Story
Someone came to me for help with their finances. I told them that they needed to develop and use a budget. A budget was the single most important tool to help them achieve their financial goals. He turned to me and said “I have already tried a budget and it doesn’t work?”
- Was the problem that the budget did not work, or was the problem that he failed to either plan well or follow through with his plan? (A budget is simply a tool which lists inflows and outflows. A budget always works, if we plan correctly and if we will follow it. Now things will come up that were not planned for, but if we will use thought and prayer in its creation and hard work and prayer in our execution, it will help us live within our means and save for our goals).
How Do I Set Up An Annual Spending Plan?
The key is to have a framework for this spiritual creation. Hand out copies of Handout 4.1: How Do I Set Up an Annual Spending Planto class members to use to record projected spending needs for the year. Class Members should bring a calculator or a laptop to class if available. Following are suggested steps to create an annual budget.
1.Spending Plan items. Discuss the items recorded on the forms if needed. Encourage class members to go across the form doing one item at a time (or one row at a time). Do not go down the column as it takes too long. Members can either input the information on the Handout or into the Spreadsheet.
Encourage class membersto program variations in spending. Tell them to NOT put in the same amount each month. Doing that only makes a budget that will not be followed. We are trying to make an accurate spending plan. If the item really does take the same amount each month then put it in. Have them think of purchasing more food for birthdays and special holidays like Christmas.
2. Variations in spending. Be ready to discuss possible variations in items, with class members like Christmas or birthdays. Share your own experiences in your use of this program with them.
3. Single items. When the plan is completed, have the class member circle any item on a line that has only one or two amounts recorded. These are the problem areas. However, it may not be the place to clear the problem. Clearing the problem may possibly take place in the Personal area. Perhaps they will make the commitment to eat out less, or purchase less clothing in the month or purchase less expensive gifts. It is really up to the person.
4. Percentages. The Total Income column is a way to see Total Spending on any item and works with the % of Income column. The % of Income column is to identify where the greatest amount of the income is spent and helps bring spending in line.
Please remember that you, as the teacher, should not suggest cutting spending in any area. If you do, this becomes your plan and not the class member’s plan. Everyone has their own spending patterns. Help class members to determine theirs. There is a fine line here. A personal experience from the teacher may help with the teaching moment.
Please note that if the projected one year plan is not completed by the end of class, have the class members bring the completed plan to class next week. This plan really helps the person identify problems that can be eliminated. The more they can do in class, the better.
Conclusion
Planning is the key to living within our means. President Henry B. Eyring commented:
There are things we can start to do now that have to do with providing for the spiritual and physical needs of a family. There are things we can do now to prepare, long before the need, so we can be at peace, knowing we have done all we can. . .
Have you noticed husbands and wives who feel pinched for lack of money choose for a solution ways to make their family income keep rising but soon find that the pinch is there whatever the income? There is an old formula which goes something like this: Income five dollars and expenses six dollars: misery. Income four dollars and expenses three dollars: happiness.
Whether the young man can provide. . . can depend as much on how they learn to spend as on how they learn to earn. President Brigham Young said it this way, speaking to us as much as he did to the people in his day: “If you wish to get rich, save what you get. A fool can earn money; but it takes a wise man to save and dispose of it to his own advantage. Then go to work, and save everything” (Journal of Discourses, 11:301) (Henry B. Eyring, “The Family,” Ensign, Feb. 1998, 10).
Assignments
Reading. The assignment for this lesson was to read the article by N. Eldon Tanner, “Constancy Amid Change,” Ensign, Nov 1979, 80.
Family Home Evening Assignment. Select one of the points from the reading above. Use that point as your lesson for your Family Home Evening lesson that you teach your family. Be prepared to comment on your Family Home Evening activity next Sunday. There are also two other FHE lessons that may be used.
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