GODLY

FINANCIAL
GUIDANCE

Advice You
Can Take
to the Bank
 Whose money is it, anyway?
Scripture is clear that God is not only the creator of all that exists but also that
everything in the universe ultimately belongs to him (Dt 10:14). Our role is
described as a steward of providence (Catechism of the Catholic Church, 2404)
a steward is a manager or caretaker.

As Catholics, we have a great opportunity to renew our understanding of what it

means to be a steward of providence. This call is transforming, as we recognize
that the resources we have arent mine, his or hers. They are the Lords, and he calls
us to use them in ways pleasing to him.

The following articles each focus on a particular financial principal and the
Catholic approach to that principal. The ultimate goal of this resource is to help
build better financial habits better management of our finances so we
can live within our means and grow as effective stewards of what God has so
generously given us.

Building a Firm Financial Foundation

Each new year provides a natural time to take stock of the direction of our lives
and make changes where appropriate. This includes taking stock of our financial
lives. After all, our financial plans and behaviors should be supporting our broader
life goals. Here are steps you can take to align your financial goals with your life
goals so you can get on the road to true financial freedom.

Since your finances should support your lifes goals, we need to start there. Have
you taken time to think I mean really think about your lifes goals, especially
over the long term?

PRIORITIZE WISELY

I remember hearing the story of a young man who was very talented. He
graduated from college at the top of his class and went to work for a large
company, setting a goal of eventually becoming CEO. As the years progressed,
he rapidly climbed the corporate ladder but, along the way, didnt recognize
that distance was opening up between him, his wife and their children. His
relationship with the Lord became secondary. All of his focus was on reaching
the top of the corporate ladder. As time progressed, he and his wife divorced,
his relationship with his children was permanently damaged and he stopped
attending Mass, all while still pursuing his goal. Eventually, he reached the top
of the corporate ladder but, after the initial high of doing so, realized that he had
been climbing the wrong building.

Why do I share that story? Not because setting a goal to advance in our work
isnt a worthy thing. It is. But it needs to be in a broader context. We dont want
to spend years, maybe decades, climbing the wrong building. As stewards of
providence (Catechism of the Catholic Church, 2404), the recognition that God is
our Creator should lead us to desire to grow closer to him as our highest priority.
As we come to know him better, and grow in holiness through the sacraments,
prayer and teachings of the Church, we will better fulfill our role as his steward or
manager. We will dedicate ourselves to building strong family relationships and
managing our money based on Gods principles.

BUILD A PERSONAL PLAN

Once youve reviewed your lifes priorities and goals, you are in a position to
develop financial plans to support them. A financial review starts by assessing
where you are. That means putting together a balance sheet listing your financial
assets, liabilities and net worth, and asking a few basic questions.

Are you saving and investing at a rate that will provide for your future obligations
especially retirement and the education and formation of your children?
Have you anticipated additional needs that will require reserve funds in the
future, including such needs as replacement vehicles, weddings, and home
improvements?

Are you managing debt with the proper level of caution described in Scripture
(Prv 22:7)? Do you have unproductive debt debt used to purchase depreciating
assets or everyday expenses? If so, its critical for your financial future that you
create a plan to eliminate it rapidly and follow through on that plan. Unproductive
debt is a major obstacle to financial freedom.

Are you falling into a habit of turning what might have been productive debt at
one point into unproductive debt by extending out payment terms? I come across
far too many people who repeatedly borrow against the value of their home for
unproductive purposes and have a large mortgage in retirement when they should
be debt free.

Your next step will be to develop an annual cash-flow plan that takes into
account the review of your balance sheet and your responsibility as a steward
of providence. It should reflect generosity, saving for the future, and a temperate
lifestyle that honors the Lord with the gifts he has entrusted to you.

Finally, its important that you periodically measure actual activity as you progress
through the year with your original plans. If married, I suggest family meetings,
where husband and wife come together to review and update financial plans. This
will help build the unity in your marriage (Gn 2:24) that our Lord desires for you.

Properly recognizing Gods role as Creator and ultimate owner of all you have and
fulfilling your role of steward of providence well, will move you forward on your
journey to true financial freedom.

The Value of Hard Work

Theres no getting around it: Work is a big part of our lives, yet some think of
work in a negative way, as something to be endured. This is quite natural for fallen
human beings but also sad and unfortunate. Sure, there are times when work can
be monotonous, but its important to remember that it provides an opportunity to
participate in Gods creative and redemptive plan for mankind. Simply put, work
has a purpose. And that purpose goes well beyond earning a living and providing
for your family. It includes using your God-given talents to make a positive
difference in this world.

Below is a letter I received from a gentleman who shared with me how his
grandfather approached work. It captures the essence of what work is all about.

Dear Phil,

My grandfather was a dentist in central Iowa in the 1930s. He was a committed

 dentist whose last resort was to pull a tooth.

Unfortunately, people who were struggling with basic needs did not practice
the best dental hygiene [and dentists werent always readily available for a
reasonable fee]. My grandfather was often called in too late and had to pull a
molar out rather than fill a cavity often in exchange for a chicken, a dozen
eggs or a gallon of milk.

This led my grandfather to consider a teaching career. He left the small town,
moved to the University of Iowa in Iowa City in 1938 when my mother (an only
child) was in eighth grade, and became a professor at the University of Iowa
Dental College. He held his teaching position until 1972, when he retired after
training a generation and a half of dentists to practice the good dentistry that
was not possible during the Depression. He used his gift of teaching to spread
good dental hygiene and practice.

When I was a boy, I was treated by one of my grandfathers former students,

an orthodontist in Sioux City. After quite an extensive regime of treatment, my
mother asked him to send the bill and please to allow a little time to pay as
I was the oldest of seven and a large dental bill was the last thing my parents
needed to pay. The orthodontists response was, You dont owe me anything.
Without your fathers training, I would not have had my profession. It is the least
I can do to treat his grandson as a gift back.

This story is a great illustration of how one man effectively used the skills God
had given him to better his own life and the lives of those around him. Its also a
lesson in learning to give thanks to those who have mentored us along the way.
Just as with this mans grandfather, give your work your best effort. By following a
few basics, youll be a valued employee and find great purpose:

Be so reliable that your employer would trust you with his or her
life. Integrity matters. Start work on time, apply yourself diligently
to the work at hand, and be honest in all your dealings. With
these attributes as your foundation, your employer will know he
or she can depend on you.
Plan your work and work your plan. Follow through on
commitments.
Be a team player. Dont let a competitive spirit lead to envy or
jealousy with coworkers.
 Never stop growing your talents and abilities and helping
grow the abilities of others. Participate in company-sponsored
education programs if offered, or sign up for continuing
education programs on your own. You need to stay current in
your field of expertise so that you will always have the best there
is to offer.
Go above and beyond the call of duty. Do more than is asked of
you.

The Delicate Balance of Wealth

Have you ever noticed Bible references to wealth seem contradictory?

On the one hand, consider the parable of the talents (Mt 25:14-30). Our Lord
praises the servant who multiplies his talents fivefold and chastises the servant
who buries his talents. A call to create wealth, right? Well, not so fast. Matthew
6:24 says, No one can serve two masters. He will either hate one and love the
other, or be devoted to one and despise the other. You cannot serve God and
mammon.

SO WHICH IS IT?

A steward of providence has a responsibility to create wealth. As the Catechism

of the Catholic Church says, The ownership of any property makes its holder a
steward of providence, with the task of making it fruitful (No. 2404).

While the parable of the talents is primarily about growing our faith, the teaching
makes clear that Jesus expects us to grow our resources, too.

Pope Benedict XVI, when discussing the subject of poverty, spoke of the need to
create wealth. In his message for the 2009 World Day of Peace, he said that trying
to solve the problem of poverty solely by redistribution of existing wealth is an
illusion, and that wealth creation therefore becomes an inescapable duty, which
must be kept in mind if the fight against material poverty is to be effective in the
long term.
Wealth creation is a responsibility. The challenge and, hence, the Lords
warnings (Mt 6:24; Mk 8:36; Lk 12:16-21) is to respond to wealth in ways that
honor God and neighbor.

HOW DO WE DO THAT?

Give the Lord first place in your life. Follow his teaching for life and youll be
confident in your priorities. Remember that money is just an object that cant
compete with the creator.

Know that you wont leave this world with any possessions but that you will give
an accounting to the Lord for how you used the possessions he entrusted to you
during your life on earth.

If blessed with wealth beyond the needs of you and your family, have the good
judgment to use that wealth wisely. Remember that the saints frequently point to
simplicity and detachment from things, lest the Lord be crowded out.

Avoid attitudes of selfishness and laziness described in the parable of the rich
farmer (Lk 12:16-21). Not only was he keeping everything for himself, but since
he had it made, he planned on kicking back and relaxing forgetting that the
talents he had were to be used for good purposes. We never stop being a steward
of providence.

St. Robert Bellarmine captured a beautiful balance when he said, May you
consider truly good whatever leads to your goal and truly evil whatever makes
you fall away from it. Prosperity and adversity, wealth and poverty, health and
sickness, honors and humiliations, life and death, in the mind of the wise man,
are not to be sought for their own sake, nor avoided for their own sake. But if they
contribute to the glory of God and your eternal happiness, then they are good and
should be sought. If they detract from this, they are evil and must be avoided.

Its an interesting paradox. Stewards of providence are called to create wealth,

yet Jesus admonitions about attachments to money remain as true as ever. The
challenge is this: To use our talents to create wealth, yet remain detached from
that wealth and use it for good purposes. Keeping that balance is a challenge, but a
mature Christian is up to the task.
 The Importance of Saving Money
Proverbs 21:20 says, Precious treasure and oil are in the house of the wise, but the
fool consumes them. One of the most common financial mistakes people make
is spending all of their current income on todays needs and wants, while failing
to build in savings for near- and long-term obligations. As a result, they find
themselves on the financial edge, often using unproductive debt to pay for things
that should have been funded through savings.

There is a better way. Many financial planners speak of paying yourself first.
Thats not quite right, since as Catholics we should develop the habit of paying the
Lord first through our charitable giving. We should give from our first fruits (Prv
3:9). However, once we do that, it does make sense to pay yourself second, using
your remaining income for regular living expenses. Building savings for both
near- and long-term obligations into your financial plan will revolutionize your
financial life.

Buying a replacement car is one expense you may want to set up a reserve fund
for.

How can you best manage saving for multiple goals? I recommend using what
I call reserve funds. What are reserve funds and how do they work? They are
savings or investment accounts used to fund future expenses over a period of
time. What types of future expenses should you use a reserve fund for? Here are
several you may think of others:

Emergency/rainy day funds Childrens college funding

A replacement automobile Childrens weddings

Down payment on a house Retirement funds

A home improvement fund

Today, many people borrow to pay for such things as replacement vehicles and
home improvements, but it wasnt always that way, and its not smart money
management.

How do reserve funds work? Here is an example. Lets say you expect to replace
your car in three years. You anticipate spending up to $15,000 on a used vehicle.
You get paid every two weeks. Thats all the information you need in order to
know how much youll have to save if you want to pay cash for your next car. The
calculation goes like this:

Anticipated timing of purchase: 3 years

Estimated purchase price: $15,000

Annual savings required: $5,000

Paycheck frequency: biweekly (every two weeks)

Amount to be direct deposited into auto reserve fund every pay

period: $192.30

By following this simple approach, youll have set aside the $15,000 you need to
replace your next car. And youll be debt free!

I recommend keeping your emergency and rainy day funds in one money market
account. You can keep your auto and housing funds in the same money market
account or in CDs with maturities that match more closely with the time frame
of your purchase. Through the use of a simple spreadsheet, you can track the
balances and activity of each of the funds that make up the one money market
account.

When it comes to funding college expenses for the kids and your retirement,
youll use separate investment accounts since youll most likely be taking
advantage of tax-favored investments.

As you saw with the automobile example, its fairly straightforward to know
how much you need to set aside for your emergency, rainy day, automobile and
housing needs. College and retirement planning get more complicated, but the
power of the internet makes figuring it out a whole lot easier.
 Tithing: Dont Pass the Buck
The call to generosity is a key part of how we are called to live out our faith.
Generosity comes in many forms but primarily through the use of our time, talent
and treasure. When it comes to generosity through sharing our treasure, questions
on tithing frequently arise. The purpose of this column is to address the most
commonly asked questions on tithing that I receive:

Question: Does the Church require that we give ten percent?

Answer: The universal Church does not specify a particular amount, while some
local dioceses do. The original tithe (a 10th) was part of Mosaic Law and, as such,
is now subject to the current governance of the Church. In the Summa Theologica
(Q. 87), Thomas Aquinas noted that the Church can change the amount the
faithful are to give based upon circumstances.

The pertinent instruction for the universal Church comes from Code of Canon
Law 222, which says, The Christian faithful are obliged to assist with the needs
of the Church so that the Church has what is necessary for divine worship, for
apostolic works and works of charity and for the decent sustenance of ministers.
They are also obliged to promote social justice and, mindful of the precept of the
Lord, to assist the poor from their own resources.

While Canon 222 specifies an obligation to give, it does not provide a specific
amount. While the Church has not defined a universal amount to be given, it is
not uncommon for local dioceses to recommend specific percentages for giving to
the diocese, local parishes and other charities. Check with your parish regarding
such guidelines.

Just because the amount you give is voluntary doesnt mean that the concept of
the tithe, or 10 percent, isnt important. Aquinas noted that the tithe flows from
natural law, with ten being one of the perfect numbers. Ten percent continues to
be an excellent guideline for the faithful.

Its important that our giving be both from the heart and substantial as a reminder
that God reigns first in our lives. With the average American Catholic giving a bit
more than 1 percent to charity, the tithe is an effective antidote to our consumer
culture.

Question: Should giving be based on income before (gross) or after (net) taxes?

Answer: Proverbs 3:9 says, Honor the Lord with your wealth, with the first fruits
of all your produce. This reference lends credibility that our giving be based on
gross income, or income before taxes. Thomas Aquinas concluded as much in the
Summa. With that said, it would be possible for a government to tax its citizens
at a rate that would make it virtually impossible to tithe on gross income and still
meet ones personal obligations.

Question: Can I use part of my tithe to pay for Catholic school tuition?

Answer: Church teaching isnt clear on this and there are varied opinions. My
own opinion is mixed. On the one hand, it seems clear that Catholic education
fits within what Code of Canon Law 222 describes as apostolic works. Thats an
argument for allowing tuition payments as part of the tithe. On the other hand,
giving should be outward focused, and tuition for family members does provide a
level of self-benefit. However, it also provides support for institutions of Catholic
learning.

Because the objective of Catholic education is of such importance, and the

financial burden so high, I believe it is reasonable to include Catholic tuition as
part of the tithe when necessity dictates. If resources are adequate to provide
for Catholic education in addition to a full tithe, that would be the preferred
approach. Finally, in the event of very limited resources, it may be that tuition
costs will absorb the full tithe. In this case, I recommend that at least some portion
of the tithe be reserved for divine worship and assisting with the needs of the
poor.
ABOUT THE AUTHOR:

Phil Lenahan is the author of 7 Steps to Becoming Financially Free (OSV, $19.95).

Scripture selections taken from the New American Bible, revised edition 2010,
1991, 1986, 1970 by the Confraternity of Christian Doctrine, Washington, D.C.,
and are used by license of the copyright owner. All rights reserved. No part of
the New American Bible may be reproduced in any form without permission in
writing from the copyright owner.

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