Merrit H. Egan grew up on a dairy farm but claims his parents raised him to be great. He lived up to those lofty expectations by becoming a successful and prominent physician in Salt Lake City. Merrit and his wife had 11 children and they did their best to pass on the legacy of success to them.
One of the Egan’s daughters is Natalie Gochnour, Associate Dean in the David Eccles School of Business at the University of Utah and Chief Economist of the Salt Lake Chamber of Commerce. In an article in the Deseret News she was asked to share the best financial advice she ever received. In her case the advice came from her parents.
Although she claims the advice she provided “doesn’t seem profound” I disagree. After a lifetime of studying money management, including reading hundreds of books and thousands of articles, I have not found anything that sums up the collective wisdom of personal finance better or more concisely.
The simple but profound advice passed down to her from her parents consists of only 7 words: Place a substantial premium on the future!
In President Hinckley’s 1998 General Conference talk on the temporal gospel the prophet counseled us to:
- “Be modest in our expenditures”
- “Avoid debt to the extent possible”
- “Pay off debt as quickly as you can”, and
- “Have a little money against a day of emergency”
Each of these instructions from the prophet can only be fulfilled by placing a substantial premium on the future.
Financial Time Travel
“The essence of finance is time travel. Saving is about moving resources from the present into the future. Financing [debt] is about moving resources from the future into the present.” – Matt Levine, Financial Journalist
One of my favorite movies is Back to the Future. The movie is about Marty McFly (Michael J. Fox), a typical American teenager living in a typical American small town in 1985. Marty’s ordinary and boring life changes drastically late one night when he helps the local mad scientist, Dr. Emmett (Doc) Brown (Christopher Lloyd) perform a time travel experiment and suddenly finds himself transported back to the year 1955.
It is a great fish-out-of-water story with numerous twists and turns. In the process Marty accidently prevents his parents from falling in love and thus puts his own future in jeopardy. When Marty travels back in time he has a picture of himself and his siblings in his wallet. When it looks doubtful that his parents are going to fall in love Marty’s older brother starts fading out of the picture. His sister, and eventually Marty, also start disappearing.
Doc Brown explains this is because when he prevented his parents from falling in love he broke the space-time continuum. Unless Marty can get his parents to fall in love, thus repairing the space-time continuum, there will be no future for him. Marty, with the help of a younger Doc Brown, must help his parents fall in love and get himself back to 1985.
The point of the movie, if there is a point other than fun, is that time travel would be an interesting and powerful tool, but also a dangerous undertaking with possibly catastrophic unintended consequences. Therefore, it should only be used with extreme care.
While physical time travel is still only fantasy, financial time travel is a reality. Modern finance provides us the necessary tools to send money to our future selves through saving and investing and to send money from our future selves back to the present through borrowing.
Like physical time travel financial time travel is a powerful tool. When used wisely it can help us meet our needs and accomplish our goals. Financial time travel can also have serious negative consequences if we use it unwisely. If we damage the money-time continuum by sending too many resources to one particular version of ourselves (usually the present one) other versions will start to fade from the picture. Therefore, we need to plan carefully before sending our money off on time traveling adventures.
Church leaders have often counseled us to avoid unnecessary debt. This is because it is the natural tendency of people to place a premium on the present but temporal progress can only be made by placing a premium on the future.
Understanding the true nature of debt is a powerful deterrent from making poor financial decisions. We often think that we are borrowing from a bank or credit card company when we go into debt but in a very real sense we are borrowing from our future self. Debt in the present decreases our future income and our future prospects can begin to fade.
Many reject the idea of putting a premium on the future. They believe the way to happiness is to live for today, with no thought for tomorrow, as reflected in the popular saying, paraphrased from Ecclesiastes 8:15, “Eat, drink, and be merry, for tomorrow we die.” People holding this philosophy believe that putting a premium on the future will make them miserable today.
This would seem logical, but the paradox of putting a premium on the future is that you can do so without discounting the present. In fact, sacrificing now to obtain goals in the future, whether that means studying, developing talents, improving job skills, or saving and investing gives our lives meaning and makes us happier both now and in the future.
Placing a Premium on the Future is a Spiritual Principle
Placing a premium on the future is not simply an earthly concept necessary for temporal success but an eternal principle vital for spiritual progress. In Ether 12:6, Moroni teaches:
“Wherefore, dispute not because ye see not, for ye receive no witness until after the trial of your faith.”
President Spencer W. Kimball, expounding on Moroni’s teaching, stated:
“In faith we plant the seed, and soon we see the miracle of the blossoming. Men have often misunderstood and have reversed the process. They would have the harvest before the planting, the reward before the service, the miracle before the faith. Even the most demanding labor unions would hardly ask the wages before the labor. But many of us would have the vigor without the observance of the health laws, prosperity through the opened windows of heaven without the payment of our tithes. We would have the close communion with our Father without fasting and praying; we would have rain in due season and peace in the land without observing the Sabbath and keeping the other commandments of the Lord. We would pluck the rose before planting the roots: we would harvest the grain before sowing and cultivating.”
Spiritual growth involves “experimenting” on the word (see Alma 32:27) by planting the seed of the gospel and then nurturing it in faith as it grows. It is an eternal law that the planting and nurturing have to come before the harvest.
I find it interesting that obeying the same principle (placing a premium on the future) is necessary for both temporal and spiritual growth. Both require faith, effort, and patience. Because of this doing our best to live the temporal gospel can also help us develop some of the attributes necessary for spiritual growth.
Eternal Time Travel
The tools of modern finance allow us to send our money on time-traveling adventures in this world but the power of the gospel allows us to send our “treasure” all the way to eternity. Matthew 16:19-21 states:
Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal.
But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal:
For where your treasure is, there will your heart be also.
While the collective wisdom of personal finance experts can be summarized as “Place a substantial premium on the future” the collective wisdom of the scriptures and teachings of prophets, both ancient and modern, can be summarized as “Place a substantial premium on eternity.” This is done through faith in Jesus Christ, obedience to His commandments, and wise stewardship over our temporal resources to build the kingdom of God and help others. Doing this allows us to send our treasures to heaven where they will be waiting for us upon arrival. Sounds like an exciting concept for “Back to the Future IV.”