In an earlier post I wrote about how a comment by President James E. Faust in a leadership training meeting made me realize that the Law of Consecration is not just something we might be asked to live in the future but something we should be striving to live now.
This idea intrigued me but I struggled to think of a practical way to follow President Faust’s counsel. Specifically, I struggled with how to figure out what enough was (the topic of my last post), and how saving for retirement, which I consider vital, fit into the picture. My answers came many years later from an unexpected source.
Financial Finish Lines
John Cortines and Gregory Baumer met as MBA students at Harvard Business School. Both were committed Christians and as their friendship grew they started studying what the Bible taught about money and wealth. They wanted to determine how much of their money they should give away. It didn’t take them long to realize that the Bible didn’t provide a clear answer to that question, but it had a lot to say about a different, but related, question: How much do I need to keep?
With their perspective – and hearts – changed, Cortines and Baumer co-wrote the book, God and Money: How We Discovered True Riches at Harvard Business School. It was in this book that I encountered the idea of Financial Finish Lines, a simple but powerful concept that provides a practical way for living life in harmony with principles of the Law of Consecration.
Cortines and Baumer recommend establishing two financial finish lines, a spending finish line, and a wealth finish line.
The Spending Finish Line
The spending finish line is the maximum amount you need to spend annually to meet your needs and just wants (D&C 82:17). This will be different for different people based on family size, where you live, and many other factors.
Once established it should be adjusted over time for inflation or major life events such as marriage or children, but otherwise it should remain constant. As you are working towards this finish line you should pay tithing, fast offerings, and participate in other charitable giving as inspired. You should also be saving and investing some money for the future.
What if you are fortunate enough to cross your spending finish line? Anything above this line should be split between increased saving and increased giving. How you split the excess is entirely between you and the Lord and should be a topic of prayer and pondering.
The Wealth Finish Line
The second financial finish line is the wealth finish line. This is the amount necessary to support your needs and just wants during retirement. The wealth finish line is also somewhat subjective and will be based on your unique circumstances.
The starting point for determining your wealth finish line should be your annual spending finish line. Your goal is to accumulate enough wealth to provide income equal to your spending finish line each year when you are no longer working.
As a guideline the financial planning profession generally agrees that if you withdraw 4 percent a year from your investments, and adjust this amount each year for inflation, there is a high probability your money will last at least 30 years. This is based on historical returns and some planners question the validity of the 4 percent rule going forward. A more conservative approach would be to use 3 percent as the amount of your wealth you can safely spend each year.
Using these guidelines $1 million in investments would provide either $40,000 in annual income ($1 million multiplied by 4%) or $30,000 in annual income ($1 million multiplied by 3%).
If you take your spending finish line and subtract the amount you expect to receive annually from government pension plans (Social Security in the United States) and private pension plans, you will be left with the additional income you need your accumulated wealth to provide each year. From this point you can use the guidelines above to establish a wealth finish line.
For example, if your spending finish line is $100,000 and you expect to receive $40,000 per year from government and/or private pensions, then your accumulated wealth would need to provide $60,000 of additional income annually ($100,000 – $40,000).
Using the 4 percent rule this would imply a wealth finish line of $1.5 million ($60,000 / 4% = $1.5 million). If you choose the more conservative safe withdrawal rate of 3 percent your wealth finish line would be $2 million ($60,000 / 3% = $2 million). This is just an example to help you understand how the wealth finish line can be calculated and is not meant to suggest what your wealth finish line should be.
As you work towards the two finish lines you should continue paying tithing and fast offerings and giving additional amounts to worthy causes as inspired. As you become more financially secure the amount you give may increase significantly even before you cross the finish lines. If you are blessed enough to cross both the spending finish line and the wealth finish line all the additional temporal resources you are blessed with after that point would be used to build the Kingdom of God and help the poor.
I was really impressed with the financial finish lines framework taught by Cortines and Baumer. Although they use different language than we would use in the Church the system they describe is essentially a simple and practical method for living the Law of Consecration. It answered my concerns about how to incorporate principles of consecration into my life and is a useful framework for other Church members to consider who have both the means and desire to give significant amounts beyond tithing and generous fast offerings.
While it would be wonderful to meet one or both finish lines it is not necessary in order to live a meaningful and fulfilling life. The finish lines are simply a plan for what you will do with the surplus if you are blessed with more than enough to meet your needs and just wants. The finish lines should never be used as a measure of your success or worth. Finally, I believe it is a good idea to set your finish lines in advance. It will be much easier to part with the surplus if you have planned to do so prior to crossing the finish lines.
Wisdom and Order
In Jacob 2:18-19 Jacob instructs the Nephites on what their priorities should be:
18 But before ye seek for riches, seek ye for the kingdom of God.
19 And after ye have obtained a hope in Christ ye shall obtain riches, if ye seek them; and ye will seek them for the intent to do good—to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted.
Set your financial finish lines now and then “seek ye for the Kingdom of God.” If you are later blessed with riches you will already have a plan in place to use your temporal blessings “for the intent to do good.” This will allow you to focus more on “obtaining a hope in Christ” rather than on seeking wealth.
With Jacob’s counsel in mind, Elder L. Tom Perry offers additional instruction:
“So often it is the order of things that is fundamental in the Lord’s instructions to us. The Lord is not telling us that we should not be prosperous. This would be inconsistent with the many records we have of Him blessing His people with prosperity. But He is telling us that we should seek prosperity only after we have sought and found Him. Then, because our hearts are right, because we love Him first and foremost, we will choose to invest the riches we obtain in building His kingdom.
…Is the order of things right in our own lives? Are we investing, first and foremost, in the things that are eternal in nature? Do we have an eternal perspective? Or have we fallen into the trap of investing in the things of this world first and then forgetting the Lord?”
Finally, financial finish lines are in line with King Benjamin’s comforting instructions for caring for the poor in Mosiah 4:27, in which he teaches:
27 And see that all these things are done in wisdom and order; for it is not requisite that a man should run faster than he has strength. And again, it is expedient that he should be diligent, that thereby he might win the prize; therefore, all things must be done in order.
Financial finish lines allow us to diligently and wisely give in an organized manner that does not require us to run faster than we are able.
In conclusion, the financial finish lines framework is in harmony with scriptures and counsel from prophets and can be a useful tool in helping us become wise stewards over temporal blessings by consecrating our surplus to care for the poor and build the Kingdom of God.