Because a pastor’s finances can be different from another person’s finances, I have often asked older and wiser pastors for counsel on managing personal finances. According to the apostle Paul, managing the home is no small matter for a pastor, and this includes our personal stewardship. “If anyone does not know how to manage his own household, how will he take care of God’s church?” (1 Tim. 3:5).
In some ways, pastors are different because we can claim a housing allowance and also opt out of paying into (and receiving benefits from) Social Security/Medicare. But in other ways, we are not any different from other believers. We are responsible to provide for our families and also challenged by the Lord to be generous in our giving. I am not a financial guru, so I would encourage you to confirm any moves with an adviser, but here are six of the best pieces of financial counsel I have received.
Though He was rich, He became poor so we could be blessed with the richness of knowing Him. And His generosity should motivate us to be generous givers. As pastors, we should set the pace in generosity. Without doing so, we lack the moral integrity to challenge the people we serve to be generous.
Save, even when you are not making much.
When I served my first church, they gave me nearly a 35 percent raise when I got married—from 9K to 12K a year (without any benefits). Kaye worked part-time as a bank teller, and we were both full-time students, but we learned to live within our means and always to set aside money. Learning the discipline of saving is critical.
Claim as high a housing allowance as you can.
A housing allowance allows you not to pay taxes on that portion of your income. There are rules you must follow, such as actually spending on your house what you claim as housing allowance and not claiming more than fair-market rental value (including furnishings). We have driven really old cars for years (my college truck for 18 years) so we could put more into a house.
IF you opt out of Social Security, invest the savings.
If you have opted out of paying into Social Security, invest that money for the future. If you live on it now, you are not planning well for the future. If you go to a new church and the church pays the typical employer’s part of FICA for the pastors (not all do so as ministers are considered “self-employed” for Social Security purposes), consider asking the church to pay the amount that would have been paid to FICA as additional salary. If they are generous in this manner, then invest that amount. Since it is likely given to you as taxable income, this could be a good opportunity to invest in a ROTH IRA.
Do not live on any “extra” money.
If you receive extra personal revenue (speaking, writing, weddings, etc.), don’t start to work this into your budget or live like this will always be there. It will come and go.
Splurge on memories, not toys.
A pastor encouraged Kaye and me to “invest more in memories than you spend on toys.” He shared how kids will remember the times with their parents more than they will remember the toys or gifts they received. This has impacted our spending and our parenting.