A Pastor's Guide on Keeping Personal and Ministry Money Goals in Balance

Pastors are committed to guiding people spiritually and looking out for their communities, but it can be challenging to establish a balance between the money they make at work and their personal financial goals. Pastoral pay is distinct from most other employment because it usually comes with irregular pay, housing allowances, and benefits that change. You need to plan ahead and be disciplined if you want to keep your personal finances in good shape while also conducting your ministry work.

This booklet gives pastors helpful tips on how to balance their ministry income with their financial goals. It provides ideas on how to make a budget, save money, and other helpful information.

Getting to Know the Parts and Issues of Ministry Income

1. How the Ministry Gets Its Money

• Salary: The church board normally decides on the base pay.
• Housing Allowance: A tax-free part of your salary that you set aside to pay for housing.
• Fees and Honorariums: Extra money for things like weddings, funerals, or giving speeches.
• Benefits: Health insurance, retirement plans, and reimbursements are some of the benefits that come with some jobs.

2. Issues with Money Coming in from the Ministry

• Irregularity: Your income may not be the same every month.
• Tax Complexity: The housing allowance involves careful record-keeping and affects taxable income.
• Limited Employer Benefits: Not all churches offer comprehensive benefits.
• Problems with Budgeting: If your income changes, it can be harder to keep track of your monthly financial flow.

How to Develop Personal Financial Objectives as a Pastor

1. Short-Term Goals

• Making a fund for emergencies
• Paying bills and debts
• Making a plan for daily expenses

2. Goals for the Next Few Months

• Saving money for significant purchases or improvements to your home
• Making plans for kids' education
• Putting money away for retirement

3. Goals for the Future

• Getting to the point where you don't need money
• Leaving a legacy and giving to charity
• Making plans for the future of your church and estate

Advice from Pastors on How to Make a Budget

1. Write Down All the Money You Get and Spend

• Use budgeting apps or tools to keep an eye on your money flow.
• Don't mix your personal money with the money you spend on your mission.

2. Pay for the Most Critical Things First

• Housing, utilities, food, insurance, and loan payments come first.
• Set aside money for the church and savings.

3. Think About Money That Doesn't Come in on a Regular Basis

• When planning for fees or honorariums that can change, be careful with your estimates.
• Save extra money in months when you make a lot of money so you can spend it when you don't.

4. Set Up Automated Payments for Bills and Savings

• Make automatic transfers to your retirement and savings accounts.
• Don't be late on payments or suffer late fees.

Getting the Most from Your Money and Investments

1. Emergency Fund

Try to keep enough cash in your checking and savings accounts to cover 6 to 12 months' worth of living bills. This keeps family and ministry safe throughout money issues.

2. Money for When You Retire

Make the most of the money you put into your 403(b), IRA, or other plans. Use accounts that help you save money on taxes.

3. Putting Money Down for School

You might want to think about using custodial funds or 529 plans to pay for your child's education.

4. Dealing with Debt

First, pay off debt with hefty interest. Don't borrow more money than you need to.

Aligning Ministry Responsibilities with Financial Goals

1. A Way of Thinking About Stewardship

Being a good steward means taking care of your money. Make sure that how you spend and give money is in keeping with your spiritual beliefs.

2. Talk to Each Other

Be honest with church leaders regarding wages and benefits. Learn more about housing allowances and reimbursements.

3. Putting the Ministry's Aims Together

Put the costs of your ministry on your own budget. Help out with charitable projects that fit with your calling.

Taking Care of Taxes and Housing Allowance

Keep track of how you spend your housing allowance and what you do with it. Get help from tax professionals who know the requirements concerning clergy taxes. If you need to, plan to pay your estimated taxes every three months.

How to Keep Your Money Safe

1. Disability Insurance

When you're sick or hurt, it gives you money to survive on.

2. Life Insurance

Keeps the family safe in case of an early death.

3. Health Insurance

Very important for keeping track of medical expenses.

Tools and Resources for Pastors

• Budgeting software that can handle income that isn't always stable
• Financial advisors that help clergy manage their money
• Learning how to handle money and be a good steward

How Church Law and Strategy Can Help Pastors

Regan is in charge of Church Law and Strategy, which helps pastors reach their financial goals while also running their churches through subscription plans like THE STARTUP PLAN and THE FOUNDATION PLUS PLAN.

Links Inside

• Learn more about the legal technique for pastoral compensation.
• Check out the church's legal audit and compliance reports.
• Find out about getting help with church tax planning.

Links to Other Websites

• IRS Clergy Tax Guide: https://www.irs.gov/charities-non-profits/ministers-income-tax-guide
• ECFA Financial Ministry Resources: https://www.ecfa.org/Content/FinancialPlanning
• Christianity Today Financial Stewardship Tips: https://www.christianitytoday.com/pastors/financial-steardship

Please don't regard this blog post as legal or financial advice; it's only meant to be informative. For personalized assistance, talk to a licensed specialist.