eight-common-money-questions

UPDATE: Listen to the podcast episode about this topic

I have informally counseled hundreds of ministers about financial matters. My background lends itself to such interaction. I have a business degree with a double major in finance and economics. I served as a corporate banker before answering the call to vocational ministry.

In ministry I went to seminary and received two degrees. I served as pastor of four churches, and as dean of a seminary.

My life has consistently been the intersection of business and ministry. Indeed, my current position as president of LifeWay is the perfect example of that intersection.

The purpose of sharing my brief bio is not to brag, but to explain why ministers gravitate toward me on financial matters. Hundreds of ministers have sought my advice. I am humbled and happy to share my knowledge with these servants of God.

Allow me to share in this post some of the more common questions I have been asked. There are probably more than a hundred questions I omitted; these are simply the top eight I have been asked most frequently.

  1. How do I broach the subject of getting an increase in my pay? Pastors and other ministers are typically very sensitive about this issue. They fear asking the question lest they appear lacking in faith or money hungry. The pastor must first determine if his pay is indeed well short of standards for his area and position. We discussed this issue in my previous blog post about pastors’ salaries. I then recommend he find a trusted friend in the church, preferably a leader and a businessperson, who can be both his mentor and guide for broaching this subject. Someone other than the pastor himself should speak to this issue.
  2. Will I be okay for retirement? This question may soon move to number one as boomer pastors approach retirement. Sadly, a number of aging pastors are not prepared for this day. They had this naïve idea that things would just work out. They did not prepare for the inevitable. Often churches did not offer any retirement benefits. Many boomer pastors are getting some sad wake-up calls. I encourage pastors to seek a financial advisor as soon as possible to plan with the few years they have left in fulltime ministry.
  3. How much can I designate as housing allowance? First, I encourage pastors to make certain they meet the IRS requirements to have an allowance. If they do, the housing allowance can be no more than the lowest of these three items: 1. The housing allowance designated by the church; 2. Actual housing expense; and 3. Fair rental value of the home. Guidestone has an excellent FAQ on housing allowances.
  4. How much should I save for retirement? I really like this question, because it means that the pastor understands the nature of retirement. In the past in most vocations, we often depended on “the company” to provide our retirement income through pensions. That has all but disappeared. Today the employee is responsible for his or her own future. It’s great if an employer has a 401(k) or a 403(b) for employees to save toward retirement. It’s even better if the employer offers some type of matching funds. But ultimately, it’s up to the employee, in this case the pastor, to be prepared. Many times that means supplementing employer plans with savings or Individual Retirement Accounts. The question itself is difficult to answer because it involves so many variables. The best answer is “as much as you can as early as you can.” Sometimes the number of 10 to 15 percent of gross income is offered, but that too is a very rough guideline.
  5. Is it okay to accept a small stipend for weddings and funerals? Though there are always exceptions, the general answer is “yes.” The pastor typically has to spend work and time (especially for weddings) beyond his weekly responsibilities. Weddings, with Friday rehearsals and Saturday ceremonies, take a pastor from his family for the entire weekend. One year as a pastor I officiated 40 weekend weddings.
  6. Should a pastor’s salary be clearly shown on every church financial statement? Polity, policy, and tradition determine the response to this question. In most of the churches I served, my salary was not itemized on the financial statements; it was lumped with other salaries. We did, however, have an open book policy that allowed any member to see the salaries if he or she requested.
  7. I can’t pay my billsWhat do I do? Find a trusted advisor immediately. Find someone who understands personal finance well. The first thing you will need to do is determine if you have an income or expense problem. An income problem means that you simply do not have sufficient income for someone in your position. An expense problem means that you are managing your finances poorly. Don’t wait to get help. Your emotional health and reputation are at risk.
  8. Is it okay to leave a church for financial reasons? The Bible clearly teaches that we are to manage our household well (1 Timothy 3:4-5). That management includes the financial stewardship we have been entrusted. In that sense, if someone cannot provide for his family, it is likely okay to seek another church. The pastor, however, must first ask himself some tough questions. Am I struggling because of my own mismanagement of money? Am I demonstrating too little faith? Have I shared my plight with any trusted person in the church?

I could add many more questions. What do you think of this list? What would you add?

Comments

  1. Steve Drake says

    Thom, I know this post is going to be helpful to many including me. I am one of the hundreds who has already benefited from your counsel in financial matters. There are probably many pastors out there who have opted out of the social security program. They have an even more urgent need to plan for retirement. Maybe in a future post you could address this group. Thanks for caring about pastors in a holistic way. There are many theological and ecclesiological voices out there and I’m grateful for them (assuming they have a high view of Scripture and good hermeneutics), but not many are speaking to the practical needs of pastor as you do. Thanks for this post.

  2. Danny Gilliam says

    The hardest financial issue for most ministers and church members concerns the tax issue. The difference between ordained and nonordained ministers. The difference between federal tax and self-employment tax. And of course for those of us who have not opted out of social security, whether to pay quarterly or have additional amounts withheld. Most young pastors have no idea how this all works, and few church treasurers understand the issues. I speak from experience because my first year of full time ministry, when my wife and I did our taxes, we were shocked to discover we owed a huge tax bill, and we also learned the IRS are in no mood to be charitable at that moment.

    • Thom Rainer says

      You’re right Danny. The Social Security issue is huge, and many pastors do not understand its implications.

    • says

      I totally agree. Every church handlrs thing differently. Its changed 3 times at the church im at. Im not young and I still cant get clear answers. Any books or webinars that keep it simple?

      • Thom Rainer says

        I have used the book “B. J. Worth Tax Guide for Ministers” for over 20 years. A new guide is published annually. It’s the definitive resource for me.

  3. says

    2 Thessalonians 3:10 states that if a man do not work he shall not eat. So Everyone who work, should be able to eat. If we are fed, we should pay for it. SIPLE! So I agree with your statement. We are to invest in the people of God first, and leave the world to care for their own. Thanks for sharing this. It is appreciated.

  4. says

    God has been good to us through the years, but the one thing I wish I could go back and do is save for retirement. I’m now 55 and I am WAY under-prepared. Entering the Publisher’s Clearinghouse Sweepstakes is not really the best way to plan for retirement.

    I wish I could somehow communicate to every young preacher two things – STAY OUT OF DEBT and SAVE FOR RETIREMENT!

    I wish someone had shouted those things at me. More to the point, I wish that I had listened to those who said things like this to me.

    Too soon old. Too late smart. This is very good advice.

    • Thom Rainer says

      Good word Dave. The good news is that you have 10 to 15 years to reverse the old patterns. I talk to a lot of pastors who are staring at virtually no savings or retirement in their mid 60s.

  5. Brad Gilbert says

    As a 34 year old pastor I know I need to set aside money for retirement, but I have found the 10-15% figure most throw out unreasonable for me. As someone who already gives that to the church each week, my family of 6 cannot afford to double what we take out of check each week to 20-30%. I currently continue to put in for SS since I already paid in enough in the secular workforce to withdraw when I retire.

    • Thom Rainer says

      Brad -

      The good news is that if you can set aside 4% to 5% for retirement at your age, you will be well ahead of most people. Also, see if the church is willing to add 5% as well. If so, you would be in a strong retirement posture.

      • Brad Gilbert says

        Can you do that small of an amount (4-5%) weekly into something like an IRA, or is it something you just save aside and make a large payment once every couple moths, or six months, etc.?

        • Thom Rainer says

          Brad -

          There are no minimum amounts for contributions into an IRA. You should be able to find an institution that will deduct the amount from your checking account on the days you predetermine. It would thus become automatic for you.

  6. Christopher M. Webb says

    Thanks so much for this information. It really provides helpful insight(s) for me to consider. I will be 40 this year and have been in full time vocational ministry as pastor a little over 10 years. Among our folks (Native Americans) we tend to fall short in each of the areas you have addressed. Right now I’m able to put almost 3% for my retirment, which I’m thankful and consider it to be a tremendous blessing to be able to do so. Once again thanks so much for this insight.

    • Thom Rainer says

      Thank you Christopher. A contribution of 3%, though low, is better than most. I really appreciate your heart.

  7. Joe Cooper says

    Thom, this was a great blog I am wondering if you would be willing to blog about, or reply in this comments section, about a related subject to the above. There are some churches that pay their pastors a relatively large salary. One could argue that many church members would be confused, or strongly concerned, with a pastor that draws a large salary from the church; especially a salary that could make someone wealthy within a matter of several years. Of course, this is not a black and white issues, and many aspects of the conversation might be considered relative. If you are willing to write/reply about the subject at all, I would also love to hear your thoughts on this too: If you would even agree that there is such a thing as ‘paying a pastor too much money’ (for lack of a better phrase), do you believe that the people who decide the salaries are putting pastors in a situation that might lead them to stumble. In other words, with the love of money being the root of all kinds of evil, is giving a pastor such a large salary putting them in a potentially vicarious position?
    I find your writing to be very insightful, particularly when it comes to these types of subject. I would love to know what your thoughts are on the above.

    • Thom Rainer says

      Joe -

      There are always exceptions and even abuses in ministry. I see quite often data that categorizes pastors’ salaries by different levels of pay. I do not know what individual pastors make at specific churches.

      My perspective is that the potential abuses are rare exceptions. I am spending my energies on the opposite end of the spectrum where problems abound with underpaid pastors. I hear from these servants of God from time to time as well. I pray that we who are served by these pastors will do everything we can to give them the honor that is due them.

      Thanks for your kind words about my blog. Keep visiting!

  8. says

    With specific regard to #5, what is your take on unsolicited “love gifts” that family members choose to give a pastor when he does a wedding or funeral? I’ve heard conflicting opinions on how/whether it should be reported as “income.” Thanks.

  9. Hal Hunter says

    I, too, came to ministry out of a business and banking background. From the very beginning of my ministry I decided that every penny I spent using a CPA familiar and current with ministry payroll and tax issues was money well spent. And understand, not every CPA is qualified and comfortable with ministry payroll tax issues, just as not every CPA or firm is a good fit for a church or non-profit when you are looking for an auditor or financial affairs adviser.

    To plug a SBC affiliate. Guidestone has a wealth of material available, online and dead-tree, that can help churches and ministerial employees be better informed about these issues.

  10. says

    If one sets up church budget correctly according to irs guidelines to get the maximum tax benefits then the savings of taxes could be put in retirement account. It will cost the church and pastor nothing extra. Again, consider BJ Worths tax guide for ministers. Get the most current copy.

  11. says

    This looks like a potential book to me. Even with training and teaching on this subject, there were still times where it could be just overwhelming with confusion. Helpful posts like this provide some guidance on a personal and often times “controversial” topic.

    • Thom Rainer says

      Thanks David. My son, Art Rainer, has an e-book, releasing on the topic in two months. You are a prophet!

  12. Tim Napaver says

    I feel for my young brothers in the ministry. I’m 57 now…and saved nothing for retirement (and the small churches that I pastored did not contribute anything) until I was around 41. But in those very, very lean years, God taught us some principles that has helped us position ourselves in pretty good shape for retirement. So please don’t give up. It is not as easy saving for retirement when you start later in life, but it is possible. Currently, I am saving around 40% of my $50,000 salary for my retirement. That seems impossible, but it is not. Perhaps I can provide some assistance and guidance, telling you how my wife and I turned our situation around. First of all, we found a standard of living level where we were comfortable…and stayed there. College and seminary took 14 years of full time work. When those times ended, we stayed at that standard of living level. When our income increased, the additional income went to retirement savings. I can’t stress this point enough. If you could live last years on what you made…live this year on it as well. When I was in school, my wife was a stay at home Mom raising our two girls. We raised a garden to cut our costs. When I returned to my home state for Christmas vacation, I always inquired about filling available pulpits to reduce my Christmas traveling costs. We couponed and looked for every and any way to stretch our dollars. In time, our girls both went off to school. My wife decided to take a job with the school system…so she would be off when the girls were off and earn a little extra cash.. Initially, she was hired as a lunchroom/playground monitor, working only 10 hours a week. But she built relationships and soon enough she was working as a one-on-one aide with handicapped children and eventually became a teacher’s aide. But here is what we did. We determined that we would live off my salary and save hers. We invested in Roths with the Annuity Board, and every raise I recieved at church went into our retirment accounts. When the girls went off to college, it decreased our cost of living…and we saved that reduction as well. It is amazing how much we have saved over 16 years. We bought our cars very carefully off of Ebay, and saved thousands on every purchase. I also turned my yardsaling/picking hobby in a part time eBay business that pays for all our family vacations, and several week end fishing trips every year with a lifelong friend. Other activities are also paid for with this unexpected, extra income. It is also important to estmate your tax liabilities every year. If you can’t invest in Roth IRAs through the Annuity Board, estimate how much you will have to save in order to drop a tax level, lowering the percentage of tax you pay on your adusted gross income.and also reduce your taxable income. It is not unheard of to save an immediate 15% on the money you put into your IRA, when you look at your reduction of gross income and tax rate. I found that visiting the Guidestone site and checking on my Aunnity Board investments encouraged me to stay on course…when you see 12, 14 and even 19% returns from time to time. Make sure you are up to date on all your tax deductions…and use them!! I have several friends in the ministry who don’t like saving every reciept and itemizing their deductions at tax time. Don’t be foolish. Render to Ceasar what is his…but use every tax advantage Ceasar gives you. Please understand guys that retirement is coming for all of us…and you have to be ready. Don’t expect Social Security to be there for you if you are less than 40. Learn everything you can about finances, especially the power of compounding and the 72 rule. If that doesn’t encourage you to save, nothing will.

  13. says

    Can anyone recommend a good CPA or financial advisor for these areas mentioned above. I live in te Chicago area and want to learn about this as I am a new full time pastor. I strayed away initially because of the cost associated with them but maybe someone could recommend one that could help me for free or very low cost. Thanks for the article and God bless.

  14. says

    Great article, Thom! Any chance you could also address how deeply involved in the church finances the pastor should be? For instance, should we know what everyone in the church gives? I’ve heard arguments both ways. I’ve never been comfortable with it, but I’m not sure it’s wrong, either. Certainly a church member’s giving is a key part of determining their spirital maturity. How have you seen this handled? As well, are there church treasurer “support groups” or blogs that can help our treasure/finance people stay current on best practices & tips from others in similar volunteer positions?!! Thx so much!

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