5 Healthy Habits of the Financially Savvy Pastor

Written By Troy Levy

Here’s what we know: Ninety percent of pastors feel financial pressure. With the economy still in an unstable and unpredictable flux, and with inflation and cost of living prices continuing to rise, we need clear and consistent strategy to manage our financial resources well. We still believe that Jesus is coming soon. Yet, with that awareness in mind, we have all the more responsibility to be faithful stewards. Here is a certainty: We can still manage well; even in this economy. So here are five “best practices” for effective money management. If you do them consistently, you will be more fruitful, financially. 

Financially savvy pastors plan for retirement.

Let’s start with the end in view. The odds are that you won’t want to have to work forever, even if you do keep busy with ministry-related activity for as long as you can. The Church helps to support retirement, but planning for retirement is not the Church’s responsibility; it’s yours. As you plan, it’s best to keep in mind that you probably will not be able to retire rich after working for the Church for 40 years. Generally, the Church’s retirement plans are designed to be supplemental. Opening and contributing to an IRA (Individual Retirement Account) is a great primary plan that you can do yourself. You might be thinking, “That ship has sailed. I’m too old to contribute meaningfully to a retirement account at this point.” There’s good news! If you are past the age of 50, you can contribute even more with catch-up contributions.

Financially savvy pastors budget systematically.

Budgeting is one of the most important financial habits. John Maxwell says that budgeting is “telling your money where to go instead of wondering where it went.” We’ve all been there too many times for comfort. As we live in a very heavily marketed-to society, if you don’t have a plan for your money it will probably be wasted. Budgeting and spending mindfully is your way of taking control of your finances.

Financially savvy pastors establish an accountability system.

Most pastors are leaders who are used to being in charge. While it may not be true for every pastoral home, this can easily be the case with your finances. If you’re “in charge” of the finances in your home, your spouse needs veto power. Both of you also need to communicate regularly about finances; whether you handle the finances or not. If you happen to be single, an accountability partner will be very useful, especially when it comes to major purchases. Having another set of eyes on things is always best.

Financially savvy pastors save for a rainy day. 

While we might be surprised about the timing of an emergency, we cannot be surprised that they happen. Many times, the difference between those who stay out of debt and those who don’t is being prepared for the inevitable emergency. Having a savings account well-stocked with 6 months of expenses as an emergency fund will help to ensure that you don’t get caught desperate.

Also, having sinking funds to plan for your replacement car, new furniture, or some other large purchase is an excellent strategy to plan and save towards a tangible goal. Some people might refer to a sinking fund as a “cash stash.” Nevertheless, no matter what you call it, a sinking fund is setting aside a little money every month for a specific goal; like starting to save for Christmas gifts in July.

Financially savvy pastors get a tax professional who has experience/specializes in clergy taxes.

Clergy taxes should be handled differently because our compensation is different from the average employee in that we are technically self-employed from a government standpoint. Self-employment status combined with the parsonage exclusion can make for a significant legal reduction in tax liability. Please see your conference leaders and/or a tax professional for what might be required, especially for auditing purposes.

Bonus: Take advantage of seldom-used employee benefits.

Despite the age-old joke of pastors not making much money, conferences do tend to have good benefits (including standard ones that you may not have to do much) to participate in like: health insurance, tuition discounts for your children, and retirement. There are others that may require an extra step of submitting receipts and/or requesting reimbursements such as: mileage and tolls for official conference travel, vision/dental benefits, mental health and/or relationship counseling, continuing education & convention attendance, computer purchases, etc. 

Over the years I’ve been shocked to hear seasoned pastors tell me that they never request any reimbursement for benefits like these listed above. Just this week, I had a casual conversation with a colleague when I mentioned submitting a receipt to our conference for vision care and they had no idea that it was a benefit. I looked at their designer brand glasses and only imagined the hundreds of dollars that they could have saved by requesting reimbursement. Taking advantage of little-known employee benefits can literally save you thousands each year. Please be mindful that these benefits can vary widely by conference, so please double-check with your conference’s HR department or Benefits Manager.

Troy Levy pastors New Life SDA Church in Gaithersburg, MD and writes about financial literacy at www.troyslevy.com.