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Another Thing You Probably Haven’t Discussed With Your Spouse—But Really Should

by Monday, January 17, 2022
Picture of a young couple walking on a beach with blog post title: Another Thing You Probably Haven’t Discussed With Your Spouse—But Really Should

Back in November, I gave you some homework. Did you do it? I hope so! Being on the same page as your spouse about your vision for the future is very important. I have some more homework for you again this week. It’s a lot like last time’s—getting on the same page as your spouse. Except this time the topic of conversation is in the nearer future.

How Much Would You Like To Help Your Children Financially?

After the retirement conversation, the next one is kids. Even if you don’t have kids, you may want to have this same conversation relating to other family members in general. How much financial support would you like to provide?

Again, there is a wide spectrum of possible answers to this one. I’ve seen everything from “You start paying rent on your 18th birthday” to “I’ll keep paying your car insurance well into your 30’s.” The major place the topic of helping out adult (age 18+) children comes up is in regards to college.

How Much Do You Want To Help Pay For College?

Do you want to contribute to your children’s college education? If so, how much? Do you want to pay for it all so they aren’t saddled with debt? Do you want them to shoulder part of the burden so they feel they have skin in the game? Do you want them to find their own way to develop character and responsibility as an adult?

Chances are, your initial reaction to this question will be to do whatever your parents did for you. That’s what I have seen with most people. After all, it worked for you, didn’t it? But what happens if you and your spouse have different opinions based on your different experiences?

Here’s another opportunity to practice your marital communication skills. Talk it through with your spouse. If you have different ideas, sincerely try to understand their point of view instead of just trying to help them see your point of view. This is a topic that you should really try to find some agreement on before your kids are old enough to ask. 

Also, your kids might not ask. They may assume that you will provide for them what all of their friends’ parents are providing. If that’s not the case, speak up sooner rather than later. If most of your children’s classmates are wealthier than you are, then you should start to set realistic expectations early. 

What About After College?

In December 2020, more than one in five 25- to 29-year-olds lived in their parent’s homes. And you can’t blame the pandemic, because the December 2019 numbers were actually higher for that age group. 

Here’s a question: are your children welcome to come back and live in your home after college? Will it be on the same terms as before college? 

I know some people love and cherish having time when their adult children are living under their roof. I mean, isn’t your goal as a parent to help your children become the kind of people that you love to be around? I’ve also seen young people who have lived with their parents rent-free while saving up for a down payment on a house, which gave them a great head start in life that they didn’t take for granted. Then there are the people who think they can go back home and not have to work and their parents will just keep supporting them as if they were kids again. 

Do you know how your spouse feels about adult children returning home?

What About Weddings?

College is something that most parents have thought about at least once or twice and even what happens after college. Here’s something that usually scares parents, though, especially dads: weddings. Yes, your baby girl may get married someday. It’s the only way you’ll ever get grandchildren, after all. 

While you don’t need to set a budget for your seven-year-old’s future wedding, you should start mulling over in your mind what your participation will look like. I’ve seen people make detrimental financial decisions to fund lavish weddings because that’s the expectation that was set for their children. 

But I’m not here to tell you what to do with your money. I’m just here to tell you to be proactive and intentional rather than reactive. And you and your spouse should do so as a team.

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11 Free Technology Tools To Help You Conquer Your Finances In 2022

by Monday, January 3, 2022
11 Free Technology Tools to Conquer Your Finances in 2022 by Chris Wells, CFP

Today’s post is written by Chris Wells, a CERTIFIED FINANCIAL PLANNER® professional and Certified Kingdom Advisor® who works with pastors and Christian families to help them make healthy financial decisions and become wise financial stewards. His firm, Flourish Financial Planning, is located in Texas and serves clients across the US utilizing a fee-only model with no asset minimums.

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The Top Ten Personal Finance Blog Posts for Pastors of 2021

by Monday, December 20, 2021
Picture of a hand writing with a pencil with blog post title: The Top Ten Personal Finance Blog Posts for Pastors of 2021

In 2017, I started the tradition of ending the year with a report of the top 10 most viewed blog posts on Pastor’s Wallet. I thought it might be helpful for new subscribers and others who may have missed something that would have interested them.

While it has served that purpose, it’s also been interesting to see the trends of what pastors are interested in over time. Certain topics rise in popularity for a season, such as 2018’s articles on the tax law changes, while others are always in demand regardless of what is going on in the world, as you’ll see below. 

Drum roll, please. Ladies and gentlemen, here we have it: the top ten personal finance blog posts for pastors of 2021:

1. How Much Housing Allowance Can A Pastor Claim?

This one rose to the top this year because it is something that applies to just about every single pastor. The IRS places restrictions on how much housing allowance a pastor can claim and this article explains each one in detail. This is foundational information that every pastor needs to know. 

2. Secular Jobs For Pastors: 9 In-Demand Skills You Already Have

This article has been in the top 3 since I wrote it in 2018 and spent the last two years in the number one spot. It makes me a little bit sad because it shows that a lot of pastors are looking to leave the ministry, but I figure the secular workplace is much better off for it. We need more shining lights out there in the world!

3. How To Calculate The Fair Market Rental Value For The Clergy Housing Allowance

The number one spot on this list discusses the limitations on the amount of housing allowance a pastor can claim. One of those is that it cannot exceed the fair market rental value of the home. How do you know what that is? Read this article!

4. 2020 Housing Allowance For Pastors: What You Need To Know

Don’t let the 2020 date fool you with this article. The information regarding timing, amounts, calculations, overestimating, and the effects of having a side gig is all still accurate and relevant. The only dated part of this article is in regards to how the housing allowance affects the Child Tax Credit. For 2021, it has no effect at all. Going forward, it will depend on what Congress decides to do with the Child Tax Credit long-term. When you read in the news that the credit is “fully refundable,” that means that your housing allowance will not affect it.

5. Do Pastors Pay Social Security And Medicare?

This article addresses a common point of confusion regarding clergy taxes. As with so many things in life, the answer to the title question is, “It depends.” The article discusses how the taxes work, whether or not pastors have to pay them, and how pastors actually go about paying them when they have to.

6. Are Pastors Eligible For Public Service Loan Forgiveness?

There was a change in the laws related to Public Service Loan Forgiveness this summer, so we dusted off this old post and updated it. When it was on the top 10 list back in 2019, it was very rare that a pastor was eligible. Now it’s shot back onto the list because the religious restrictions were removed. If you have federal student loans, this is a must-read. 

7. Health Insurance For Pastors: What Are Your Options?

Despite the attempt to fix it with Obamacare, healthcare is still a major issue here in the United States, especially for the self-employed and people who work for small organizations. Like many pastors. This article details your different options, whether you’re trying to get health insurance on your own or if your church is willing to help. You’ll actually be surprised at how many different options are available. 

8. How A Parsonage Allowance Works

Live in a parsonage? Enough people do for this article to make it into the top 10 this year for the first time. It details the requirements for claiming a parsonage allowance, how it is taxed, and how it should appear on your W-2.

9. Business Ideas For Pastors Who Want To Make Extra Money

Here is another article that addresses pastors looking to make money outside of the church. Not surprisingly, it has been on the top 10 list since it was written in 2018. All 15 business ideas included are still just as relevant and accessible today as they were when it was written. 

10. What Expenses Qualify For The Minister’s Housing Allowance?

The housing allowance is one of the biggest financial benefits available to pastors. It isn’t any wonder that half of this list addresses it. This article is important because it gets into the nitty-gritty practicality of what expenses actually qualify. It is definitely another must-read.


There you have it, the top 10 most viewed Pastor’s Wallet articles of 2021. What do you think? Is there one you’re surprised to see or surprised you didn’t see? Share in the comments!

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What Are The Different Parts Of A Minister’s Compensation Package?

by Monday, December 6, 2021
Picture of a half-completed puzzle with blog post title: What Are The Different Parts Of A Minister’s Compensation Package?

The Apostle Paul told Timothy in 1 Timothy 5:17-18 that “The elders who direct the affairs of the church well are worthy of double honor, especially those whose work is preaching and teaching. For Scripture says, “Do not muzzle an ox while it is treading out the grain,” and “The worker deserves his wages.” (NIV) 

I agree. You are worth your wages. But what are your wages?

We commonly think of wages as simply your salary, what you get paid to work. However, compensation can be a whole lot more than just a salary. This is especially true for pastors because of the unique opportunities that you have access to. There are a number of different things that comprise compensation, but they can be broken into two basic categories: income and benefits.

Ministerial Income

Income is actual money that’s coming to you. It’s something tangible that you can put in your bank account.

Salary

A pastor’s salary isn’t much different than anyone else’s salary. It’s money that you get paid for doing a job. You have to pay taxes on the money and you get to do whatever you want with it. 

Social Security & Medicare Offset

Pastors are dual-status taxpayers for Social Security purposes and thus have to pay both the employee and employer portions of that tax. If you’re not familiar with that, follow the link in the last sentence or none of this will make sense to you.

Some churches feel bad that pastors have to pay the employer portion of the Social Security and Medicare taxes and want to help them cover the cost. They calculate how much an employer would normally pay for the pastor, 7.65%, and pay that as additional salary. It is a nice gesture and definitely helpful to the pastor. Nevertheless, a Social Security and Medicare offset is simply additional taxable income in the eyes of the IRS. 

Housing Allowance

Another type of income unique to ministers is the housing allowance. This site has all kinds of articles related to the housing allowance and I even wrote a book on it. 

Basically, the housing allowance is income that is exempt from federal income taxation and can only be used for qualified housing expenses. It is also exempt from most state income taxes as well. Nevertheless, it is not exempt from Social Security & Medicare taxes.

Equity Allowance

The final type of pastoral income is specific to pastors who live in a parsonage. A parsonage is church-provided housing. As such, a pastor who lives in a parsonage does not have the opportunity to build home equity. When the ministry position is gone, the pastor has to start from scratch with housing.

This is the opposite experience for most Americans who purchase a home. As they pay down their mortgage and home values rise, their equity increases. Many people are able to pay off their mortgage by the time they retire so that they have lower housing expenses in retirement and a valuable asset that they can pull equity from if necessary. 

Pastors who live in a parsonage often find themselves at retirement homeless and equity-less. To make up for that, many churches pay their pastors an equity allowance to help build towards purchasing a home in retirement. If they pay it directly to the pastor’s retirement account, it receives tax benefits and the pastor cannot access it for other things until retirement. If it is given as a cash payment, it is treated as taxable income by the IRS.

Ministerial Benefits

While income is money that you get, benefits are more of services or products provided to you. They are not cash and will not grow your bank account, but they are still very important to your overall financial life. 

Health

One of the most valuable benefits that an employer can provide is health insurance. It is much more expensive to purchase health insurance as an individual than through a group policy. Also, premiums paid through an employer-sponsored health insurance plan are tax-free. Other health-related benefits that churches can provide to all of their employees are dental and vision insurance, health reimbursement arrangements, flexible spending accounts, or health savings accounts if in conjunction with a high-deductible health insurance plan.

Life Insurance

Another benefit that is helpful to both the pastor and the church (because they would want to care for the pastor’s family if anything happened) is life insurance. Up to $50,000 of group term life insurance can be provided tax-free and the premiums on any amounts above that are considered taxable income to the pastor (based on specific IRS calculations).

Disability Insurance

Most pastors are at greater risk of becoming disabled than dying. As such, disability insurance is a very valuable benefit. Like health insurance, it is also much more affordable when purchased as part of a group plan rather than as an individual.

Retirement Savings

A retirement savings account, usually a 403(b), is a benefit that has multiple advantages for pastors. Not only are pastors able to save for retirement pre-tax, but having a church-sponsored retirement plan makes it possible to claim a housing allowance in retirement and also entirely avoid paying Social Security and Medicare taxes on contributions.
 

Paid Leave

Even God took time to rest. As such, it is important for pastors to have access to paid leave (and a culture where they are encouraged to take it). It can be broken down in different ways, but paid leave can include sick days, holidays, vacation time, family leave, professional development, outside ministry, and sabbaticals. It is also important for the church to respect the pastor’s time off and pitch in to get work done while the pastor is away.

Parsonage

All of the other benefits (not income) listed here can be given to all church staff but a parsonage is only for ordained, licensed, or commissioned ministers. A parsonage is a church-owned home that a pastor gets to live in income tax-free.



Those are the different pieces that can be fit together to create a ministerial compensation package. Both pastors and their churches should understand these different components in order to create a tax-efficient compensation package that meets the pastor’s needs. Pastors, share this with whoever in your church makes salary decisions, whether it’s a board of directors, stewardship committee, an HR department, or whoever. Sit down and review it together to make sure your church is fulfilling 1 Timothy 5 to the best of its ability.

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One Thing You Probably Haven’t Discussed With Your Spouse—But Really Need To

by Monday, November 22, 2021
Picture of a couple walking on the beach with blog post title: One Thing You Probably Haven’t Discussed With Your Spouse—But Really Need To

When you get married, two become one and you set out on the exciting journey of building a life together. You dream about the ministry you’ll have together, what your kids will look like, even the sports that they’ll play. However, there’s one thing that you probably haven’t taken the time to dream about together and it’s a whole lot more important than what sports your kids play.

How do you want to spend your golden years?

How Do You Want To Spend Your Golden Years?

What do you want to do in your 60’s, 70’s and 80’s? Do you long for the traditional retirement where you end your career to embark upon a life of leisure? What does leisure look like to you? Touring castles in Scotland or doing crafts with the grandkids?

It’s amazing how few people have taken the time to intentionally think through how they would like to spend the last third of their life. It can be hard to think of the future in that way, especially the younger you are, but it’s very important. Your plans for the future affect your behaviors today. In fact, your plans for the future should dictate today’s choices.

At What Age Do You Want To Retire?

When I’m talking to a prospective financial planning client, I always ask them at what age they want to retire because it’s a necessary data point for projections. Most people don’t know. A common answer is, “I don’t know, I haven’t really thought about it. Social Security is at 65, right? I’ll do that.” 

When you end your career is a big deal. Though as you can see, if you don’t take the time to think about it, you’ll end up letting an uninterested government agency arbitrarily determine your life plans. Ouch. When I put it that way, it doesn’t sound so good, does it? (And for most of you reading, your full Social Security retirement age is 67, not 65.) 

Do You Want To Retire?

Before you start stressing out over picking a retirement age, though, let me challenge you even further. Do you even want to retire in the traditional sense? Personally, I don’t plan on retiring. As I age, I may work less or do different things, but I think to completely stop working would be incredibly boring (I’ve already done that once when I became a mother). I’m told that’s a very Millennial and Baby Boomer attitude and Generation X still wants to retire. Either way is fine, there isn’t a right or wrong answer. 

I just want you to be intentional about it. Take some time to think outside the box and don’t just assume you’re going to stop working at age 65. There are so many things you can do in your later years. You can keep working full-time, cut back to part-time, stop working but actively volunteer, devote your time to your family, start an entirely new career or business, or even perfect your golf swing. 

Take some time to think these things through and envision your ideal retirement. If you could do anything, how would you spend your golden years? For many people, they are the most fruitful years of ministry, even if not formal, since they have so much wisdom and experience to offer the next generation.

Discuss It With Your Spouse

And now the hard part. Wait, you thought it was hard to create a vision for an unknown future? That’s just the beginning! Now you have to meld that into your spouse’s vision for the future. Hint: The sooner you start discussing this, the more time you have to work out your differences before you reach retirement age.

If you’ve been married for any significant amount of time, you’ll know that you and your spouse likely have different views on your retirement years. Even if you have the same goals, your ideas of how to accomplish them and prioritize different aspects of those goals probably differ. And that’s okay! 

Even though you’re a couple, you don’t have to do the exact same things! One of you can stay home and care for the grandchildren while the other leads short-term missions trips. One of you can keep working while the other one goes fishing, and there’s nothing wrong with that. What’s wrong is when you make assumptions instead of having conversations. Assumptions never bode well in marriage.

So, here’s your homework. Take some time to dream about how you want to spend your golden years. Share this article with your spouse so they can do the same. (If you’re single, you’re done with the homework once you have it figured out for yourself—lucky you!) Then, set a time to start discussing it. It will likely be an ongoing discussion, not something that’s addressed and solved in one sitting. Your vision will also likely continue to be shaped as you grow and your life circumstances change. That’s good, keep the discussion going. What’s not good is expecting the Social Security Administration to make major life decisions for you!

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