This is a guest blog post by Ted Miller of Guardian Wealth Management. Ted was a pastor for 25 years and now operates a 403(b)(9) retirement plan for churches.  Salary discussions can be sensitive, particularly for pastors who must balance financial needs with spiritual and communal responsibilities. Engaging in these conversations with a church board requires a thoughtful and strategic approach to ensure that both parties feel heard and respected. The very first concern is for a pastor to evaluate and address their own insecurities. Without pride it is good to recognize one’s strengths and without shame to clearly see one’s weaknesses. In this evaluation, I have found it to be very helpful to engage the help of a friend or trusted advisor. For many years I had another successful pastor that would come to my church and provide coaching for our staff and board. This friend would help all of us to dream bigger ...

Marketers are going crazy with their back-to-school ads right now and they all have one goal: to get you to spend more money on your kids. There's nothing wrong with spending money on your kids, I do it on a regular basis, but I believe that our culture takes it to an extreme.   It’s amazing how much kids activities cost and how quickly they add up. With school starting again, parents have to prepare to be nickel and dimed to death. It’s not just the gymnastics classes you were already paying for over the summer, it’s the $25 snack fee, the fundraiser that you have to participate in, the dozens of brand new #2 pencils you have to buy, and the extra cost to be in the school band. What can you do to survive the back-to-school tidal wave?   Ask For A Discount If you really cannot afford something, don’t be afraid ...

Even though to me it seems like summer is just getting started, some colleges are starting up again in only a month. This is the season when thousands of families are signing up for student loans. Personally, I don’t think loans are necessary to earn a college degree, but they definitely are the norm. If you or your child are planning on attending college this fall and using loans to do so, you need to know what you’re getting into. Here are three very important things for you to understand before taking out student loans: View post

Whether or not you ever want to stop working, it is important to plan and prepare for retirement just in case your health or your spouse force you to slow down at some point. A lot of people say that their retirement plan is to simply not retire, but real life has shown us that that isn’t always an option. Knowing that, it is irresponsible not to plan for being unable to work someday. The biggest part of a retirement plan is saving money now, while you are still working, so you will have something to live off of when you stop working. Just creating margin in your budget to be able to save for the future is the biggest battle. If you can start to actually save, then it’s all fairly easy after that. While stock-piling cash in a can under your bed is better than what a lot of Americans ...

The Department of Education recently revamped the Free Application for Federal Student Aid (FAFSA) in order to make it easier to submit, and therefore, make student aid more accessible. They say, “The Better FAFSA is simplified, redesigned, and streamlined. It is faster and easier to fill out, with most students and families completing it in less than 15 minutes.” With its rocky rollout, I’m not sure if their claims are true, but what matters is that the FAFSA is completely different, especially for pastors. As soon as it came out, I started getting people asking me, “Does the new FAFSA include the clergy housing allowance as income?” What Is The FAFSA? If you’re new to this, let me give you a little bit of background. The FAFSA is the form that college students use to apply for government student aid, such as grants, loans, or work study programs. In addition to federal aid, ...

Lately, I’ve seen people recommend that pastors who have paid off their mortgages should take out home equity lines of credit (HELOCs) to extend their housing allowance. The idea is that without a mortgage you cannot claim as much in housing allowance so taking on new debt related to your home will allow you to increase your housing allowance and save on taxes. That is not a good idea. First of all, depending on the interest rate on your HELOC, you may not save any money. Secondly, debt reduces your flexibility and adds greater risk to your financial situation. HELOC Eligibility For Clergy Housing Allowance Finally, and most importantly, debt is only eligible for the clergy housing allowance if it is used for eligible home expenses. Just because a HELOC is tied to your home equity does not mean it automatically qualifies for the housing allowance. As with a cash-out refinance, the debt ...

Lately, I keep getting asked if chaplains at government-owned organizations are eligible for the housing allowance. As I stated in my book on the housing allowance, I was under the impression that government employees other than those in the armed forces are eligible for the housing allowance because on page 9 of IRS Publication 517 it says: However, other sources make it appear that chaplains in government-owned hospitals are not eligible for the housing allowance. Honestly, I’m not really sure anymore. Since I’m not certain about it, in this post I’m going to share the different information sources that I have found.  This is what I’ve got for you: IRS Publication 517 I gave you a screenshot from IRS Publication 517 above. It can be confusing because the same publication also says this: However, that section is talking about the payment of Social Security and Medicare taxes. After further reading, I believe this is unique ...

Pastors who save into their church’s retirement plan are eligible to withdraw some of that money as a tax-free housing allowance in retirement. It’s a great benefit to have. Unfortunately, a lot of church retirement plans have investments with higher fees than are available in IRAs. Because of this, I have been asked multiple times if it is worth it. Does the ability to claim a housing allowance outweigh the cost of the higher fees? As with everything in financial planning, the answer is that it depends. It depends on a lot of things, the primary one being your tax situation. Since the question involves calculations and doesn’t have an easy answer, I asked one of my amazing colleagues, Cal Treichler, to help me out. In addition to being a Certified Financial Planner, Certified Student Loan Planner, and PK, he’s also a spreadsheet whiz. In his free time, he created this ...

This is an excerpt from the book The Pastor’s Wallet Complete Guide to the Clergy Housing Allowance, which is available in paperback and Kindle format on Amazon. Treasury regulations state that, In order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel. Another term the IRS commonly uses for “services which are ordinarily the duties of a minister of the gospel” (since that’s way too long) is “ministerial services.” So, as with everything, in order to determine eligibility for the housing allowance, we need to define ministerial services. IRS Publication 517 states that “Ministerial service, in general, is the service you perform in the exercise of your ministry.” Writing this book is the exercise of my God-given ministry. Does that mean I can take a housing allowance? I wish! Luckily, they provide further guidance, since ...

One of the greatest financial benefits available to pastors is the housing allowance exemption. This comes in two forms: the minister’s cash housing allowance and parsonage allowance. These allow “ministers of the gospel” to exempt all of their housing expenses from federal income taxes. That can be worth quite a bit of money, so who are these “ministers of the gospel” that are eligible to take advantage of it? The Bible calls us all to be ministers of the gospel but I don’t think that’s what the IRS has in mind. And “gospel” is a very Christian word but you know the US government would not give special benefits to Christians and not other religions. That would be unconstitutional. So who is eligible for this awesome tax benefit, then? IRS Definition Of A Minister The IRS defines a minister as: Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body ...