ON THE MONEY: 3 seasoned financial experts talk about church leaders’ biggest challenges, and how to tackle them

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By RaeAnn Slaybaugh

Rev. Dr. Sara Day, CFP®
Director of Development
MMBB Financial Services

Since 2002, Rev. Dr. Day has held numerous positions with MMBB, including providing service to members and employers. Now, she serves as director of development.

In her career, Day has also served as an area minister, senior pastor, and director of campus ministry. She holds both MDiv and DMin degrees.

One thing that differentiates most church leaders and clergy from secular clients, she says, is that their calling to the job by God comes first. She, too, believes her career is a call from God — after several twists and turns along the way.

“Clergy often say, ‘I’m called by God, so God will make a way,’” she says.

But, Day also understands the potential financial pitfalls associated with this mindset. As such, she felt confident that earning her Certified Financial Planner® (CFP) certification would enable her to help pastors and churches in the best way she could.

“I believe God has called us — individually and together — to be a community,” she says. “We don’t have to be individuals and isolated; we can provide better insights for each other.”

Rev. Dr. Patricia L. Hunter, CFP®
Financial Wellness Program Director & Financial Planning Service Manager
MMBB Financial Services

With 30+ years of experience, Rev. Dr. Hunter has served as an assistant pastor and a professor (including a “Talking Faith and Money” course). She is a theologian in residence and an associate minister at two Seattle-area churches. She holds both MDiv and DMin degrees.

When Hunter joined the staff of MMBB in 1987, she was a national coordinator for women in ministry, as a liaison for the American Baptist churches.

“There certainly weren’t many women in ministry then,” she says. “[I appreciated that] MMBB had a portfolio for them.”

After two years, with a business degree and vast ministry experience, Hunter began to work more on the retirement planning side. Now, her full-time focus is church financial management. In 2008, she earned the CFP® certification. 

“In many ways, I believe as [my clients] do — that God has our backs and that we can trust God  with our future, even financially,” Hunter says. “But I also believe that God gives us resources, and we’re to use those responsibly to care for our families, ourselves and our communities.”

Alina Parizianu, MBA, CFP®, BFA™
Financial Planning Specialist
MMBB Financial Services

Prior to joining the staff of MMBB, Parizianu spent 14 years in the financial services industry, including as vice president and credit portfolio manager for a major European investment bank in New York. She holds the CFP® certification, an MBA, and a behavioral financial advice certificate.

Now, her focus is on helping MMBB members define and work towards achieving their immediate and long-term financial goals. She leads webinars and seminars on a range of financial planning topics, from transitioning into retirement to clergy taxes.

At one time in her career, Parizianu’s clients were primarily medical doctors – whom she says share similarities with clergy, financially.

“Both are in service careers, so working with them is very rewarding,” she says. “Also, they focus on their mission and, in the process, tend to neglect their own financial issues.”

Both also need help with debt management and avoiding mortgage mistakes.

As a member of the Financial Planning Association Pro Bono Committee, Parizianu is an advocate for financial literacy among underserved, low-income populations in New York.

Increasingly, clergy are dealing with debt. Why?

Sara Day: First, churches expect superior education, strong experience and great understanding of church life, but they’re not necessarily willing to pay for all that. So, clergy salaries are low compared to others’ roles requiring post-graduate degrees. And, education is costly.

Also, pastors do a lot. They preach, counsel, educate — all kinds of gifts and callings. But having financial and administrative knowledge might not be one of their gifts and it is not typically an extensive part of their training.

Patricia Hunter: One big reason, as Sara mentioned, is that many ministers are trying to make ends meet with low salaries; frequently, there’s no emergency fund. They’re trying to pay off student debt while also helping children through college and paying for private elementary and secondary schools. So, they’re incurring debt to help their kids.

Alina Parizianu: I agree. Our members are in a very tough position, with limited emergency funds. They rely on credit cards that keep ballooning. I’ve spoken with members who are paying interest rates as high as 28 percent.

In what ways can you come alongside clergy to navigate a path out of debt?

Hunter: We’re willing to have the hard conversations needed to take away the mystique about money.

We offer information on how to get out of debt, being realistic about how much money is coming into the house.

We also offer information on taxes — how to limit the amount of taxes one has to pay, for example, by taking advantage of the housing allowance.

We talk about debt management — how to minimize the amount of debt on credit cards.

Also, we talk about what it takes to retire with dignity.

Parizianu: First, we help them by creating a debt management plan that allocates their limited resources to conflicting goals.

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More importantly, we advocate for staying out of debt. There’s really no magic wand; the bottom line is to live within one’s means.

We work on both sides of clergy compensation, advocating for salary increases for our members, providing information about comparable salaries in their area or their region, and helping them negotiate with the church to the extent possible. Certain shifts can be made as far as salary increases, housing allowance or social security offsets, but the most important thing is to know where the money goes, and to start with a budget.

You’ll hear us talk about ‘the budget’ many times, because that’s really the starting point.

Day: We can help in two big ways, I’d say. One is providing pastors with tools. Tools to keep track of their expenses. Tools to look at cash flow. Tools to look at debt.

But most of all, I think, we provide encouragement — making sure they know that they can do it by doing some things differently.

Can you share some examples of clergy who have achieved debt freedom?

Parizianu: Recently, a member showed me his credit card statement; he was paying more than $1,400 a month just in interest with a 28 percent APR, which is outrageous. As one option, we looked into a home equity line of credit with a lower interest rate, so he could roll over some balances.

But he also had significant retirement savings that he hadn’t touched. While those funds are subject to market fluctuation — on average, achieving between 6 percent and 10 percent appreciation over a long period of time, depending on asset allocation — it still doesn’t compare with the 28 percent APR he was paying. Since he is already retired, it made sense for him to use some of his retirement savings to stop the financial bleeding.

Day: A few weeks ago, I was talking with a pastor about paying off some of his debt. He has some extra money right now, so our goal is to strategize what will make the greatest impact on reducing his financial stress.

We can work with churches — not necessarily to get them to pay their pastor more, but to make them aware of certain tax ramifications.

I’ve also worked with pastors to just keep track of their expenses and income. Many don’t monitor what’s coming in and going out, let alone deal with their debt. So, every month, they feel like there’s no money left. Once they start keeping track of it, they realize that instead of going out to lunch on a given day, they can spend that money in a better way.

It sounds so simple, but it can be very difficult if you’ve never done it.

Hunter: I do a lot of workshops, and a light comes on when our ministers and spouses realize there’s a way out of debt — when I give them a strategy. I make a list of all the debt they owe: who it’s owed to, interest rate, minimum payment and total amount owed. Then, I ask them to reorganize their payments based on the highest interest rate and try to pay that off first.

Or, maybe they pay off the credit card with the lowest balance first as a way to gain some traction. When we have those conversations, it’s like, ‘okay, there’s hope here.’

As they pay down their debt, members talk about seeing their FICO (Fair Isaac Corporation) credit scores go up, sometimes by 200 points. They’re pleased about that, and so are we. 

You’ve each led many webinars and seminars on a range of financial planning topics. Which are most in-demand right now?

Day: Some churches think, ‘we’re non-taxable; therefore, we don’t even have to think about taxes.’ That misconception really needs to be dealt with appropriately.

Also, the whole issue of how to communicate about money in the local church is important. Money isn’t an evil thing. It’s not a sinful thing. It’s how we use it that gets us into trouble.

Hunter: I agree: the most asked for workshops I do are on taxes, as well as compensation.

Ministers really want to know how to make what they’re earning go as far as possible, and how to minimize their tax liability. We suggest that the pastoral budget be set up in a way that ensures everybody is clear about the salary that represents, ‘this is what the pastor must live on.’ There’s another section of the budget that lists the pastor’s benefits, and another for ministry-related expenses.

Church leaders are also interested in how they can earn more money. Sometimes, we just have to be upfront about the need for a second job, or for the spouse to bring in income.

Retirement planning is another in-demand workshop. It’s never too late to start planning for retirement. It might not happen as soon as they’d like, or it might look a little different than envisioned, but that honest conversation needs to happen.

Parizianu: A seminar on financial planning basics is always in high demand, because it’s an eye-opener for many church leaders. It provides overviews on debt, budgeting, investing, Medicare, Medicaid and Social Security. Depending on your life stage, at least a few of those would apply at the moment — and all will apply at some point.

Right now, there’s a focus on “financial wellness.” What does that term mean to you?

Hunter: A few things. First, having limited stress about money. Second, knowing how much is coming into the house, and where the money’s going.

Financial wellness is about having financial goals — college funding, retirement planning, getting out of debt, and so on. It requires setting up some benchmarks and goals, getting a will and a durable power of attorney, doing estate planning.

Also, financial wellness is being able to absorb a financial shock of $10,000 or more. I was speaking with a member this morning who will need a new roof this year. It will cost $12,000, and he has no emergency fund.

When I talk about financial wellness, it’s important to ask: ‘Why is this important to you?’ An emergency fund might be a goal, but why? Because your spouse and children are gifts from God and you want to care for them? Why do you want to eliminate debt? Because you’re tired of waking up in the middle of the night wondering how that next bill will get paid? 

Parizianu: Financial wellness is like overall wellness; it’s being healthy with handling your finances. Having financial security, freedom of choice. You achieve that by living within your means. If you keep paying the minimum on your credit cards, it will snowball out of control. That’s why an emergency fund is so important.

Day: Financial wellness, for me, is helping people reduce their stress related to finances. To know where their money is going and to live within their financial means. To understand that you can live out your call and passion, and also take care of your family, with the money coming in.

In what ways can you come alongside a church leader to help achieve financial wellness?

Day: First, as I said earlier, we believe you have to break the silence around finances — to be able to talk with our spouses about our family histories. As a financial planner, I know that the things we learn about money in childhood stick with us. If giving away all your money was drummed into your head as a child, that will be a pattern in adulthood.

In some couples I’ve worked with, one partner will say, ‘I really want to get this under control, but I have no idea where my spouse is spending money. They don’t have to justify it to me or talk with me about it.’ That can be very detrimental in a family, especially for the next generation.

We also have to talk about what a person’s theology says about money. It’s one of the most talked-about topics in the scriptures, yet we often pick up one scripture and think that that’s the whole truth.

We’re always on the path to financial wellness. It’s similar to physical wellness: we can always drink a little bit more water or get a little more exercise. With our financial health, we might need to make adjustments if we have children, or if those children are getting ready for college, or if we’re getting closer to retirement. It’s a journey, not a destination.

Hunter: From a lay leader’s perspective, we can offer suggestions on how to structure the pastoral package: compensation, reimbursement of ministry-related expenses, benefits.

For example, when setting up the pastoral budget, many of our churches have stopped providing one lump sum, where it looks like the pastor is getting three times what they’re actually making because the church has lumped all the benefits, conferences, conventions and so on under one total.

We can also try to eliminate tax problems by letting ministers know that they need to be receiving W-2s from the churches where they serve as pastors. If they’re doing preaching for one Sunday or a revival, a 1099 might be appropriate. That helps them stay out of tax trouble.

Some churches we’ve talked with have stopped collecting unaccounted-for love offerings for pastors and staff. Previously, they’d put out a basket, and people came forward. Then, all that money went into a brown paper bag and out the door.

We also talk about risk management — how it helps the church to have disability and life insurance, as well as retirement plans, for all staff. If, for example, the church administrator becomes disabled, he or she can collect disability, and the church can hire another person and go on with their ministry, instead of continuing to pay someone who might not be able to perform the job anymore.

Parizianu: Here again, we invite our members to create a budget and ask themselves why a certain item is important to have. Do they really need it? Is it in alignment with their overall goals?

Also, we remind them that financial wellness is achievable, and it’s a step-by-step process. It doesn’t happen overnight. From interaction to interaction, we determine progress and set new goals together.

Recently, I helped a bi-vocational member, after he retired from his secular job at 55, who continues to work in the church. Soon, he realized he couldn’t achieve all his goals.

So, as he and his wife were preparing to celebrate his retirement with a nice cruise — using her bonus — they allocated that money to paying down debt instead. They realized that would give them peace of mind in the long run.


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