FINANCIAL FOUNDATIONS FOR THE FAMILY
Philip Lenahan
Phil Lenahan is a CPA who worked for five years with the Arthur Andersen accounting firm and is currently a controller for a Fortune 300 company. He is also a contributing editor of St. Joseph's Covenant Keepers newsletter. Phil and his wife, Chelsey have been married for twelve years and are the parents of four children.

FAMILY FINANCES AND THE EDUCATION OF CHILDREN

When it comes to a genuine Catholic education for our children, finances play a key role in two ways. First, as parents, we have responsibility for providing the resources which allow our children to obtain a solid Catholic education. Second, we are called to be a living example when it comes to applying Godly principles in the area of money management.

MAKING A GENUINE CATHOLIC EDUCATION A FINANCIAL PRIORITY

Let's discuss the elementary and high school years first, then we'll get into planning for college.

For kindergarten through high school, 5-10% of pre-tax income is a guideline you can use for budgeting purposes. Factors which influence this percentage include your income level, the number of children in school, and whether your children are in public, private or homeschool. For most homeschoolers, 5% should be adequate. In addition to the cost of tuition and books, the education category should include amounts for religious instruction, lessons in the arts and sports and other activities like summer camps.

When it comes to college, early planning will be essential given the cost of higher education. A four year education at a private college averages in excess of $80,000 today and with the impact of inflation, this could turn into $200,000 or more twenty years from now. You would need to save $400 per month for twenty years with a 7% after tax return in order to accumulate $200,000. I don't want these figures to discourage you because they don't take into account direct financial aid, student work programs and other methods of offsetting some of the cost, but it is critical that you start planning and saving early so you benefit from the compounding effect of your savings.

One key area of your finances that may make or break your ability to provide a solid Catholic education for your children is how you handle debt. In my counseling, one of the traps I see families falling into is the use of credit to pay bills without the resources to pay the balance off at the end of the month. This results in ever growing levels of debt with very high interest charges and takes precious resources away from your children. Your financial blunders may very well force you to narrow the choices you make regarding the education of your children, and they may not necessarily be the choices you want to make.

Maybe the following example will illustrate what I mean. I recently read that in Hartford, Connecticut, 5,000 people will visit the consumer credit counseling service this year. The average person is 38 years old, earns $38,000, has eleven credit cards and $20,000 in credit card debt alone. If the interest rates on these cards run from 15% to 20%, up to $4,000 of the income of these families is being swallowed up by interest each year. Think of what that $4,000 could do if it was applied to the education of your children rather than paying interest on debt.

In summary, given the critical need for our children to receive a genuine Catholic education, our budgets need to reflect sufficient amounts not only for the current cost of their education, but also savings for the college years.

THE IMPORTANCE OF BEING A LIVING EXAMPLE IN THE AREA OF FINANCES

Fathers, if you want to give your children a blessing more valuable than any material inheritance, then be a living example for them by applying Godly principles to your family's finances. Is our example one we would want our children to follow or would we rather they do as we say and not as we do? St. Gregory the Great, Pope, says, "For true doctrine tries both to teach by words and to demonstrate by living example... When one practices first and preaches afterwards, one is really teaching with power." Take a moment to complete the self-test in the following table. Give yourself a rating from 1 to 10 (with 10 being excellent) for each of the questions. I suggest that your spouse complete the test as well, then you can sit down and compare your answers.


Self-Test on Family Finances

1. Are you tithing (10%) from your first fruits? _____

2. Would you say you have good communication with your spouse regarding family finances? _____

3. Do you pay your bills on time? This includes avoiding the use of credit to pay bills unless the entire balance is paid off every month. _____

4. Do you balance your checkbook monthly? _____

5. In addition to any work related retirement plan, are you saving at least 5% of your gross income? _____

6. Are you tracking your actual expenses and comparing the results to your budget? _____

7. Would you be comfortable showing God your checkbook as relates to what you spend money on? Is money being spent on things contrary to a good Christian life? _____

If your total score is between 63 and 70, I applaud you. Your children will be blessed by your example. If your score is between 49 and 62, you clearly understand many of the principles we are working through and just need to work on applying them consistently in your daily life. If you find your score below 49, my guess is your family finances are a major source of irritation in your marriage. By learning God's principles and applying them in your daily life, you can eliminate this source of friction and provide your children with a solid example that will benefit them for the rest of their lives.

As we strive to share God's principles in the area of finances, I would sure enjoy hearing from you. Do you have a story to share which others can learn from? Do you have questions we can help with? Send your correspondence to: 

Philip Lenahan 
P.O. Box 890998 
Temecula, CA 92589-0998. 

                                                         God love you!


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