Planning and preparing financially to serve a Latter-day Saint senior mission is essential to being able to “serve with all your heart, might, mind and strength,” Alek Johnson, a senior financial advisor, said in a class at BYU Education Week.
“The biggest thing is just having a plan in place,” Johnson told the Deseret News following his class, titled “Financial Foundations for Your Senior Mission.”
Going into senior missionary service without a financial plan in place could create a negative financial experience, Johnson said. “If you go and you have a plan, … it’s going to be a success. It may not even be the best plan, it could be a mediocre plan, but if you have a plan and you stick to it, that’s going to be a huge win.”
During his class, Johnson, who works for Peterson Wealth Advisors, discussed the estimated costs of serving a senior mission for The Church of Jesus Christ of Latter-day Saints. He also discussed how to manage investments and organize finances. Here are three tips gathered from his discussion.
1. Know the costs
Prospective Latter-day Saint senior missionaries may feel hesitant to serve, expecting the cost of service to be far greater than they can afford. The cost, however, is “not as far out as you think,” Johnson said in the class.
Johnson broke the cost of service down into several categories, including travel and transportation, housing, personal and insurance costs. He noted the cost of service can go up or down depending on where senior missionaries serve and for how long, but he said many senior missionaries end up spending less than they initially anticipate.
Travel to and from a Latter-day Saint senior missionary assignment of any length of service is paid for by the church when the mission assignment is in the senior missionary’s home country, Johnson said. Travel to and from a foreign senior mission assignment is only paid for by the church when the length of service exceeds 18 months.
Transportation costs within a senior mission assignment, plus health insurance and personal expenses (including groceries and clothing) are the responsibility of the senior missionary or missionary couple. Housing costs are paid for directly through the ward missionary fund.
Johnson recommended prospective senior missionaries to visit this page on ChurchofJesusChrist.org to look through estimated costs for specific mission assignments. The page enables users to search through currently available opportunities and filter through mission lengths, costs, countries and more.
2. Make money management and investment plans ahead of service
For many Latter-day Saints, senior missionary service happens soon after retirement, so making plans on how money will be distributed and invested is important, Johnson said.
Johnson outlined several items prospective senior missionaries should consider as they set up their own money management and investment plans. These items included:
- Financial goals. Clearly define goals regarding retirement income, buying a house, education savings, etc.
- Risk tolerance. Consider your comfort level with potential ups and downs in the stock market.
- Time horizon. Consider the length of the time you plan to have money invested before taking it out to spend. Short-term money needs go with short-term investments.
- Asset allocation. Decide how to divide your money among different asset classes, such as stocks, bonds, real estate and cash.
- Diversification. Spread your money within those asset classes across various companies and industries to balance risk and reward.
- Cost considerations. Evaluate the fees, taxes and transaction costs associated with managing your investments.
“Clearly defining your financial goals and objectives will help you understand how you want to invest,” Johnson said in his class.
Johnson also cautioned prospective senior missionaries against trying out new investment strategies right before commencing missionary service.
“The mission is not the time to experiment with something new,” Johnson said.
“If you have never touched (stocks) before, do not go and start investing in them right before you go serve a mission. You will never be able to serve with all your heart, might, mind and strength, I promise you.”
On the flip side, senior missionaries who have long invested in stocks and are comfortable can likely afford to continue during their service, Johnson said.
3. Consolidate and organize financial information
There is “no better gift you could leave kids” or whoever you’re entrusting to take care of financial matters during service than consolidating and organizing your financial information, Johnson told listeners.
Johnson advised prospective senior missionaries to use password managers for safe and reliable access to key information and to automate payments for property taxes, insurance, utilities and other possible expenses back home.
“Whoever you leave in charge while you’re gone, will thank you endlessly for being organized,” Johnson said.
Johnson also advised listeners to make and review their estate plan. Estate planning allows for liquidity and the effective and efficient transfer of assets, he said.
Five key documents Johnson recommended prospective senior missionaries should have are a financial power of attorney, a medical power of attorney, an advance healthcare directive or living will, a trust and a last will and testament. The first three are for incapacity planning, and the latter two are for estate distribution.
Prospective senior missionaries should communicate these plans with their family, Johnson said. “It does not matter how good of an estate plan you have, if no one knows where the estate plan is. … Make sure that whatever you need to communicate is communicated.”