Do you remember that college professor who used to insist your paper be written in “1000 words or less”? My prof apparently didn’t want to spend an entire evening reading my brilliant thoughts and neither do you, so here is my view of the Vagabond Path in, you guessed it, “1000 words or less.” Feel free to count them!
We, as nonprofit workers and missionaries, will likely never earn as much as our American counterparts or as much as the expat executives around us, but there is no reason to live on a wage that doesn’t allow us to live and serve today and save for our needs of the future. Don’t feel guilty about earning a sustainable wage.
Earning less than others while often having higher expenses, we must be avid savers. This has to become a priority in our lives or we will never reach the stage of Financial Freedom and Reckless Generosity. We need to “save on” and “save for.”
“Saving on” includes both little and big sacrifices. Some examples are scrimping on your cell phone plan, paying less for money transfers (see my friends at Transferwise), having stay-cations, eating sandwiches on a hike instead of having dinner and a movie, buying thrift-store clothing, and getting cash back on credit cards, hotel bookings, etc.
“Saving for” includes big-ticket items like cars, weddings, college, homes, and retirement. If you don’t do save for these things, who will do it for you? Use a tool like Personal Capital to keep an eye on your net worth. If it is not going up, there is something wrong in your Earnings and your Savings.
Even in the area of Investing, we are going to have to do more with less. If future finances are similar to the last century’s finances, putting our relatively small Earnings and Savings under a mattress or in a bank account will probably not get us to our goal. To turn our savings into a Mercy Mound that will fund our retirement, pay our taxes, allow us to give generously, and more, we will likely have to have a significant percentage of our money in the stock market.
You are going to want to steadily put aside more money each year so that you eventually put the maximum allowed by law in your organization’s 403b or similar retirement account. All of us will probably need some combination of 529 college funds, individual retirements accounts (when legal for us), health savings accounts, taxable brokerage accounts and the like.
All of those accounts can be invested in the stock market and probably should be to a large degree. Again, because we need to invest better than the next guy in order to reach our goal, we want to minimize risk (choosing wisely in what we invest and investing broadly in lots of companies in various sizes, locations, and sectors) and we want to invest cost-efficiently (paying few taxes and low administrative fees).
You know what’s worse than paying taxes? Paying them incorrectly and getting “caught.” Expat taxes are incredibly complicated and one mistake can make you leave your ministry and put you in the poor house. That is not an exaggeration. If, as I suspect, our tax home is usually the foreign country in which we leave, we need to do our best to pay our income taxes in that foreign country. Even in that case, the US government requires every American citizen on the face of the planet to file US income tax returns. That doesn’t mean we’ll necessarily have to pay something, but we do have to file.
The Vagabond Path to Winning Financial Freedom includes paying our taxes but also understanding some of our tax advantages overseas and back in the US to legally minimize our tax burden.
Missions has entered a new era. In past generations, many missionaries relied on missionary retirement housing and continued financial support. Those things are quickly drying up. As in every other sector of society, nonprofit workers are also generally retired much longer than in the past because our generation is living longer. Some missionaries have a fruitful and frugal carrier followed by 30 or more years of retirement. Individuals, trusts, churches, and their former charitable organization are generally not prepared to continue to provide support for 30 years.
It falls on the nonprofit workers and missionaries to provide for their own retirement through long-term, sacrificial savings into their 403(b)s. This is the first, best step to take toward being Financially Free in our later years. That hard-earned freedom includes the freedom to give generously, to travel to other countries we have come to love, and even to continue serving long after our support is gone and after we’ve surpassed our organization’s mandatory retirement age.
Winning Financial Freedom and the Opportunity for Reckless Generosity
While the Vagabond Path is long and challenging, the goal is sweet. After years of sacrifice and careful planning, we hope to find ourselves giving more and more generously as we head toward retirement. A decade or two before retirement, we feel the weight of financial headaches begin to slip off of our shoulders. We begin to envision a day when we will no longer be asking for financial support, when we can fund our own ministry, when we can provide for a modest lifestyle back in the US or in the foreign country we have come to love, and when we can leave a basic financial legacy to our children and grandchildren that will allow them to launch into employment (maybe even expatriate ministry!) without debt.
Winning is about so much more than money! It’s about freedom from financial burdens and freedom to give recklessly!
That, my friends and colleagues, is the Vagabond Path in 1000 words or less. Count them if you’d like. I’ve got about 100 words to spare!