Cost of serving mission eased by starting early to put away money

-The following are answers to questions most commonly asked about preparing for the costs of a mission. The questions were answered by Roger M. Smedley, a Certified Financial Planner, and a counselor in the Stake Sunday School presidency in the Salt Lake Riverside Stake.

Question: What are the costs to be considered in planning for a two-year mission?Answer: First is the initial cost of entering the mission field. Second is the monthly cost necessary to sustain the missionary once he or she enters the mission field.

Question: How much is the total cost over a two-year period?

Answer: Today, the average total cost is in the neighborhood of $10,000. Most of these expenses can be planned for in advance.

For starters, a missionary needs about $1,000 or more just to enter the field. Besides the obvious costs of clothing, additional money needs to be set aside for dental work, inoculations, passports, visas, etc.

Additionally, an average mission today costs about $360 per month. Of course, some missions will cost less, others more. In planning for a mission, it is probably better to err on the higher side, because extra money can be used for education later.

Question: Ten thousand dollars is a great deal of money. Is there anything that can be done to reduce that amount?

Answer: You are experiencing what many families of missionaries experience. It is called "sticker shock" (from the analogy of buying a new car and being shocked at the "sticker price"). An excellent way to beat sticker shock is to save and pay for a mission, as far as possible, in advance. The sooner you begin, the less your mission will cost in hard-earned, out-of-pocket dollars. (See chart on this page, "Let time help pay for your mission".) And the less income a person has, the more important it is to plan and save.

Question: How have families, even those who don't have a great deal of money, been able to successfully save for missions?

Answer: A study of the Mormon Forum on saving for a mission fund (see Church News, March 11) demonstrated that most had, first, a specific account established; second, some type of automatic system was followed to make regular payments; and third, this account received top priority from the entire family of the missionary.

Obviously, saving some money is better than saving no money. And saving a lot of money is better than saving some money. I have found that the rate of saving is more important than the rate of return. The scriptures also back this idea: "The thoughts of the diligent tend only to plenteousness; but of every one that is hasty only to want." (Prov. 21:5.)

Question: Is there anything else that should be taken into account in financially planning for a mission?

Answer: Yes. Inflation. A 4 or 5 percent inflation rate may not seem like much, but at that rate, costs will double in 15 years. A mission costing $10,000 today might well cost $20,000 in the year 2004. Similarly, today's $10,000 mission may only have cost $5,000 in 1974.

Question: How can I determine how much I will need to save for an upcoming mission?

Answer: The 10-step Missionary Funding Worksheet on this page can be of significant value in this regard. The amount will depend on: How much you already have saved, how much inflation affects those investments, and how much you will be paying at the time of the mission. The worksheet accounts for all those factors in a general way.

Question: Where is a good place to save for my mission?

Answer: The closer to the time of serving, the more conservative the investment needs to be. But on long-term investments, it is just as serious a mistake to be too conservative as it is to be too aggressive. Wisely investing is a must to achieve a financial goal. The following may be helpful:

0-3 years - Bank passbook accounts, certificates of deposit, money market accounts, money market funds.

4-6 years - Investment grade tax-free municipal bonds, zero-coupon bonds, U.S. government securities, income-oriented mutual funds.

7-plus years - Growth and income mutual funds, investment grade zero-coupon bonds.

Question: How much should a parent assist a child in saving for a mission?

Answer: Clearly, the more a child contributes to his or her own mission, the better. However, parental involvement and guidance is essential and individual needs should be considered. President Ezra Taft Benson has insightfully said, "Teach your children to work, and show them the value of working toward a worthy goal. Establishing mission funds and education funds for your children tells them what Dad considers important." (Priesthood address, Oct. 3, 1987.)

Question: What are the most common mistakes people make in planning for a mission?

Answer: First, people fail to plan. Second, they don't start saving soon enough. For example, $25 saved today at 8 percent interest would replace $100 out of pocket in 18 years. Third, they forget to account for inflation.

Question: What can an older person or couple do to save for a mission?

Answer: Many individuals and couples have served multiple missions. By labeling retirement accounts as missionary funds, individuals and couples find it easier to save for a first, second or third mission.

Question: Are missions tax deductible?

Answer: Yes and no. In some countries and in some areas in those countries they are. Members should rely on specific tax advice pertinent to their countries and areas in those countries.

Question: Is there a way to reduce taxes and save for a mission at the same time?

Answer: Yes. In the United States tax-free municipal bonds may be an appropriate way to save for a mission. Also, in the United States, a parent or guardian (or grandparent, for that matter) may gift up to $10,000 per person per year. By gifting the money to the child, the money then grows at the child's tax bracket rather than the adult's. In using this system, please check with a competent investment adviser for specific tax advice.