Last week I introduced 5 ways to respond to a weak dollar. In that post I mentioned that you need to identify your exposure to the risk of the declining dollar. For many people, shifts in the value of the dollar make little difference in their day to day living. One group of people who are especially susceptible to to a declining US dollar are missionaries who are supported by churches or mission boards based in the United States.
How are Missionaries Vulnerable to a Weak US Dollar?
To highlight how susceptible missionaries are I will introduce you to two imaginary missionary families. The first, the Australia Family, works in Australia. The second family, the Canada Family, live in Canada. Both families receive all their support from an American organization, and thus, their salary is paid in US dollars. Each month on the first they change their salary into the local currency. For this example, let’s imagine each family gets $3,333.33 USD per month. The chart below illustrates the impact of currency fluctuation:
What’s going on with the Australia missionary family?
These folks were loving late 2009 and early 2010. If we went back even as recent as May of 2008 we would have seen an Australian dollar almost equal to the US dollar. Things go much better, so in February 2009 their $3333.33 USD got them $5208.33 AUD. By the time August 2009 arrived that same $3333.33 USD would buy $3787.88 AUD.
How is the Canada missionary family doing?
Canada family would not have experienced as drastic a swing as their Australian counterparts. Their best month (March 2009) would have given them $4273.50 CAD with their $3333.33 USD. As of August this 2009 the same amount of US dollars would buy only $3584.23 CAD.
How Much Does Currency Change Impact Missionaries?
Missionaries are in a vulnerable position as currency adjustments can make drastic differences in their budget. What would a 27% decrease in income do to your budget (the change from Feb 2009 and Aug 2010)? This is exactly what happened to the Australia family.
Churches and missionaries must be sensitive to the impact of currency adjustment.
Action Items For Supporting Churches or Missionary Organizations
Currency Exchange Review
My current working agreement requires my supporting church to do a currency exchange review once a year. I can, as the missionary, request a currency adjustment review at any time during the year. I think every church or missionary organization should have a similar policy.
Action Items for Missionary Families
Diversify so you do not depend on the strength of any one currency.
This probably happens naturally. Save for college and retirement in one currency (US?) and use the rest overseas. If you are paid in US dollars you probably do not convert all of those dollars in to your foreign account – that’s good. Put yourself in a position where increases and decreases equally have a positive movement. The less dependent you are on one currency the better.
All the steps lined out on how to protect yourself from a weak dollar apply.
In the seven years of plenty, don’t eat all the food.
When the currency is working in your favor, save extra money because you know eventually the tide will shift. While your church or missionary organization may help, you need to be in a position where you are not required to be a burden to the church (especially if the currency was just working strongly in your favor).
Contact your church.
Nothing speaks louder than facts. Don’t be defensive or highly emotional. Just point out that your “X” US dollars are buying “Y” foreign currency when it was “Z”. Politely ask, “Is there anything you can do to help?”
Consider all advantages and disadvantages in the currency change.
If, for example, you own a home, each time the local currency is stronger your home, vehicle, and every other asset overseas gains value also. Owning a home overseas is a great way to balance the currency adjustment changes.
Editors Note: Yes, I am a missionary. Yes, it may appear as this post is motivated by self interest. For the sake of integrity, I want to let you know that I specifically asked my supporting church not to offer a foreign currency adjustment because this year I am making some extra income through a hobby (writing). I write this article for the sake of many missionaries around the world who I think will be struggling due to a weakening US dollar.
Photo by ZedZap(Nick).