Business

The cost of a funeral, financial literacy. . . and more

I read and then viewed this news story from KPLC-TV of Lake Charles, Louisiana and thought to myself, “Wow they did a pretty fair job of telling of the plight of paying for a funeral when no planning has been done.”  You see, a lot of people like to blame the unexpected expenses of a sudden death in the family on funeral directors everywhere instead of looking inward with the idea that this was going to happen sometime, why didn’t we prepare better.

I know that I am unusual in this capacity, but I am the type of guy that does not mind delayed gratification, I don’t mind living in a modest home, or driving a used car as long as the foundation underneath those assets is solid.  I just prefer to put money away for a later time than spend it today.

For instance, while I understand that different people have different financial resources, as a board member of a land grant research university, I am always amazed at really smart people, who have the means, but don’t think of saving anything for their children’s eventual post high school education.

I see so many people who borrow the funds to attend college and then pay interest over the next twenty years to fund that education where they could have started to save at the child’s birth and earned interest that would have allowed them to pay cash for the education and allow that child to go into the working world debt-free.  By borrowing the money instead of saving it, these people probably end up paying three to four times the actual cost of the education.  And, I’m also amazed at the decisions that get made that same way when it comes to automobile payments, home payments, and even funeral expenses.

In the news story above, the reporter talks with a family that was unprepared for a family death.  The family even says , “There wasn’t any insurance, there wasn’t any type of burial plan.”  So, what did this family do — they turned to a crowdfunding site — where they were fortunate and raised about $4000. . . . and were able to say, “Between all the donations, with the crowdfunding effort, we actually had a little bit of money left over that we we able to give to her son.”

This family was fortunate, but I don’t think crowdfunding is a solid plan to pay for a funeral that you know will happen at a later date.  Plus, it denies the family the dignity and self-esteem of taking care of the funeral expenses of their relative on their own.  The news story also interviews Zeb Johnson, owner of Johnson Funeral Home  in Lake Charles and a 50-year veteran of the industry.  He is very empathetic to some families’ situations, sympathetic to the fact that full-service traditional funerals during his career have went from about $900 to about $8000 in consumer cost, and he advocates for pre-planning and pre-financing that eventual funeral cost.  As a matter of fact, he mentions in his career he believes that pre-arrangements have moved from 10% of the funeral market to about 50%. . . so, in that regard funeral directors have got this point across about preparing for the cost of an eventual service.

My reason for this  article is not to chastise people about their savings habits, but to try to help funeral home owners understand that helping your own employees with financial literacy knowledge can be a big help not only in the employees life, but in the funeral home owners life as well.  In this day and age when employee retention is vital to the success of your business, you probably provide health care for an employee, you probably provide some type of retirement benefit such as a profit sharing plan or matching contribution to an IRA, and you might even offer some type of benefit that helps pay for child care.

What some employees need almost as much as the financial benefits that you offer is a chance to visit with somebody about financial planning for their life.  As I think outside the box about employee retention and employee well-being, I have come to believe that one of the best services that employers can give to their employees is the ability to sit with a fee-based financial coach twice a year to make sure that their life goals and ambitions are on target.  The fee can be paid by the employer and the coach can be someone who is not in the business of selling investments of any type.  Those rules can keep the discussion on a rational basis.

Having employees whose financial houses are in order will allow those employees to concentrate their time and effort on doing the best job possible for the funeral home client families.  In the end, not only will you have employees who have their financial house in order, but you will have employees who have the ability to concentrate on their client  families and give the service which will allow for more and more business for the funeral home.  This should be a win-win-win situation for employees-employers and client families.

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