Simple Steps to Biblical Finance Success

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why. The following is an excerpt from Dollars and Doctrine.

The following suggestions for Biblical stewardship are based on the counsel of scripture and personal conviction.  I have chosen not to include scriptural references in an attempt to simplify the following section.  I hope the Biblical basis for these ideas have been well presented throughout this book.  While some small points are open to debate, I firmly believe the following list of practical applications is well balanced and sound.

• Give. Start with 10% and then put a plan in place to increase your giving. The tithe is a great starting point that applies to believers in any financial situation, but it should be the beginning of your giving not the end. Prayerfully consider how and when you will increase your giving. Remember to give first, willingly, proportionally, secretively, and sacrificially. Frequently revisit your giving life with prayer and wise counsel. It should be an ever-changing dynamic of your spiritual walk.

• Serve God with your money. Prayerfully consider the depth and implications of this question: Are the Lord’s purposes the primary focus of my financial goals?

• Live on less than you make. A Christian whose expenditures exceed his income cannot honor his debts, lives in constant financial stress, and has no resources with which to bless others. However, a believer who lives within his means displays maturity, self-discipline, and contentment.

• Have a PLAN. (Live as one who will give an account.) Be responsible. Manage your money with diligence, purpose, and clarity. Too often, a believer thinks that as long as he is not bouncing checks he is managing his money well. Counsel with scripture and wise Christians to develop a plan to use your money for God’s purposes. If you do not have a budget, you cannot be an effective and Godly manager of money. A sinful man cannot move through his financial life without plans and boundaries and expect to impulsively choose God’s glory and purposes before himself on any consistent basis. Therefore, you must have a plan to take the resources God has given to you and move them into the places and directions of His leading.

• Be free from the love of money. Setting oneself free from the love of money is a necessary step in the life of the believer. There are many ways to go about doing this. Internally, the Christian must be committed to focus on and pursue things that are more important than money. Externally, it can be liberating for a Christian who struggles with materialism to shed some of the temptations and worldly goods that weigh down his heart. Drive a used car, quit the country club, send your kids to public school, wear department store clothing, sell the boat, get rid of the lake house, and get your morning coffee at a gas station. These things are not evil, but it can be quite liberating for some Christians to abandon their desire to have all the things the world can offer. If you read the list above and began laughing to yourself thinking, “I already do all of those things,” or “I’d like to have a problem like that,” then you have a different struggle moving in an opposite direction. In your situation, you must avoid the temptation to spend your life pursuing the things on the list above at the expense of pursuing God. It can be an equally deceptive snare to spend your life seeking materialistic things as it is to define yourself by them. Even simpler than these steps and strategies is giving. The easiest way to free yourself from the love of money is to give. It is impossible for someone who is obsessed with money to give it away.

• Accept the sovereignty of God. The previous step addressed the reality that we all live in very different situations, incomes, and lifestyles. We must accept the sovereignty of God and balance it with His commands for personal responsibility. While we should have goals, aspirations, and long-term planning, we should always submit to God’s plans for our life. The fruit of this submission is contentment and thankfulness.

• Work hard. God has called us to be diligent, as if working for Him and not for men. We should do our best at all we do while also being committed not to overwork or define ourselves by our careers.

• Rest on the Sabbath. The Lord rested on the seventh day and so should we. A preventative measure to keep ourselves from overworking is taking the Sabbath to worship, rest, and spend time investing in things that have nothing to do with money.

• Recognize the power of money. Money has great power for good and evil. Christians must be realistic and respectful of both possibilities.

• Practice financial integrity. Purge any morally questionable acts to make or save money. (Yes, that includes taxes.)

• Take care of your family. Christian parents must take care of their household well. Work hard to provide for your family but beware of deserting them in the process. Sometimes “success” robs many children and spouses of genuine relationships. What is the point of making a lot of money if you lose your family in the process? Seek the Lord’s guidance on how to provide for your household without abandoning it. In addition, it is my personal opinion that having a reasonable amount of insurance coverage is a wise step towards taking care of your family’s needs.

• Analyze your debt situation.  The most significant, or at least the most common, financial stress in the lives of American believers is debt.  The Bible does not forbid debt, but it strongly warns of its baggage and bondage.  This should evoke a strong sense of caution in the Christian.  At times the ability to borrow money can provide a mutually beneficial relationship, but it is all too often a trap for the financially uneducated and undisciplined.

Because I believe debt is the greatest obstacle to financial freedom in the life of the average American Christian, I have composed a list of what I think are reasonable rules of thumb regarding debt.  The guidelines listed below are intended to create a pathway to financial freedom rather than a life-cycle of debt.  The overall goal of these instructions is to create a people of God who are financially independent, patient, mature, and able to manage their money by God’s leading rather than sending out every dime they make and more to their creditors.  Consider the following guidelines before borrowing: 

• Ask yourself questions such as:

• Why am I taking on additional financial risk and stress?
• Is what I am purchasing worth it?
• Have I considered looking to the Lord before the lender?
• Does my debt situation reveal a heart that is not content?

• Do not purchase anything on the assumption that a future increase in salary will compensate for the payments.

• Toys: American Christians finance televisions, bedroom sets, four wheelers, pool tables, guitars, pools, motorcycles, appliances, guns, and vacations. The trade off between the item purchased and the financial stress the debt brings is not worth it. Do not borrow money to purchase luxury items.

• Mortgage: Try to avoid mortgage terms longer than 15 years, keep payments below 25% of your take home pay, and provide an adequate down payment. This will make your budget realistic and keep you in a reasonable position if you need to liquidate the debt. Being conservative when buying a home will allow you to do things during the month other than pay your mortgage. If married with dual incomes, consider choosing a mortgage that could be paid on only one income, especially if having children is in the future. (This allows the mother to at least have the option to stay home.) Generally speaking, a home will appreciate in value; therefore, many consider it a much safer debt. Only in recent years have we seen mortgages become an unwise and irresponsible debt. Interest-only loans, no down payment, adjustable rate mortgages (in which a buyer can only make the payments before the rate adjusts), and second mortgages create a borrowing situation with little to no margin. In these cases, the future must be perfect to maintain the payments. A Christian should seriously consider the risks and resist the temptation to assume that buying a home is always a good thing. A home you cannot afford becomes a curse rather than a blessing.

• College: Go to a college you can afford, even if that means going to an in-state, public university or community college. Try to obtain scholarships, work during school, and do your best to get your education debt-free. This allows you to start your career on solid financial ground rather than in a hole. Coming out of college with six-figure debt just to have a degree from a prestigious private university is not worth it. Paying for college is literally a financial investment in your future; therefore, spend time considering the salary you can reasonably anticipate compared to the cost of your degree. For example, it would be unwise to spend $120,000 at a private university to get a bachelor’s degree in ancient Meso-American language studies. Your salary will be a result of your work ethic, productivity, and impact in your field, not where you went to college. If you decide to get a student loan, try not to borrow more than you could realistically predict to make in your first year working. This will leave you with a reasonable amount of debt that could be paid off quickly.

• Loaning money: Try to avoid loaning money with interest to family, church members, or close Christian friends (or do not loan them money at all). It would be better to give the money as a gift, but certainly an interest bearing loan can and will alter the relationship. Loaning money would not be sinful, just unwise. This is especially important for parents to consider. The Bible clearly instructs a separation from parents that begins at the wedding altar. Too often this separation is thwarted by financial entanglements. Parents should consider the implications of gifts, loans, and assistance before acting. Sometimes parents “help” financially in a way that cripples their son or daughter’s development and confidence, along with damaging the relationship between parent and child or husband and wife. Financial gifts can be a great blessing in the proper situation and with the proper timing, but these should only come after considerable amounts of communication with the Lord in prayer and with the parties receiving the gift.

• Giving: The Bible never instructs us to give what we do not have.

• Cars: The car payment is probably the most common “thief” of the middle class financial world. Would you trade in your shiny, clean, “new car smell” vehicle for an older car if it enabled you to have money to give, save, and invest each month? What percentage of your monthly income is swallowed by car payments? How does this number compare to your giving, saving, and investing? More often than not, a downgrade in vehicles can make a world of difference in the middle class budget.

• Upside-Down: Do not borrow into a position of becoming “upside-down.” This results when you owe more on the item than it is worth. This takes away your ability to sell the item and eliminate the debt, if necessary. This position can most likely be avoided if one does not borrow money to purchase items that depreciate. This includes all consumer goods (including cars) and implies that second mortgages should be avoided as well. Being upside-down drastically reduces your freedom and creates a sense of “entrapment” when buried (sometimes thousands of dollars) beneath the current value of the purchased item.

• Investing: I do not believe it is wise to invest with debt. The risk often counteracts the gains. Too many disasters occur when debt is manipulated into investment opportunities and investors can’t weather the storm when things do not go “according to plan.” Investing only out of your surplus will make it much easier to sleep at night.

• Business: This is definitely the most confusing and complicated arena of debt. There are so many tax shields, corporations, third parties, and umbrellas that it is nearly impossible to give “one size fits all” advice. The best I can offer is as follows: In business, a company or owner should seriously consider looking to the Lord before the lender to provide the necessary funding for the stability and success of any given business. Avoiding debt in business will cause a company to grow slower (but with more stability) and spend with more caution. If one does decide to borrow, he should not leverage his business or himself to a point of no return. Biblically approached borrowing will always have a reasonable “exit strategy,” and selling everything you own is not reasonable. This is the slavery spoken of by Solomon. Debt that cannot be honored unless your company continues to grow will destroy either your business or your life in the long run. In addition, a Christian businessman should approach borrowing with the same attention to integrity as he would on a personal level. Finally, the borrowing businessman must understand that any debt that is personally guaranteed is to be considered personal debt, not business debt (since you are personally liable for repayment).

Obviously this list is infused with my personal opinion and convictions.  While points of contention and disagreement may arise, remember that these are merely guidelines that are designed to point believers towards financial freedom.  Many Americans have no conception of living without debt.  I hope this list helps to break that mentality and lead the over-leveraged budget to greater freedom and generosity.

• The future.  You and your family should do your best to be prepared for the future.  Active and available savings are a must for the short and long-term future.  In addition, I would recommend a properly organized will, life insurance, retirement preparations of some kind, and a tentative financial plan that stretches years down the road.  All future plans are subject to the Lord’s will and unforeseen life changes, but in submission, we should make wise plans for the future. 

Comments

[Seth]

I gave about $2400 to various ministries in 2009, but I only contributed $500 to my Roth IRA. We paid about $30k of student loans off, and we have less than $20k remaining.

If I would have stuck to the 10% threshold, I would have given around $5-$7k (depending on gross/net argument) in 2009. This would have reduced the amount of money I could have paid toward my student loans and eliminated any contributions to retirement.

I'm not sure that this is what the Lord calls me to and is the most prudent course of action. 1 Timothy 5:8 indicates that "anyone who does not provide for his family... has denied the faith is is worse than an unbeliever" I know this chapter is primarily in the context of leadership in the church, however, I believe it is certainly applicable to all Christians. A Christian deeply in debt and without any retirement plan cannot properly care for his immediate family according to God's plan.

My point is that I hate to see the generous Christian act imprudently. We are called to be generous, but we are also called to prudence and to care for our family. Further, we are certainly called to give generously and I'm not arguing we shouldn't.

Disclosure: I'm not an expert. I'm still trying to figure this out for myself. This is my opinion. I could be very wrong.

[Brian]

So, what if you make 250k$ plus and complain about it?

That deserves a verse or 3 to justify. Do tell.

I still can't get over that post you wrote.

[Rob @ Dollars and Doctrine]

Seth - The most important thing in these situations is motive. If you have sought the Lord and the leading of the Spirit and feel you should temporarily give less to pay off more debt (towards the goal of greater financial freedom to give even more generously in the future), you are free in Christ to do that. If you feel the Lord calling you to give more now and pay off less debt in the process, then do that. Just remember that your motives must be pure either way. God desires us to seek His counsel and His leading for our money. It sounds very much like you have done that--just keep doing it. Keep searching the word and the Lord.

Brian - I am not sure what you are talking about. Are you referring to another Dollars and Doctrine post...or something previous to today's post?

[FMF]

Brian --

You need to re-read that post. You missed the point.

Specifically:

1. I never said what my salary was and never claimed that I made $250k.

2. I didn't complain that other people made that amount and I didn't say they were complaining either.

3. My point was that the journalist who wrote the piece was using income as a measurment for wealth, and that was inappropriate. Net worth is the correct measure for wealth. If you read the links in that post, you'll see example after example of people who had high incomes and not much wealth (low net worth) and people who had moderate incomes and great wealth (high net worth.) My beef was that someone who was supposed to know better didn't understand basic personal finance terminology.

[FMF]

Seth --

The other thing I would add is that for most people, it's not an either/or proposition.

Many Americans will spend money on high-level cable TV packages, expensive cell phone plans, big vacations, etc. and then complain that they don't have enough money to give, save, and pay off debt. If they really wanted to do more giving, saving or debt repayment, they could, but their spending prohibits it. I'm not saying this is your situation, but based on the people I've coached and talked to through the years, this situation is quite common.

To me, motive/attitude/priorities is really the issue here and something you need to sort out. Personally, I felt that I needed to tithe and give offerings while I saved for retirement and paid off my mortgage. Could I have saved more, paid off the debt quicker, or spent the money on "fun" things if I had lowered my giving? Sure. But I felt God was calling me to give, and that's what we did.

We didn't want to sacrifice our savings either, so the things that went were extra spending and the mortgage. We didn't have cable TV for 15 years. We didn't have cell phones back when they first came out (I have a company-paid one now). We took vacations to see family, not to Hawaii, etc. And we didn't pay off our mortgage as fast as we wanted. But we still gave and saved because those were the two priorities for us.

Good luck as you seek out the priorities for your life.

[Brian]

This was a decent post (even if one is not a Christian).

I believe you were splitting hairs with the aforementioned post. If one makes $250k+ a year, then yes they are "rich." If they're in debt up to their eyeballs by not following said principles in this post, then that means they don't understand basic personal finance.

[BibleDebt]

Thank you for once again helping us all to prioritize our walk with the Lord and Money. It can be easy to lose sight of how money can be a tool to do the Lord's work. It can quickly become a way to justify how we can take care of ourselves. The more we learn to give, the more we learn to trust that our God will care for all of our needs.

Great post!

[Seth]

Hey FMF,

Were you consistently giving more than 10% while you had mortgage debt? What about an emergency fund? I will probably have a mortgage for the next several years; therefore, I want to be careful and not prioritize incorrectly. There will always be something to save for or spend on. Its about striking the right balance of giving and saving/spending after seeking counsel and in the spirit. I want to give, but I also want to make sure I have a full emergency fund and zero debt. Ultimately, I feel that the Lord is calling me to be prudent with my family's finances. If I double my current gifts and consequently give 10% (or more) now and it takes that much longer to construct an emergency fund and pay off student loans, I'm opening up my family to much more risk.

[MasterPo]

Charity is a good thing.

But MasterPo can't recall any verses from the Bible that one must put others a heard of one's family and own well being.

While MasterPo wouldn't dream of speaking for the powers in Heaven, what could be more holy and just than taking care of your own charges and responsibilities? MasterPo can't imagine a deity who would be angry with a person placing the well being of their own families first.

Before someone jumps up and says "You have enough and others need help too!" it isn't for anyone on this Earth to judge that someone has "enough".

If more people just did what they could to provide for themselves and their families the world would be a better place.

[BD]

I always like your biblical money topics best. Probably because I can relate to them the most. I can't relate to topics that discuss people who are wealthy or make huge salaries, but I can always relate to posts that discuss Biblical principles. :)

[FMF]

Seth --

Yes, we tithed (10%) and gave offerings all the way through paying off our mortgage. We also saved for retirement. But, as I mentioned above, we had to make choices, do without, etc.

MasterPo --

As I noted above, it's most often not an either/or choice.

[jclimber]

FMF - overall good. One point you make in the "Be free of the love of money" section is to send your kids to public school. This would seem to be at odds with the many Christian private schools?

[FMF]

jclimber --

I'll let the author address that if he visits this post (this is a gueat post -- I didn't write it -- see the opening comment.)

[Jclimber]

FMF - sorry about that. I guess the opening comment implied to me that the excerpt was yours.

[Rob @ dollars and doctrine]

JClimber - (author of Dollars and Doctrine) sorry, just noticed your question. The items on the love of money list are just a few random suggestions for the Christian struggling with materialistism to consider. They are by no means an accusation that there is anything wrong with any of the items on the list. I have found that those who struggle with loving money and the things that affluence can bring, can grow a lot personally and spiritually when they begin to sacrifice lifestyle. No commentary on public or private education was intended. Just like no commentary on whether or not it is wrong to have a lake house, be a member of the country club or pay 6 bucks for a half-caf-soy-hazelnut-latte. Some Christians struggle with materialism. Living more simply and more economically can be liberating to these individuals. That's all. Sorry this is so late.