Money matters

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When it comes to managing money, we know it can be very difficult in this modern world. However, if you feel tempted to manage your money like everyone else, it’s important to know what God has to say about it.

The Bible teaches us to live our lives somewhat differently to how the world does. That’s especially true when it comes to money.

The Bible says in Hebrews 13:5 and Exodus 20:17 that we are to practise contentment and not to covet other people’s possessions. Advertisers, however, make us want the life we see in their commercials. We feel unfulfilled and discontented, so we hand over the cash, hoping to buy happiness.

The Bible tells us in Exodus 20:3,4 and Matthew 6:24 to worship God above all else and not to worship idols. People often make their material possessions, especially money, into gods without even realising it.

When it comes to managing money, be it saving, giving or debt, it’s no different. The world says one thing but the Bible points to a better way, a way that glorifies God and helps us live a more fulfilled and joyful life (Galatians 6:8).

It’s tough trying to resist the world’s ways when it comes to managing money. We’ve all experienced temptation in this area and have fallen at some point. That’s why it’s so important to keep the principle of honouring God with our finances at the front of our minds.

The next time you feel the world trying to take your money out of God’s hands, remember these three points.

Society says: You only live once! Indulge first and save later.

Bible says: Pay yourself by saving. Then enjoy the fruits of your labour.

According to the Australian Bureau of Statistics (ABS) Household Expenditure Survey 2009–10, around a quarter (24 per cent) of households currently experience financial stress, often associated with paying bills, raising emergency money or having to ask friends, family or community organisations for financial assistance. For low-income households, servicing debt accounts for 43 per cent of their disposable income, almost doubling since 2004. More than half of households couldn’t live without their income for just one month without borrowing. Wow! Lots of people definitely prioritise the present over the future.

Proverbs 21:20 says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” And, according to Proverbs 13:11, “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.”

It’s okay to have some enjoyment with your money, if you have budgeted for it, and as long as you pay yourself first by tucking some of your money into savings. 1 Corinthians 16:2 says, “On the first day of every week each one of you is to put aside and save, as he may prosper, so that no collections be made when I come.”

Society says: Spend all your money on you. There’s no way you’ll have anything left over!

Bible says: Give 10 per cent off the top and work toward being able to give even beyond that.

Here’s the truth about giving: No-one gives accidentally. They’re intentional about it. That means that when they budget their money each month, they set aside 10 per cent of their income to give first, even before they save it. That’s the instruction in Proverbs 3:9,10 (NKJV): “Honour the Lord with your possessions, and with the first fruits of all your increase; so your barns will be filled with plenty, and your vats will overflow with new wine.” And in Malachi 3:10, God tells us that those first fruits should be a tenth of what we produce.

Lots of people say they don’t have enough money to give. But the problem might be that they don’t make it a priority. If giving doesn’t happen first, the money will never be there. That’s part of why just 5 per cent of all adults have tithed. Among born-again Christians, that number is still only 12 per cent. If you’re struggling with giving, I highly recommend a terrific book on this subject by Pastor Robert Morris entitled The blessed life.

Giving isn’t a priority in the world, but it’s a priority to God.

Society says: Debt is a tool to accumulate things you couldn’t otherwise have.

Bible says: Debt is bad. There’s no such thing as good debt.

Over the past several decades, debt has been marketed so heavily that many people feel like they can’t survive without it! In fact, the ratio of household debt to disposable income has almost tripled since 1988, from 64 per cent to 185 per cent. Eight in 10 people have debt, and seven in 10 believe it’s necessary. But debt has also forced people to delay or avoid expensive life events like marriage or kids, and has caused bankruptcy, divorce and all kinds of other messes.

With regards to biblical scripture on debt, Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender.” Other texts on the subject include: Deuteronomy 15:6: “For the Lord your God will bless you as He has promised you, and you will lend to many nations, but you will not borrow; and you will rule over many nations, but they will not rule over you”; Proverbs 17:18: “A man lacking in sense pledges and becomes guarantor in the presence of his neighbour”; and Proverbs 22:26,27: “Do not be among those who give pledges, among those who become guarantors for debt. If you have nothing with which to pay, why should he take your bed from under you?”

Here is my eight-step plan in managing money that I teach and personally live by. It can be applied in any country or economy.

Step 1. Create a plan and get onto a written budget!

Proverbs 27:23 says, “be diligent to know the state of your flocks, and attend to your herds.” In other words, have a clue of what you are doing, have a plan!

Step 2. Create an emergency fund of $2000

An emergency fund is for those unexpected events in life that you can’t plan for, such as a faulty car transmission or the loss of a job. This is only our small, initial emergency fund to make sure we don’t put these costs back onto the credit card and start the debt cycle all over again.

Step 3. Pay off all debt besides the mortgage

At this step, we are going to list all your debts excluding the mortgage from the smallest balance to the largest balance. Don’t worry about the interest rate unless the two debts have a similar balance. If that’s the case, then list the debt with the highest rate first.

Step 4. Create a fully-funded emergency fund of 3-6 months of expenses

Once you complete the first three baby steps, you’ll have built serious momentum. Don’t start throwing all your “extra” money into investments yet. It’s time to build your full emergency fund. Step 4b: Save for a house deposit.

Step 5. Invest 15 per cent of pre-tax household income into retirement savings

When you reach this step, you’ll have no payments except the house and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Step 6. Start saving for the kids’ tertiary education

If you have children or plan to have children, it’s wise to begin saving even a small amount on a regular basis when they’re young. This would be one of the best gifts you could give a child; it will give them a head start in life.

Step 7. Pay the home off early

Now it’s time to begin allocating all your extra money towards the mortgage. At this stage, you are getting closer to realising the dream of a life with no house payments. [pullquote]

Step 8. Build wealth and give

It’s time to build wealth and give like never before, be a good steward of the blessings you’ve received and leave an inheritance for future generations. Bless others now with your excess—it’s really the only way to live! As the Bible says in Proverbs 13:22, “A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.”

The Bible is full of wisdom about handling money, so next time you’re wondering what to do with your finances, don’t worry about what society says; instead turn to His Word. It’s really all the guidance you need.

Facts sourced from the Bank for International Settlements, the Barna Research Group and the Australian Bureau of Statistics.

Steve Andrews is a financial trader and investor who attends Mt Gravatt Church in Brisbane, Qld.

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