In the last blog post, we touched on the first 4 biblical principles of money management.
In today’s blog most, I’ll share 4 more principles of money management for the aspiring joyful steward.
1. Spend wisely
Proverbs 21: 17
He who loves pleasure will become a poor man
Your spending decision, particularly large ones, should ultimately be dependent on 3 things:
- Your income
- Your financial goals
- Your obligations (i.e expenses)
I’m not here to be a party pooper. In fact, GOD wants us to enjoy life and the fruit of our labour—but with restraint and intention.
Ecclesiastes 5: 18-19
18 I have seen what is best for people here on earth. They should eat and drink and enjoy their work, because the life God has given them on earth is short. 19 God gives some people the ability to enjoy the wealth and property he gives them, as well as the ability to accept their state in life and enjoy their work.
Spending wisely is connected to the notion of living within our means. Society has encouraged us to buy now and think later and has fooled us into believing there is no need to delay immediate gratification. This strikes at the heart of Christianity–delaying immediate gratification and the allure of the world to attain the greater goal of GOD’s pleasure. Still think money management has nothing to do with spirituality?
Discipline is a general muscle that GOD wants us to exercise and strengthen. Hey! Self-control is still a fruit of the Spirit.
Do not take the inability to live within your means lightly.
It suggests a heart shrouded in greed, lack of contentment and an inability to exercise discipline. Ouch! I’m licking my wounds as well.
2. Don’t take on unnecessary debt
Proverbs 22: 7
The rich rules over the poor, and the borrower is the slave of the lender.
Accumulating debt is connected to the earlier principle of living within our means. Unnecessary debt can place us in a financial hole that GOD did not intend for us to experience.
Many Christian personal finance gurus, discourage debt like the plague. Notwithstanding the dangers of debt, it is not inherently evil. In fact, in the Old Testament, GOD outlined principles concerning lending and borrowing money [Exodus 22: 25-27, Leviticus 25: 35-37, Deuteronomy 15: 1-11, Deuteronomy 23: 19].
My personal rule of thumb is to only take on debt if it is prudent to do so and if you are able to comfortably make the payments without it affecting your ability to give generously, cover your expenses, contribute to your household and save diligently. Consider that budget. Can it accommodate that monthly payment?
Please don’t take a loan, knowing fully well you are unable to comfortably make the payments and then pray that GOD helps you to pay it. It is dishonest and proud. Your inability to comfortably make the payments simply means you are unable to afford it at this time.
Psalm 37: 21
The wicked borrows and does not repay, but the righteous shows mercy and gives.
In addition to the debt principles above, always ask before deciding to take on debt-
- Is this something that I should save towards acquiring?
- Is this worth putting myself in debt for? What are the immediate and long term repercussions of this debt?
Remember, the borrower is a slave to the lender.
3. Invest wisely
When you’ve been able to amass your emergency fund and feel comfortable about your saving goals, I would recommend you consider starting your investment journey.
My general recommendations for investing-
- Start small
- Assess you goals and obligations (i.e. expenses);
- Assess your risk appetite/tolerance
- Invest for the long haul
- Be careful about the nature of the schemes that you invest in
I’d do my profession a disservice if I didn’t make this disclaimer:
I am not a financial advisor. The opinions expressed herein should not be taken as financial advice. Please consult a financial advisor before making any investment decision.
As your risk appetite grows and your knowledge and understanding on investing grows- start small.
Assess your goals and obligations
How much you’ll be able to invest on a consistent basis will ultimately be dependent on the surplus available for investing in your budget. What are your short (less than 3 years), medium (3-10 years) and long (over 10 years) term goals? Assessing these goals will determine how consistently and in what investment vehicles you will invest in.
Your risk tolerance is based on how comfortable you are with the possibility of losing your initial investment [principal].
An important rule of thumb for investing– the higher the projected interest on the investment vehicle, the higher the risk of losing some or all of your principal.
Invest for the long haul
This aint a quick money thing. The trends show that while investments like equities will fluctuate in the short term, they tend to trend upwards overtime.
Be careful about the nature of the schemes you invest in
As stewards, we should carefully consider what investment vehicles or companies we place GOD’s money into. As a rule of thumb, you should not invest in companies/funds that promote ungodly principles—for example pornography, gambling, greed or companies that flout child labour and employment laws. Our investments should advance GOD’s kingdom.
Also, be wary of investments schemes that claim to produce high yielding interest in a short space of time.
Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows. Proverbs 13:11
I always encourage persons to start their investment journey with a ‘unit trust’ or ‘mutual fund’ as opposed to individual stocks. A unit trust is an investment vehicle which pools investors’ money into a single fund, managed by a fund manager. Unit trusts allows the investor to invest in a number of investment vehicles (equities, bonds, real estate, fixed assets) and therefore minimizes the risk of losing your principal. As with all investments, lowering the risk often lowers the potential interest to be gained on the investment.
Even unit trusts have varying levels of risks and this is dependent on its composition.
Why do I recommend this investment vehicle?
- It is managed by a trained financial advisor that should analyse the market and make good financial decisions for the benefit of the entire pool of investors.
- It takes the hassle out of watching the stock market, making buy and sell bids and worrying if you’ve made the right decision.
- Your investment is spread across several investment vehicles or companies, dependent on the composition of the unit trust.
‘Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.’
Another rule of thumb- never invest money you are unable or uncomfortable with losing. This is why it must be done after you’ve developed your emergency fund and you’ve assessed your risk appetite/tolerance.
The allure of interest to be gained from investing can seem enticing but remember the core principle of biblical money management– watch your heart posture concerning money.
Talk to a financial advisor. Let them know your short, medium and long term goals.
4. Work Diligently
Although not a direct money management principle, working diligently gives us the opportunity to honour GOD in our day to day living while earning an income. As mentioned in the stewardship parable, GOD apportions our wealth based on our abilities but expects that we put in the work to earn profit on His wealth. At the crux of it, the Bible says
2nd Thessalonians 3: 10-12
10 Even while we were with you, we gave you this command: “Those unwilling to work will not get to eat.” 11 Yet we hear that some of you are living idle lives, refusing to work and meddling in other people’s business. 12 We command such people and urge them in the name of the Lord Jesus Christ to settle down and work to earn their own living.
This weekend I sat with GOD in my devotional time and made my budget. Some may say this is unnecessary but there’s a personal freedom that comes when I include GOD in my financial decisions and my plans with the use of His money. Stewardship is really important to me. I let him know my financial goals, areas of contentment that I’m struggling with and get His insight on future purchases and investment ideas. Most importantly, I prayerfully consider who I should give generously to each month.
At the end of the day, ‘money’ has no moral compass. It is a tool in the hands of the steward, and we must be intentional about it achieving His objective.
As you assess all 8 biblical money management principles, remember none should be practiced in a vacuum. Good stewards give generously, save diligently and spend wisely for His glory.