Biblical Application

Below are some Biblical principles as well as practical ideas to consider in managing finances.  I hope you find them useful.

SEVEN FUNDAMENTAL PRINCIPLES OF MONEY & MONEY MANAGEMENT - to also help avoid the consequences of an uncertain economy.

  • Spend less than you earn
  • Avoid debt when possible and be cautious when using it
  • Diversify
  • Build savings for the future
  • Think long-term
  • Give generously
  • Cultivate an eternal perspective by remembering that God owns it all

PERSPECTIVE - WHO OWNS IT

  • I Chronicles 29:11-12  Everything in the heavens and earth is yours, O Lord, and this is your kingdom. We adore you as being in control of everything.  12 Riches and honor come from you alone, and you are the ruler of all mankind;  
  • Psalm 24:1  The earth is the Lord’s, and everything in it
  • Luke 14:33  No one... can be My disciple who does not give up all his own possessions.
  • God owns it all and it’s all from Him.  Understanding this, followers of Christ relinquish what He has given, to Him.  We are temporary managers during our life for the things He has given. 

STEWARDSHIP

  • Luke 12:42-48
  • Many think stewardship is giving or tithing and while that is part of it, it’s much more than that.  It means managing the property of another.  Biblical stewardship is the use of God-given resources (time, talent, treasure, relationships, etc.) for the accomplishment of God-given goals/objectives.  It’s saying, I want to be a good steward of what You , Lord, have allowed me to have.  How can I honor you?  We’re called to be good stewards of what He has given.

SAVE / INVEST

  • Financial maturity is giving up today’s desires to reap future benefits.
  • Proverbs 6:6-8  Go to the ant, you sluggard; consider its ways and be wise!  7 It has no commander, no overseer or ruler, 8 yet it stores its provisions in summer and gathers its food at harvest.
  • Prov. 21:20 The wise man saves for the future, but the foolish man spends whatever he gets.
  • Proverbs 13:11 Dishonest money dwindles away, but he who gathers money little by little makes it grow. 

DIVERSIFY

  • Ecclesiastes 11:2  Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
  • Don't put all your eggs in one basket.  Avoiding big losses in bad times can be more important to long-term growth than racking up big gains in good times.

LONG TIME HORIZON

  • Proverbs 21:5, LB  Steady plodding brings prosperity, hasty speculation brings poverty.
  • Proverbs 21:20, LB  The wise man saves for the future, but the foolish man spends whatever he gets.
  • Economic uncertainty is certain - the future cannot be predicted.  There’s no guarantee no matter what we do.  Be wise and plan for the future.

SPOUSAL UNITY IN DECISION MAKING

  • Many marital problems can be traced to finances.  How money is earned, given, saved, spent, invested and more can impact not only your spouse but others as well.  Consider Biblical guidelines in managing money that creates and brings family cohesion.  Jointly make financial decisions and goals.
  • Ephesians 5:21 Submit to one another out of reverence for Christ.
  • Philippians 2:3-4  Do nothing out of selfish ambition or vain conceit. Rather, in humility value others above yourselves, not looking to your own interests but each of you to the interests of the others.

CONTENTMENT / HOW MUCH IS ENOUGH

  • Society may try to sell you on ease, comfort and pleasure. The myth that more will bring satisfaction can and most likely will lead to discontentment.  Be careful not to get caught up in this world.  True peace, contentment, joy and fulfillment is found through Jesus Christ.
  • Hebrews 13:5  Keep your lives free from the love of money and be content with what you have...
  • I Timothy 6:6-8 (NKJV)  6 Now godliness with contentment is great gain. 7 For we brought nothing into this world,and it is certain[a] we can carry nothing out. 8 And having food and clothing, with these we shall be content.

BIBLICALLY RESPONSIBLE INVESTING

Refer to the BRI tab at top.

LIFE INSURANCE - RISK MANAGEMENT

  • Life insurance should play an integral part in any financial plan.  Buying life insurance does not demonstrate a lack of faith but rather prudent planning if there is a need to provide for others.  Having enough life insurance for the family is a good stewardship decision. 
  • I Timothy 5:8  Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever.

GIVING

  • How much to give: Scripture is not exactly clear on this but consider the tithe (10%) to be a starting goal.  Earnestly seek the Lord’s will for you.
  • Consider the impact of the sacrifice and ask whether it is responsible in terms of our commitments, financial obligations, etc.  Consider small sacrifices and build up from there.  Three principles that relate to sacrifice:  1) Giving that is proportionate   2) Giving that is sacrificial   3) Giving that is cheerful
  • Giving can be tax efficient: Donating appreciated assets can eliminate capital gains tax as well as receive an income write-off to further reduce income taxes.
  • 1 John 3:17 (NKJV)  But whoever has this world’s goods, and sees his brother in need, and shuts up his heart from him, how does the love of God abide in him?
  • 1 Timothy 6:18-19 (NIV)  18 Command them to do good, to be rich in good deeds, and to be generous and willing to share. 19 In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.
  • Three areas Scripture says to give:  1) The local church – Galatians 6:6   2) To the needy – I John 3:17   3) To fulfill the Great Commission – Matthew 28:18-20
  • If you have kids, consider including them in discussions re where you give.  Gather their thoughts and teach them how you make decisions in this area.

...much more

BORROWING / DEBT

  • Borrowing always presumes upon the future.  There’s no guarantee of tomorrow.
  • Consumptive borrowing will sentence one to a lower standard of living in the future.
  • Proverbs 22:7  The rich rule over the poor, and the borrower is slave to the lender.
  • Develop a plan to get out of debt:  Luke 14:28 Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?
  • James 4:13-15  13 Now listen, you who say, “Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.” 14 Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. 15 Instead, you ought to say, “If it is the Lord’s will, we will live and do this or that.”
  • Consider how debt affects your marriage.  Is your spouse in unity / agreement (Ephesians 5)?
  • Be careful of the debt trap and the dark cloud it can bring.

WEALTH TRANSFER

  • Never pass wealth without first passing wisdom.  Wealth will never create wisdom, although wisdom may create wealth.  Help heirs without harming them - use discernment regarding if they are financially responsible.
  • Both money and wisdom can be left to children but wealth left without wisdom can have dire circumstances on future generations.  Train children to manage money with biblical truths and principles.
  • Genuine followers of Christ transfer ownership of possessions to the Lord.  “No one...can be My disciple who does not give up all his own possessions” (Luke 14:33).  We are simply the temporary manager of what He has given.  Does the potential recipient of the gift understand who owns it and would they be a good steward of those assets?
  • I Chronicles 29:11-12  Everything in the heavens and earth is yours, O Lord, and this is your kingdom. We adore you as being in control of everything.  12 Riches and honor come from you alone, and you are the ruler of all mankind; your hand controls power and might, and it is at your discretion that men are made great and given strength. 
  • Psalm 24:1  “The earth is the Lord’s, and everything in it”
  • Husband and wife in unity regarding decisions.
  • If a child is financially irresponsible: Let them know you do not want to ruin the need they have to provide for themselves and/or family - to enjoy the same experience you had in creating the wealth.  Love your children equally, and as such treat them uniquely.  It may not be best to leave some children completely out.  Don’t be vindictive if someone hasn’t lived the way you desired.  Will disinheriting them cause disdain towards you or what you hold to be true?  Provide something but don’t leave enough to protect them or so much that it could bring them harm if abused or misused.  
  • Three questions to consider when deciding on who and what to give heirs:  1) What is the best/worst thing that could happen if you transfer wealth to ____________?   2) How serious is it?   3) How likely is it to occur?
  • Manage expectations.  Communicate with heirs about your decisions.  Are expectations in line with reality?  Rarely (if ever) would it benefit a beneficiary to be surprised by the decision of the steward.
  • Have a family conference (with all adult children): find out what’s important to the children (heirlooms, etc.).  This could help avoid sibling rivalry.  Share your values/goals.
  • Don’t be manipulated by children’s demands or expectations.

WHAT IS MONEY

  • Money is simply a tool.  For example, I might hire someone to cut my grass to buy back time so I can go out and spend that time with my kids or other things.
  • Don’t build your portfolio or net worth at the expense of neglecting your family. 
  • Success is not defined by the size of your nest egg.
  • Don’t place your hope in money.  1 Timothy 6:17-19 (NIV) 17 Command those who are rich in this present world not to be arrogant nor to put their hope in wealth,which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. 18 Command them to do good, to be rich in good deeds, and to be generous and willing to share. 19 In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.

LIFESTYLE

  • The Bible does not specifically address a lifestyle but to be content with food and clothing. I Timothy 6:6-8.  Philippians 4:11-13.  Consider how much is enough and prayerfully seek God’s direction regarding lifestyle.
  • Romans 12:2  Do not be conformed to this world. 
  • Buy things for its usefulness, not status.  Your validation doesn't come from what you own.
  • Paradox of Prosperity: The more you have, the more choices you have which results in greater confusion and complexity to life.  The more you have the less real freedom you have.
  • “This, then is held to be the duty of the man of wealth: First, to set an example of modest, unostentatious living, shunning display of extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer.”  -Andrew Carnegie

TRAINING KIDS

  • It is by faith with commitment that a parent trains his children in the principles and skills of money management.   Both money and wisdom can be left to children but wealth left without wisdom can have dire circumstances on future generations.  Train children to manage money with biblical truths and principles.
  • More is caught than taught.  They must experience what is being taught – perhaps delayed gratification is an opportunity.  Whether parents like it or not – or realize it or not – kids look to them for financial guidance.
  • We are in a battle with a culture that does not honor or reward Biblical principles.
  • Four skills to master: a) how to develop a spending plan/budget  b) how to buy wisely  c) how to make financial decisions  d) how to set financial goals.
  • Ask kids goals they may like to accomplish. Perhaps use 5 envelopes: a) spend  b)save  c) give  d) gifts  e) clothes.
  • Annually review with each kid: goals, budget, chores, expectations.
  • Make a list of items your child would like to do to spend $ with you: i.e. mall and shop 3 hours w/ $30, Camping, Game center, Ice skating, Roller skating, Dinner and movie, Baseball game, Ice cream, Get nails done, Spend a weekend away.
  • Consider not paying for good grades – don’t bribe.
  • We learn by our failures, bailing them out is rarely (if ever) the answer!
  • Proverbs 22:6  Train up a child in the way he should go, And when he is old he will not depart from it.
  • I Timothy 3:4  He should be a good leader in his own home. His children must obey and respect him.

TAXES

  • Paying taxes is commanded in Scripture.  How you pay taxes is a direct reflection of your integrity.
  • Romans 13:5-7  Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.