5 Wise Financial principles

Posted on March 1, 2020 by otobefree

“All it takes is the wisdom of a little ant, even without a leader, administrator, or ruler, to be prosperous” – based on Proverbs 6:7-8

Introduction

  My daughter has traced our family tree, on my mother’s side, back to Shrewsbury, Shropshire, England, to the original Thornes home, Shelvock Manor. It was once a place of local importance, and was for more than two centuries the seat of the Thornes, a leading family in Shropshire. It is interesting to know that my ancestors were a wealthy prominent family in England, but that did not help my mother much who worked in a laundry for 23 cents an hour when I was in high school.

That got me thinking about how my family handled finances when I was growing up. Looking back, even though they did not earn much, I think they followed the 5 wise financial principles without even knowing what they were. For example, they never spent more than they earned. They did not believe in having any kind of large debt. Dad was a carpenter and built our home and paid for it as it was being built. He paid cash for used cars and never owned a new one. Dad died at 76 years of age. Mon lived to be 92 and paid her own way until death and owed nothing when she died.

I wish I had followed their frugal example when I was first married. My wife and I had new car, new house, and new furniture within the first year of our marriage.

The fact is, 96% of Americans don’t do well managing money and are not fully prepared for retirement when it comes time.

Here is a question to consider

What if I don’t save for retirement? First of all, it is not the end of the world. You probably still have some Social Security to fall back on. You probably have equity in your home. With godly stewardship, you can live a frugal, simple life on a small amount of money, and still be very content. Paul said in Philippians 4:12 “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.”

There are many fearing Christians today, who are rich spiritually, yet consider themselves poor; their complaints, doubts and griefs make them poor. More than anything else, you still have God looking out for you, if you are a believer. Hebrews 13:5 says, “Keep your lives free from the love of money and be content with what you have, because God has said, ‘Never will I leave you; never will I forsake you.”

Eccl. 5:10 is a great Bible verse on personal finances: “God has also given riches and wealth to every man, and He has allowed them to enjoy them. Take His reward, and rejoice in his labors. This is a gift of God.” God has, in a way, given wealth to every man; the life God has given is wealth. However, in this instance, I believe that God is referring to Finances. To paraphrase it; “To every man that God has given riches.” Obviously, God has not given everyone riches. But everyone He gives riches, He also has the power to enable them to enjoy it, and the other side would be, not to enjoy it. Nevertheless, all wealth is a gift from God.

Here is something to think about: A gift is not yours until you take it and enjoy it. Could it be God is offering you wealth, but you have not yet taken it. By our very attitude, we may be rejecting God’s gift of wealth, which includes far more than just money.

There is a great commentary on Eccl. 5:19: “Only the man or woman who has God as the center of their life-is able to enjoy the nice things this life has to offer. Outside of Christ possessions and wealth will naturally cause you to worry, fret, envy, and so on. Please note that wealth isn’t bad or good, riches are not evil in and of themselves. When they are looked upon with a proper attitude and used in harmony with God’s ordained will, they bring joy. Abundance is useless without the ability to enjoy it.”

Last week our study centered on stewardship. The following 5 financial principles, that we are considering today, is godly stewardship in action. The first financial principle is a no brainer: Spend less than you earn If you are having trouble living within your means, there are some things you can do: Though it may seem a drastic move, it may require downsizing. I know that this is a tough decision. My wife and I just recently went through it. We did it because the present house was far more than we needed and really was not a matter of good stewardship.

Break the habit of thinking you must always have a new car

Car payments can drain you of any extra money to save. The Jeep Wrangler, which is my primary driver, is 20 years old and I paid cash for it used when I bought it 14 years ago. Maybe you need to discover how good It feels not to make car payments.

Go through every monthly required bill

Be objective and ask yourself if that service is really needed at all. See if there are optional services that you are paying for that are unneeded. Diligently keep track of your spending. Keep a handy notebook in your pocket to record every expense you have incurred throughout the day. At the end of the week, carefully look at them and see what you could easily do without.

Look carefully at your routines

Watch how you spend money every day. Avoid spending money that you don’t need to spend. Avoid eating out to often.

Get a better bank

The vast majority of Americans are with banks that charge them unnecessary fees. Check around and find a bank that respects you. Do some one-time energy improvements around your home. It will surprise you how many little things around the home is costing you a lot of money when added together.

Find ways to increase your income

A side job can bring in enough to finance a good ongoing savings. Read 21 ways to become financially free: http://jimmieburroughs.com/2014/01/580027/  

Avoid debt

The average American household, according to NerdWallet’s calculations, has more than $15,000 in credit card debt. Get rid of credit cards if you can’t manage them. If you can’t pay them off at the end of the month, you probably are not managing them. Paying credit card interest is wasted money.

Here is how high credit card interest can be: The highest credit card interest rate in history was 79.9% on the old First Premier Bank Credit Card. This card is no longer available. It was for people with bad credit. The highest current credit card interest rate is 36% on the new First Premier Bank Credit Card. The card is unsecured and for bad credit.

High current credit card interest rates can go as high as 29.99% as is on the Total Visa. Again, this card is for bad credit. Most credit cards charge 20% or more on the average. Lowes and Home Depot charge 25% or more.

Here is how you can pay your credit card off step by step: Step 1: The first thing to do is to immediately stop paying interest on your balance. You may be thinking, how in the world can you do that? There’s a simple way, it actually uses the banks’ marketing offers to your advantage. Here’s how, find a card offering a long “0% intro APR balance transfer, say for 18 months.” Then, transfer your balance to it.

Here is an example of how bad a high interest credit card can be toward your finances: If for instance, you have a $10,000 balance and your monthly payment is $200 – $150 of that payment goes to interest charges. That leaves only $50 of your $200 that that goes to reducing your balance, the rest goes to bank. At this rate, you could be paying on it for the rest of your life – “EEK.”

Step 2: During the no interest period, pay down the balance as much as possible. At the end of the 18 month period, do the same thing over again until you are paid off. This may seem like cheating, but it isn’t. It is only taking advantage of credit card promotional offers.

Pay yourself first after you tithe

Before paying bills and other financial obligations, pay yourself. know this, you’re never too old or earn too little to figure ways to pay off debts and begin saving.

Another important matter is to recognize that your total savings are determined both by the amount you save and the interest you earn on those savings: Most bank savings accounts today lose money for you, because their rate of interest is below inflation. Mutual funds are a good place to start for the beginner investor. They are diversified; that means if one stock loses, there are others to account for the loss, so you don’t lose everything. Here is how fast money doubles if you have an investment paying a good return: Money doubles by the “Rule of 72″. You can determine how long it will take your money to double by dividing 72 by the interest rate. An account earning 6% interest will double in twelve years, 72 divided by 6 equals 12.

Organize Your Finances to save money

Organizing your finances is the first step to creating wealth. Take advantage of letting your money work for you. Say someone had $25,000 saved up 50 years ago and buried it for safe keeping, which some have done. What would it be worth today? Because of inflation, less than $5,000. What if they invested it and earned 6% on the average? What would it be worth today? $460,503.86.

Set up a Budget: 50% for essentials; 10% for Tithes; 10% for Investments; 20% for personal spending

Buy things that Produce Assets: The difference in wealthy people, generally, and poor people is the rich don’t buy junk, and don’t need to have yard sales. They pay Credit cards off at the end of the month. They pay cash for cars, which are sometimes used cars. Credit card interest, and car loan interest, is money flushed down the drain. The only kind of debt that pays is for items that retain their value over time, or appreciate, like real estate.

Continuously Educate Yourself

Read books on finance, and articles by well-regarded financial authors. Understand investing and have a plan for investing. 

Be alert to new trends and excellent investment opportunities. Almost every decade presents excellent opportunities to invest a few dollars  in something that can make you wealthy. I missed two great opportunities when I was young: Holiday Inn and Walmart.

Maximize Your Employment benefits like a 401(k) or other plans, especially those whose contributions equal your contributions. Take advantage of medical and dental insurance offered through your work.

Plan for the Unexpected: Despite of your best efforts, you’ll face unforeseen emergencies. Save enough money to cover them. Increase the amount of money you save when times are good: Instead of raising your living standard, invest for your financial future.

Give generously

The Bible has a great promise for faithful givers: Malachi 3:8-10 “Will a man rob God? Yet ye have robbed me. But ye say, Wherein have we robbed thee? In tithes and offerings. 9Ye are cursed LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.” When you consistently give back a portion of what God gives you, you are laying up treasures in heaven: Matthew 6:19-21 “Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also.”

How much should we give: No, the New Testament does not teach tithing. However, Jesus thought it was still a good standard for giving: In Luke 11:42, He said, “Woe to you Pharisees, because you give God a tenth of your mint, rue and all other kinds of garden herbs, but you neglect justice and the love of God. You should have practiced the latter without leaving the former undone.” So, Jesus said it was good that they tithed, but that they had neglected the most important, justice and love.

There are several good reasons for giving: Giving is part of what it means to be a believer in Jesus. Giving honors and glorifies God. Giving shows our thankfulness to God. Giving is a way to help those in need.

Have Financial goals Here are 10 commandments for setting financial goals:

1. Pay off the mortgage on your home.

2. Get completely out of debt.

3. Have an adequate emergency fund – at least 6 months of living expenses

 4. Have a plan for retirement.

5. Have enough insurance coverage.

6. End any costly habits like smoking or drinking. Smoking one pack of cigarettes a day costs $2,000 a year. I heard that John Wayne smoked 6 packs a day. I guess he could afford it. He also said he believed that is why he had lung cancer. The cost of alcohol for the average household is $565 a year, $5,650 in 10 years, or a whopping $22,600 over a 40-year period.

7. Don’t settle for a job you don’t like; aim to do work that you love.

8. Share Your Good Fortune with others.

9. Set up a plan to leave your financial house in order upon your death.

10. Create multiple income streams.

Here is the bottom line: Financial success is not an elusive goal. Anyone can practice the 5 wise financial principles above for prosperity and financial freedom, if they set their heart to do so.

Written by Jimmie Burroughs