There are many personal finance books and guides available to us today such as Rich Dad Poor Dad by Robert Kiyosaki, Think and Grow Rich by Napoleon Hill, The Millionaire Next Door by Tom Stanley, or The Total Money Makeover by Dave Ramsey to name a few. While these are all great reads, we should not lose sight that the book we refer to every day for truths on how to live our lives has great financial advice. While these modern day texts have biblically based financial principles sprinkled throughout them to various degrees, why not just go straight to the source to understand how God wants us to manage our money?
Is it any coincidence that the best-selling book of all time has such great wisdom for us in how we should manage our personal finances? What was written over 2,000 years ago is as relevant today as it ever has been. Right in front of us we have the guiding principles that can help us serve as good stewards of what has been given to us to manage. The Bible has more than 2,000 references on every financial topic you can imagine including debt, budgeting, teaching our children, contentment, cosigning, giving, greed, inheritance, investing and so on. It is almost as if the writers of the Old and New Testament knew we could use some advice in this area of our life. Coincidence? I think not.
I think we all can agree that our society could use a dose of sound financial advice. We are struggling with debt and our capacity to both save and give. Just how much are we struggling?
- In terms of debt, a recent study by Nerdwallet revealed the average household with credit card debt has a balance of $15,355, with a total debt owed by US consumers of $712 billion. While credit card debt is concerning, student loan debt is more so with US consumers owing a total of $1.21 trillion.1 According to the 2015 American Association of Colleges of Pharmacy (AACP) Graduating Student Survey, we know that 89% of pharmacy students borrowed money to pay for college expenses with a median balance upon graduation of $150,000.2 In 2009, that figure was just $100,000.
- How about saving for a rainy day? Without a savings account, we run the risk of taking on more debt or borrowing from areas that we shouldn’t borrow from (e.g., retirement) when an emergency strikes. According to a recent survey conducted by GOBankingRates, 28% of respondents had $0 saved in their savings account and 13% had less than $1,000 saved. While those with higher incomes had a higher percentage of savings, the balances in those accounts fall short of the often-recommended 3-6 months of expenses for a fully funded emergency fund. For example, in the income bracket of $100,000-$149,000, where many pharmacists would fall as a minimum assuming one income for the household, only 28% of respondents had $10,000 or more saved, meaning the vast majority do not likely have 3-6 months of expenses saved.
- As you guessed, if we aren’t doing so well for saving for a rainy day, we probably aren’t doing well for long-term retirement savings. A 2015 report issued by the US Government Accountability Office revealed that approximately 29% of those in households age 55 and older had no retirement savings and no defined benefit plan (aka pension).3
- How about giving? After all, the Bible gives us great instruction in this area. According to a study conducted by the Barna group, 5% of adults gave 10% or more of their income in 2012 to a church or non-profit organization.4 It is important to note that several biblical references refer to tithing as giving to the local church whereas this study used a definition of giving to the church or non-profit organizations and calculated the 10% by taking total giving divided by one’s household income.
What the Bible Says about the Ultimate Owner
The earth is the Lord’s, and everything in it.” (1 Corinthians 10:26)
God’s word to us is very clear that we are not the ultimate owner of our possessions. I don’t know about you, but I feel peace in that, especially when we have been given good advice to follow. While we are the ones making the transactions, the source of that income is His and the responsibility for managing that wisely was delegated to us. Our entire financial plan should be built around this truth of being a good steward of what God ultimately owns.
What is exactly is stewardship anyways? Chris Brown, host of a stewardship radio show (www.stewardship.com), defines stewardship as “handling God’s blessings His way for His glory.” I love this definition of stewardship. How different would our view on personal finances look if we regularly prayed this prayer: “Lord, please help me to be a good steward of Your blessings as You see fit for Your glory.” That quickly changes the focus from us to Him. This prayer in the context of stewardship emphasizes four important points:
- First and foremost, we are not the owner;
- Second, we need help (‘Lord, please help…’). This may not come naturally to a broken world where greed and pride come into play, especially when we talk about finances;
- Third, what we have been given is truly a blessing and we are entitled to nothing;
- And fourth, we should handle our finances (aka blessings from Him) for His glory rather than ours.
If we acknowledge who the ultimate provider and owner is, we act from a position of trying to responsibly handle our personal finances for Him rather than for us. It changes the way we approach budgeting, giving, saving and our view on debt.
What the Bible Says about Taking on and Managing Debt
The Bible has nothing good to say about taking on debt.
- “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.” (Romans 13:8)
- “The rich rule over the poor, and the borrower is slave to the lender.” (Proverbs 22:7)
I went to college without a penny of debt and after finishing my pharmacy degree and completing residency, I had well over six figures in debt. I was sold the argument that debt would not be an issue since I would be making a significant income coming out of school. While my wife and I did not live an extravagant lifestyle by any means, we had borrowed money we had no business borrowing for things we didn’t need to buy. It all seemed so normal and manageable. ‘We had it under control,’ we thought. We had a good income and never thought twice about taking out debt for things that seemed ordinary such as buying a home, regardless if we were ready. After all, the bank said we were ready. In hindsight, it is hard not to laugh and be a little embarrassed about that considering the banks are encouraged to loan us money to make money on the interest of the loan. Of course they didn’t bat an eye at the fact we had nowhere near 20% to put down on a home, didn’t have a fully funded emergency fund and still had over $100,000 in school loans at the time.
Debt repayment and taking on debt, is a sensitive topic to discuss, even amongst Christians. I think we get caught up too often in petty debates about debt and miss the point. We debate about interest rates and loan forgiveness programs and good debt versus bad debt. Whether or not a Christian should take on any debt is an interesting debate but not the main point. In my personal experience of having significant student loan debt, the bigger point is the impact debt can have on your life.
- There is a weight that is on your shoulders when you are in debt. I didn’t realize this until we got out of debt. That weight dictates other parts of your life. For example, discussions about giving and seeing opportunities to help others comes up lot less often when we were worried about the next big student loan payment. Our eyes were focused on the here and now of that debt rather than looking towards the future and what plans God may have for that money.
- At the end of the day, debt is risk. Some debt is certainly safer than others but it is a risk nonetheless. For example, if someone buys a house and only puts 5% down and the housing market tanks and/or values drop in the neighborhood, they may now owe more than they own and therefore could be at risk for foreclosure and/or not having the flexibility to move if a situation would arise where that may be needed.
- The vast availability of credit in our culture allows us to buy almost anything without having the money to pay for it. Whether that be a house, car, or new couch, we can get what we want, when we want with having little to no money up front to pay for it. What is the risk? Either buying things we don’t need and/or buying things before we are ready to do so. This inserts the temptation to live a more lucrative lifestyle than we can really afford. It is a slippery slope.
What the Bible Says about Giving
The Old Testament has numerous references to giving in the context of ‘tithing’ or giving a tenth of your income (Genesis 14:20; Genesis 28:20-22; Leviticus 27:30-32).
I love the idea of giving the ‘first fruits’ that is referenced many times in the Old Testament (Exodus 34:26; Leviticus 2:12; Numbers 28:26; Deuteronomy 26:1-2; Proverbs 3:9) and strongly believe that is something we should apply today. Giving the first portion of our income to God’s kingdom reminds us that He is the ultimate owner and that we are called to be good stewards of what He provided.
There is a stark contrast between the context of giving in the Old and New Testament. In the Old Testament and under the law, there was an expectation to give 10%. It was legalistic in nature. Under the New Testament, giving is referenced in the context of generosity (not ‘what is the bare minimum’?) and it is a cheerful, sacrificial giving.
- “If I give all I possess to the poor and give over my body to hardship that I may boast, but do not have love, I gain nothing.” (1 Corinthians 13:3)
- “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” (2 Corinthians 9:7)
While we are under God’s grace today and no longer the laws of the Old Testament, I strongly believe there is value in keeping the tithe. The Pharisees gave us an example to learn from: the amount is not the priority to God. Rather, what matters is our attitude and love towards Gods.
“Woe to you Pharisees, because you give God a tenth of your mind, 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.” (Luke 11:42)
So what are we to do with the advice we have in front of us regarding giving?
I feel convicted that giving should be a part of our budget as a minimum (the tithe) with flexibility to increase giving for various needs that you become aware of after you are walking down a sound financial path yourself. When exactly are we heading down a ‘sound financial path’? There are lots of opinions on this and while the Bible doesn’t give us the exact answer in the context of today’s financial world, I personally believe this means being out of non-mortgage debt and having an emergency fund built up.
What the Bible Says about Saving
When it comes to saving, finding the appropriate balance between saving wisely while avoiding greed is difficult and one with which many Christians struggle. On one hand there is wisdom in planning for a rainy day and taking care of your family now and in the future. On the other hand, there is a fuzzy line between building up a cushion for a rainy day and caring for your family and lusting after a large nest egg.
Take a look at Matthew 6:19-21 to see what I mean about how this can be a struggle for us:
“Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”
How can we be wise and save but protect ourselves from greed?
- First, giving must be a priority. If we are regularly giving and making that the priority, our heart is likely to be better aligned to recognize who the ultimate owner is, and we can avoid focusing on saving for selfish reasons.
- Second, we should ask ourselves what goal we are trying to achieve with saving? We are warned against saving to become rich (1 Timothy 6:9) but are encouraged to provide for our family (1 Timothy 5:8) and leave an inheritance (Proverbs 13:22).
I had a great conversation with one of my best friends and pastor at my home church about using money now to help those where there is an immediate need versus investing those funds for the future. We were specifically talking in the context of giving above and beyond the tithe. On one side, you may argue that if there is an immediate need, why wouldn’t you help now? On another side, you may argue that if you saved that money and invested it wisely over 10, 20 or even 30 years, the result would be a sum that could go much further than the money today. We came to a conclusion that this has to come down to two things. First and foremost, prayer. Go to God in these situations and ask for His wisdom in providing for His kingdom now or saving for His kingdom and caring for your family in the future. Second, where does your heart really lie? This may be exposed during prayer. If an immediate need to help is on your heart, the answer may be obvious from the Spirit. If not, seek God in prayer for how He wants you to best use this money.
So what about investing for retirement? Believe it or not, the Bible mentions the idea of retirement (Numbers 8:24-26). However, I’m certain the intent was not what we see portrayed on commercials today of longing for a day where we can disengage from work with a mass of money saved up to travel, play golf or do ‘all the things’ we wanted our whole lives.
Check this out. The Bible even gives awesome advice on how to invest including diversifying our funds (Ecclesiastes 11:2), avoiding unnecessary risk (Ecclesiastes 5:13-16) and being steady in our investment plan (Proverbs 21:5). It’s almost like God knew about the challenges we would face in today’s stock market. Oh wait, He did.
Saving a certain percentage of your income each and every month, with a diversified portfolio that matches your risk tolerance is the key to reaching your saving goals. Simple as that!
Stay the Course
Following the biblical principles for managing your money such as avoiding debt and giving away significant percentages of your income will feel at times like you are flying into a strong headwind that is our society. We are dependent more on debt today than ever before, are pressured to keep up a certain lifestyle that others around us may have, and we are tempted to forego giving to others to fund a lifestyle that we can’t afford.
It is important to note that none of the above has to do with our salvation. Therefore, managing your money wisely is not a salvation issue. Managing your money wisely is what we have been called to do; similar to how we are called to love our husband or wife and our children.
We are called to be good stewards of our resources and the Bible is very clear that our eyes need to be on Him and the hope that came in His Son rather than putting our hope in wealth. In Matthew 6:24, Jesus says, “No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.” We should be wise about handling our personal finances and spend time and efforts on thinking about these areas within our life including budgeting, saving, and giving. However, if we start to be drawn to our money or our focus becomes on accumulation and moves away from Him, we have been warned and need to go to Him in prayer to be centered on the goal.
We have advice right in front of our eyes that has been tried and tested for over 2,000 years. Isn’t there wisdom in taking that advice?
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- 2015 American Household Credit Card Debt Survey. Available at http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/. Accessed January 25, 2016.
- American Association of Colleges of Pharmacy (AACP) Office of Institutional Research and Effectiveness. Graduating Student Survey: 2015 National Summary Report. Available at http://www.aacp.org/resources/research/institutionalresearch/Documents/2015%20Graduating%20Student%20Survey_Final%20Summary%20Report_All%20schools_for%20web.pdf. Accessed January 25, 2016.
- United States Government Accountability Office. Report to the Ranking Member, Subcommittee on Primary Health and Retirement Security, Committee on Health, Education, Labor and Pensions, U.S. Senate. May 2015. Available at http://www.gao.gov/assets/680/670153.pdf. Accessed January 29, 2016.
- Barna Group, Inc. American Donor Trends. 2013. Available at https://www.barna.org/barna-update/culture/606-american-donor-trends#.VqgnK4QyfLQ