How can we survive economic setbacks? Do you fear the economic future of our country? There are only two approaches for meeting future financial needs including emergencies.
One way is to save a part of every dollar of income that comes into our hands to meet those needs.
Another approach is to spend all we make as we make it.
Solomon says, “Finish your outdoor work and get your fields ready; after that, build your house” (Proverbs 24:27)
Solomon’s economic principle is simple: “Begin your financial planning on the basis of your financial resources, not on your desires.
Too often we’re seduced into asking questions like: “What do I want? “What does my peer group say I should have?” What is fashionable?”
We would do better to ask questions like: “What resources do I have?” “What can I do with the resources that I have?” “What buying power do I have?” “What earning power do I have?” When we take this approach we will allocate our resources rather than attempt to pay for desires. If we go through life attempting to pay for our desires, we will ultimately crash and burn.
I was intrigued by Vladimir Putin’s comments regarding our dysfunctional US government’s inability to properly resolve the problem of our increasing national debt. He called us a parasite on the world’s economic system. He said that by our inflated, national debt and outright luxurious selfishness we are holding the rest of the world economically hostage. He was not impressed.
Since the early 1920s our country has increasingly built our economy on what we desire rather than on what we can afford. Our standard of living has so far outstretched our ability to pay that we’d have national revolt is we tried to take back some of what we’ve given away.
Think Social Security and Medicaid. Think Greek rioting because of planned austerity plans necessary to keep Greece from economic collapse. Think entitlements.
Going into debt, not because of need, but because of desire, is not only a national issue, it’s personal as well. Sheikh Fazaga proclaimed: “The fact that you could not control your desire, there is the problem. Part of having good character is to control your desires, not to let them control you…. “
We’ve created a society where it is possible to live on the basis of our desires instead of our resources. We do this though credit cards. We desire a new flat-screen smart TV. We don’t have the money; but, instead of saving up for one, we buy it on credit. But, why let that stop us? We end up with a giant television in our dens by somehow ignoring the pressure of a monthly payments at 19% interest. We have just lowered our standard of living—but most Americans don’t seem to catch on to what the long-term result of that home theater system in the den does to them financially.
What a shame we can’t print money like the federal government! Since we can’t print money our alternative is to secure every credit card in sight and use them to the limit. But, we’ve just put off the inevitable. The bills will come do—as they are now for our federal government.
For centuries people were evaluated on the basis of how well they managed their resources to help others. That came way before the modern day concept of spending it all on ourselves.
A friend shared with me that in Judaism the Talmud says that a person was judged on how well he managed his “kiso, koso, and ka’aso.” That is, his “wallet, his cup (alcohol) and his anger.” Since the Torah requires Jews to make provision for those less fortunate, interest payments on credit cards could interfere with that moral duty.
Credit cards are permissible for Moslems only if the user pays off the balance each month before finance charges begin.
Solomon says: “The rich rule over the poor and the borrower is servant to the lender” (Proverbs 22:7).
It is not a problem for us to owe money as long as we pay it back in timely fashion—and it does not interfere with things we should be doing: like building up our emergency fund, or having money for our children’s tuition, or making our next car payment, or having enough money to take a sick child to the doctor.
God never intended for His people to live in bondage. Overly indebted people live in constant fear that their car is going to be taken away, or that they can’t make their house payment, or that they can’t pay the minimum monthly required on their credit card (cards?).
A large manufacturing firm opened a new assembly plant in an underdeveloped Latin American country because labor was cheap and plentiful. The plant successfully opened and the operation was progressing smoothly—until the first paycheck. The next day, none of the villagers reported for work.
Management waited … one, two, three days. Still no villagers came to work. The plant manager went to see the village chief to find out the problem.
“Why should we continue to work?” the chief responded, “We have already earned all the money we need to live on.” The plant stood idle for almost a month.
Then, someone came up with the idea of distributing mail order catalogs to all the villagers. Since that time there has not been an unemployment problem.
Their vocabulary is enriched (?) with two new words: “Credit Card.”
We take the fear out of finances by carefully monitoring the condition of our finances. In other words, everybody needs a budget!
Solomon says, “Be sure you know the condition of your flocks. Give careful attention to your herds…” (Proverbs 27:23a).
Since we don’t have flocks and herds, let’s insert some things we do have, like money, savings accounts, stocks, bonds, a house, a car. What this verse is saying is know exactly where you stand financially.
Solomon goes on to say, “For riches do not endure forever, and a crown is not secure for all generations” (Proverbs 27:23a). In other words if we don’t know where we’re going, then we’re not secure, and we will not succeed financially.
This means that we must have some kind of budgeting system to keep accurate track of expenditures and income. The word, “budget” seems to scare many Americans. They see it as putting a limit on their freedom—instead of seeing it as a way to ensure financial freedom.
Charles Dickens, the 19th century English novelist, knew about living with out of control finances: “Annual income $20,000, annual expenditures $19,000, result happiness. Annual income $20,000, annual expenditures $21,000, result misery.”
I used to think that only the poor and middle classes needed a budget. Now I am convinced other wise. Those who have more than enough money are often very poor managers of what they have. When sports stars or celebrities live gold-plated-twenty-four carat lives, they might do well to reflect on the blessing they could have had if they invested in drilling clean water wells for the parasite-sickened thirsty people in the Sudan.
We take the fear out of finances by saving for the future. This process is most critical in our current economic climate.
Solomon says, “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest” (Proverbs 6:6-8).
What does the ant do that we are to emulate? It stores food for future consumption. What the ant does instinctively, we must do voluntarily. We are not forced to do it. We must do it by choice and to do that, we must act against the instincts of our old sin nature.
If we save, we are wise. If we don’t, we are foolish.
Solomon says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has” (Proverbs 21:20).
A wise man does not spend all of his income as he earns it. He saves some of it for future consumption. The fool consumes all of it as it comes in.
The Bible teaches that in lean economic times, we must help provide for those less fortunate. Paul the apostle wrote: “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever” (1 Timothy 5:8).
The Greek verb, translated, “provide,” is hard to translate into English; however, it includes the idea of “taking thought in advance … to anticipate … to think beforehand.”
Paul is saying that the Christian head of the household who fails in advance to anticipate the financial needs of his family and to provide for them has violated the Christian faith.
Paul took this principle a step further when he wrote: “After all, children should not have to save up for their parents, but parents for their children” (2 Corinthians 12:14).
Formulate clear-cut financial goals like for retirement, or family inheritance or funding your children’s education. A great goal is to provide greater financial security for your family by building up an emergency fund. We would be wise not to make any long-term, illiquid investments until we have an emergency fund in cash, in a safe place, available without loss of interest or penalty. Many recommend at least three months salary. Some recommend six months salary. In today’s economic climate, I recommend at least that.
We have to save now for our family’s future financial needs.
We do well to ask ourselves two questions: “Am I anticipating my family’s future financial needs and setting aside the money to meet those needs?” Or do I just hope that the money will be there when the need arises?
We know we are following good Biblical Economics when the following seven financial pillars are firmly entrenched in our financial dealings. These principles, with slight adjustments will work in anyone’s financial plan regardless of race, color or creed.
Foundation Stones For A Biblical Financial Plan
1. The top 10% (tithe) of our pay checks are immediately returned to God (Proverb 3:9-10; Malachi 3:6; and Luke 11:42).
2. We are regularly and honestly paying taxes to the government (Matthew 22:21; and Romans 13:1-7).
3. We are making more than we spend (Proverbs 21:20).
4. We are anticipating and saving for the future financial needs of our families (1 Timothy 5:8).
5. We are out of debt on depreciating items (Psalm 37:21; and Romans 13:8).
6. Part of every pay check is saved to build up an emergency fund to pay for future (usually unexpected) needs (Proverbs 6:6-8).
7. We produce a surplus so that we may regularly give to those less fortunate than we (2 Corinthians 8:14 and 9:10-11).
We take the fear out of finances by experiencing godliness with contentment.
The Apostle Paul wrote: “Godliness with contentment is great gain. If we have food and clothes, we shall be content with that” (1 Timothy 6:6-8).
How might we survive economic down-turns?
By emulating the financial philosophy of a wise man named Agur who prayed in Proverbs 30:7-9: “Two things I ask of you, O LORD; do not refuse me before I die: Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, ‘Who is the LORD?’ Or I may become poor and steal, and so dishonor the name of my God.”
True wealth is when we are content with just what we need. John Henry Jowett wrote: “The real measure of our wealth is how much we’d be worth if we lost all our money.”
Fareed Zakaria, “The Debt Deal’s Failure.” Time Magazine, August 15, 2011, p. 31.