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Webster's definition of wisdom: a) accumulated philosophic or scientific learning, knowledge; b) ability to discern inner qualities and relationships, insight; c) good sense, judgment; d) a wise attitude, belief, or course of action, e) the teachings of the ancients.
Did you know that the Bible contains over 2,300 verses about money and possessions? Our approach to wealth management is rooted in Biblical principles, which include strategies for prudent spending, saving, and investing with the aim to be faithful stewards of the resources entrusted to us. Below are some practical examples of how Biblical wisdom may be applied to wealth management.
Meaningful life planning always begins with goals. As goals always concern the future, they are a statement of faith and one of the primary ways that we may see God at work in one's financial affairs. A goal is not a goal until it is measured in terms of amount and time period.
The Bible does not define an appropriate lifestyle. This is determined by each family unit for themselves. Financial contentment does not result from having a particular lifestyle but rather from living within the means of God's provision.
BORROWING AND DEBT
Borrowing is not a sin but it may deny God an opportunity to work and always presumes upon the future. Consumptive borrowing will sentence one to a reduced lifestyle in the future and will limit financial flexibility currently and future financial freedom. Borrowing may be symptomatic of spiritual issues. A husband and wife should be in complete harmony with borrowing decisions. Borrowing can lead to the inability to repay which is a form of bondage. The Bible warns against being in bondage to anyone or anything. One of the keys to financial freedom is being totally out of debt.
The Bible clearly states in Psalm 37:21 that a believer should repay whatever he owes. As a result, bankruptcy with the aim of not repaying debts is not a legitimate alternative for a Christian. Bankruptcy may be used in certain situations to effectively provide equitable treatment for all personal creditors.
Giving is commanded in the scriptures both for the benefit of the recipient and for the benefit of the giver. Increased giving should be an integral part of any maturing Christian's life. The amount given should be prayerfully determined and not an automatic 10%. According to scripture, giving should be done proportionately to one's income and net worth and it should be done regularly and cheerfully.
Biblical stewardship could be defined as the use of God-given resources for the accomplishment of God-given goals or objectives. It is a lifelong process of growth in spiritual character and implies that every spending decision is a spiritual decision.
Financial planning is the allocation of limited financial resources to unlimited alternatives and is applicable to anyone at any income or net worth level as all resources are ultimately limited.
PRINCIPLES OF FINANCIAL SUCCESS
Five principles of financial success are to:
- Spend less that you earn - Proverbs 13:11
- Avoid the use of debt - Proverbs 22:7
- Build liquidity - Proverbs 6:6-8
- Set long-term goals - Philippians 3:14
- Believe that God owns it all - Psalm 24:1
Investments are a tool one uses to accomplish financial objectives and are not an end in and of themselves. One accumulates wealth by spending less than he earns over a long time period. One preserves wealth by following the biblical principles of diversification, professional advice, and a long time horizon. Investment speculation should only be done after asking the question as to whether this money would be better used by giving to a kingdom purpose and, secondly, can I afford to lose this money with no adversarial effect on my long-term goals? Using investments to make a statement of faith is legitimate and may or may not cost something in the way of return and/or risk.
WORK AND RETIREMENT
God created man to work his entire lifetime. Work is normative, not a result of the fall, and should be evidenced by a sense of satisfaction and enjoyment. Leisure is a part of God's plan but not the objective of His plan. Work should always be accompanied by a sense of calling.
One cannot accumulate enough to feel financially secure, significant, or successful. However, everyone can answer the question as to how much is enough. It will differ for every family and is a number that should be determined prayerfully and periodically as time results in many changing circumstances. Net worth is always and only a measurement of God's provision and never a measurement of significance or success.
In scripture, taxes are commanded to be paid. They should never be a source of cash-flow problems as they can always be adequately planned for. Tax planning should never be the ultimate driving force in financial decisions. In many ways income taxes are an indicator of God's blessings.
Life insurance should play an integral part in any financial plan and buying life insurance does not demonstrate a lack of faith but rather prudent planning. Over insuring for the purpose of protection is unscriptural, as only God provides ultimately the protection we need. Having enough life insurance to provide for family needs is a good stewardship decision.
Wealth transfer is different from estate planning in that it begins during one's lifetime and it considers the impact on the beneficiary as its primary objective. A beneficiary should never be surprised by the decisions of the steward. It is the last stewardship decision that God allows the steward to make.
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. Training children to manage money involves not only the skill of money management but also the biblical truths and principles underlying all stewardship planning and decision making.
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