6 Steps to Build your Wealth: Biblical Bean Counting, Pt 3
Ok, so after Part Two, you should know where you are, know where you want to be in 5 years, and you are ready to implement a plan to attain your financial goals. This is the sweaty part. You need to work really hard, make sacrifices, and be disciplined. In other words you need to ask the Holy Spirit to override your natural desires, your sinful flesh, your laziness, pride, greed, and other infections that will be seeping into this process. Your ultimate goal is to worship God better with your money. Anything else is missing the point. All wealth is a gift of God, so these principles aren’t intended to guarantee anything. It is all up to God. They are just ways of being a good steward. The results are up to Him.
This post will assume that you are making money, not losing it. I know that’s a big assumption, but there are posts coming soon that will talk about how to earn more and spend less.
If your heart is in the right place and you are ready to formulate a plan to achieve your goal, here are the steps you need to take…
Step One: Get out of debt
Prov 27:7 The rich rules over the poor, and the borrower is the slave of the lender.
Your interest payments will always be higher than your earned interest off investments. If they weren’t people would borrow from one bank to invest in another. The only time borrowing money will yield profit is if it is invested in a risky situation. This is for the big boys with lots to spend and don’ tmind losing big. For us, step one will always be get out of debt.
Debt is all about living as if you have money that you don’t yet have. Snarky quips abotu chickens and eggs abound, but I’ll settle for…
Prov 13:7 One pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.
You will need self control to stay out of debt. If you “need” a new out or TV or vacation, then save-up for it. Amputate your habit of buy now, pay later. Debt is a repulsive four-letter word in the effort to build wealth.
(There is a later post coming that gives 10 ways to get out of debt.)
Prov 6:8 she [the forward thinking, saving ant] prepares her bread in summer and gathers her food in harvest.
There are seasons to save and seasons to spend. After you are out of debt, then the money you have been using to pay off the loans is freed up to save and build a lumpsum for the seeds of investments. Investments is where the wealth comes from, but they require seeds to plant. No one gives you a money tree, you need to grow your own from the ground up. Most good investments need several thousands to seed.
Step Three: Invest
Ecclesiastes 1:1 “Cast your bread upon the waters, for you will find it after many days.”
Once you have a lumpsum amount you are ready to put that money to work. Generally speaking, for our purposes, an investment is when you make some of your money unavailable to yourself for a time, and risk losing some of it, in order to get back that amount and more, later. The higher the risk the more you get lots back, but the more likely you get nothing back. Nuts. But there are safer ways of investing, and it should be determined by your age and security, not your need.
People who are in dire need sometimes take unreasonable risks to fix their problems quickly. This is foolish and dangerous. The more you need the money soon, the more reason to NOT invest! There are other ways of making the money you need.
We’ll examine this in more depth in another post.
Step Four: Hedge
Since investments come with risk, you need to set them up in a way that if one fall, there are others to catch it.
Ecclesiastes 1:1-2 “Cast your bread upon the waters, for you will find it after many days. Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.”
Step Five: Protect
The older you get, the safer you need to be with your investments. So you shift from being agressive in your risks, to being conservative. You move your money out of risky situations into low-risk (and therefore usually low-yield) environments. Don’t get greedy and want more and more.
1 Tim 6:9 But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.
If you are not careful with the way you protect your wealth and how you pass it on to beneficiaries (your children, church, etc.) then you will lose a substantial amount in taxes.
Prov 13:22 A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous.
Ok, so now you have the panoramic picture of where we are headed. See you tomorrow for Part 4.