Discover a New Financial World
- Steve Scalici, CFP(r) Treasure Coast Financial
- 2006 9 Oct
This month we celebrate Columbus Day in honor of Christopher Columbus and his journey to the new world. I want to encourage many of you to discover a new financial world. You may have heard the rhyme: "In 1492 Columbus sailed the ocean blue." I’ve created a new rhyme for you to remember: "In 2006, my finances I did fix."
Spend less than you make
The foundation of financial planning is "spend less than you make." If you think about it, there are only three things you can do with money. You can share it, save it, or spend it. If you spend it wisely, it frees you up to give and save more. Spending less than you make doesn’t require a Master’s degree in finance. Unfortunately, most of us don’t spend less than we make and most of us are struggling with money.
I love to spend money. In fact, I can spend it with the best of them. However, I also understand that I have limited resources and can’t simply spend what I want. I have to live below my means. Often, you hear someone say "you have to live within your means." But, we actually have to learn to live "below" our means. Too few of us have this understanding. We buy because we can. Easy credit permits us to buy things we can’t afford. In my experience, only about one in ten families actually need more income; they simply can’t cut their expenses any further. The other nine merely need to learn to live below their means.
People often erroneously believe that if they can earn more money, their financial problems will be solved. But, this is usually not the case. Blaine Harris, in his book The Four Laws of Debt Free Prosperity says "our level of expenses will always rise to our level of income unless we protest to the contrary." This is a fancy way of saying "we spend what we make." No matter the amount of your income, you have to learn to live on less than you earn. If you learn to be faithful with little, it will be easier to be faithful with much. Luke recorded Jesus’ words in his Gospel:
"Unless you are faithful in small matters, you won't be faithful in large ones. If you cheat even a little, you won't be honest with greater responsibilities. And if you are untrustworthy about worldly wealth, who will trust you with the true riches of heaven? And if you are not faithful with other people's money, why should you be trusted with money of your own?" Luke 16:10-12
Share the wealth
I believe that God has made us to share our lives with others. Paul told the Thessalonians this:
"Your lives are echoing the Master's Word ... The news of your faith in God is out. We don't even have to say anything anymore - you're the message!" 1 Thessalonians. 1:8 (The Message)
Sharing our lives includes sharing our finances. We can share the wealth in many ways. We can give money to our church, missionaries, neighbors, etc… One mistake many of us make is in the belief that all our giving must be done only to organizations. Sometimes, the giving that has the most impact is the giving that is done between people. Maybe you know your neighbor needs their car repaired but can’t afford it. You may be able to help them. Remember that God allows us to give so that we can experience the blessing that comes from giving. Luke records Paul’s meeting with the elders of the church of Ephesus in Acts 20:33-35:
"I have never coveted anyone's money or fine clothing. You know that these hands of mine have worked to pay my own way, and I have even supplied the needs of those who were with me. And I have been a constant example of how you can help the poor by working hard. You should remember the words of the Lord Jesus: `It is more blessed to give than to receive.' "
When we give, we become less selfish. When we are less selfish, we become free.
Saving money must be done for provisional purposes. "In the house of the wise are stores of choice food and oil, but a foolish man devours all he has" (Proverbs 21:20 - NIV). Wise people don’t spend everything they make. Here are some benefits to saving money:
1. You feel less pressure to earn.
2. You feel good about the way God is developing your character.
3. You can respond to giving opportunities.
God wants us to manage what we receive from Him. Earthly riches are God’s blessings and can be the source of great joy, but we need to be very careful that this does not become the source of our hope. For some, saving is tricky because it can lead us to have a hoarding mentality or other negative attitude regarding saving money:
1. saving money as a measure of success
2. feelings of security from wealth
3. love of money
4. personal esteem and self-worth
Notice how the three things you can do with money (spending, saving, and sharing) all interact with one another. It all starts with limiting your lifestyle and spending less than you make -- allowing you to both share and save. Doing so will bring you much closer to discovering your new financial world. And you won’t have to sail halfway around the world to do it.
Steve Scalici is the Vice President of Treasure Coast Financial, a financial planning firm in Stuart, FL. He is co-host of God's Money which can be heard weekdays at www.oneplace.com. He can also be reached at his website www.tcfin.com.