Financial Planning from a Biblical Perspective
- 2005 18 Apr
"For where your treasure is, there your heart will be also." Matthew 6:21 (NIV)
God has a plan for your life and your finances as well. Let's review a few important considerations that you will need to take into account in order to implement God's financial plan for your life.
The Right Foundation
The first important aspect of financial planning to consider is your purpose. Your purpose in life and the purposes that God calls your family to will have a great impact on the way you manage the resources God has given you.
If you understand your life's purpose first, you will become more effective in your day-to-day living and clearer about the financial decisions you need to make. Great examples of individuals who understood their purpose are William Wilberforce, who sought to abolish slavery in England, and Martin Luther in the Reformation. Both men lived with purpose and were amazingly effective as a result of this knowledge.
Where else can we see the effects of understanding one's purpose? We see it most clearly in the intentionality with which God directs our lives. God intentionally declares His holiness and does so with relentlessness as He interacts with us. God knows the plans He has for us and He is driven by this holy purpose. Think about the implications that this has for your life. God is seeking to reveal His holiness through you and He will not quit that purpose. What a great example God has given us of the focus we need to have.
How does this relate to investing and financial planning? Well, just as He did with Wilberforce and Luther, God has a plan for your life. You can be confident in this fact, and know that He will give you the necessary resources to accomplish His purposes. All you need to do is ask Him.
The fact that God has a plan for you also means that you need to be clear in understanding the gifts and resources that God has given your family and how you can work together to serve Himi. This understanding should direct where you give, where you invest your time and money, and how you view the world. Spend time thinking, praying, and journaling about this aspect of your life before you dig into the practical aspects of developing a financial plan.
Once you have spent time understanding your purpose, the next step is to put together a solid financial plan. A number of great resources exist to help you through this process:
Master Your Money - by Ron Blue, takes a look what the Bible has to say about stewardship and combines it with advice on budgeting and managing your finances.
A Life Well Spent - by Russ Crosson, challenges your thinking about how to invest in your family from an eternal perspective.
Sound Mind Investing - by Austin Pryor, a great step-by-step resource outlining the process for investing and managing your finances from a Biblical and practical perspective.
The Word on Finances - by Larry Burkett, explores what the Bible says in regards to almost any area of your finances.
In addition to these resources, consider taking a Crown Ministries (www.crown.org) class through a local church or seeking out a good certified financial planner (CFP) who can help you. You can visit the CFP Board of Standards (www.cfp-board.org/cons_fndplr.html) or the Christian Financial Planning Institute (www.christianfpi.org) to locate a good CFP in your area.
As you begin to explore how to invest and what it means to have a financial plan, you will find that the overarching process outlined in many of these resources is similar. However, each has different techniques and valuable insights that you should consider as you seek to develop a plan that is right for you.
As you work your way through these resources, you will begin to understand the following basic steps in the financial planning process:
1. Goal Setting - Define both short-term and long-term goals (driven by your purpose). These will differ depending on your stage of life, your finances and the size of your family. Make sure you have these in writing and keep them up-to-date.
2. Creating A Balance Sheet and Cash Flow Statement - This is just a fancy way of saying that you should list all of your assets (property, stocks, bonds, etc.) and liabilities (mortgage, credit card debt, etc.) to get a clear picture of where you stand financially. You should also list all of your regular income sources and expenses for a year.
3. Develop a Budget & Financial Plan - Based on your analysis in step 2, determine how much you should save, invest, and spend. Your goal should be to spend less than you earn over the long haul. Your financial plan defines how you move from where you are in step 2 toward the goals outlined in step 1.
4. Assess and Adjust - Once you have begun implementing your plan, schedule a time to review your progress. Plan to do this on a monthly basis. In addition to regular assessment, make an annual date with your spouse to pray, review your finances, and discuss your goals for the coming year.
The beginning of the year is a great time to start, but you can begin at any time. Focus on developing your budget for the next year and reviewing your progress in the previous year. Review the "numbers" for each category and then take a look at where your money went as it relates to saving and investing, giving, and living expenses.
Also take a look at whom or what your money was invested in. Was it time with family, saving for retirement, or a new car? Was your spending in line with the purposes God has given you?
Finally, review what you did well. Celebrate those positives and decide what you need to improve going forward. Plan to do this every year and you will be surprised at the positives effects this has on your ability to be a good steward.
Have No Anxiety...
Do not worry if this seems overwhelming at first. You can do it with the right kind of help. Thankfully, God tells us that He will provide the wisdom and guidance we need, whether it be directly through Him or through one of His servants. "For the LORD gives wisdom, and from his mouth come knowledge and understanding." (Proverbs 2:6)
Once you have been through this process, you will find it becomes much easier to repeat as an on-going discipline. The real challenge is establishing the right kind of habits to help you grow and become a better steward.
"To the man who pleases Him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases God. This too is meaningless, a chasing after the wind." (Ecclesiastes 2:26) This verse is an excellent reminder that God will bless and provide for us as we seek Him. However, if we are not seeking to please Him first, we will ultimately fail in doing anything that has real value.
Remember this verse and let God guide you as you seek to understand the purpose He has for your life. Approach your investing and financial plans with this purpose in mind and God will take care of the rest.
i "The Call by Os Guinness," available through the Trinity Forum (www.ttf.org) - is an effective resource to assist you in discovering God's will for your life.
The National Planning Group of Ronald Blue & Co. is a unique division within RB&Co. that serves the everyday steward - For more information you can visit their website: www.everydaysteward.com.