Storm-Proof Your Financial House
How do you protect yourself in a bad economy? Among those economists who see financial storm clouds gathering, there is a wide range of opinion, much of it conflicting and contradictory. You may hear endorsements for common stocks, preferred shares, options, warrants, mutual funds, hedge funds, exchange-traded funds (etfs), government bonds, corporate bonds, junk bonds, savings accounts, cds, gold, silver, oil, commodities, futures, real-estate, iras (rrsps for our Canadian readers), or even “burying it in the backyard.” With so many options, ensuring your financial future can seem intimidating. No wonder so many people have just given up.
But there is a sound source of advice upon which to base your financial decisions. It contains principles that have allowed men to prosper for thousands of years, even during periods of drought, flood, famine and war, through the rise and fall of empires. Some of the world’s most successful businessmen use a copy of the book at home or in the office.
It is the Holy Bible.
Before you cast the Bible aside as outdated, prove for yourself whether the many financial do’s and don’ts it supplies aren’t sound principles that will work for you. They have worked for such modern executives as JetBlue Airways founder and ceo David Neeleman and abc News’s Hugh Downs. They also worked for America’s Founding Fathers. Why? The laws the Bible outlines bring success.
Remember, “In all labour there is profit …” (Proverbs 14:23). No matter how smart you are, you will never be a success unless you are diligent. Plain old hard work is often the best way to generate income.
Some people are offered jobs just because of their reputation as hard workers, but most are sought after because they also have become skilled in their field. The word diligent can mean skillful; it can refer to an expert or teacher. Becoming an expert or a teacher obviously requires hard work, but the rewards are obvious: “Seest thou a man diligent in his business? he shall stand before kings; he shall not stand before mean men” (Proverbs 22:29; also 10:4). Prepare for the highest and most well-paid job you can. Don’t be afraid of putting in extra hours (Exodus 20:9; Proverbs 21:25). A second job may be required for a time, or even night classes. Be creative. Consider all your options. “Be thou diligent to know the state of thy flocks [or whatever occupation you have], and look well to thy herds. For riches are not for ever …” (Proverbs 27:23-24).
Poverty comes if you are slothful (Proverbs 24:30-34). Don’t assume poverty is not your fault—although some situations do occur that are beyond our control. Still, take responsibility for yourself and for your family. Don’t freeload, use others, or think you are entitled to something (2 Thessalonians 3:10). You are accountable for your financial house (1 Timothy 5:8; Galatians 6:5), not someone else.
Seeking counsel and advice may be one of the most underexploited yet vital tools for financial security. Most people seek counsel only when they are in trouble. Had they sought counsel before acting, problems could have been avoided before they developed. Remember, Solomon—probably the richest man who ever lived—first sought wisdom (counsel from God); only then was financial prosperity given to him (2 Chronicles 1:11-12).
It doesn’t make sense to wait until calamity strikes before asking for advice, especially when the benefits of seeking counsel are so numerous. Seeking counsel boosts the likelihood of accomplishing your dreams and financial goals. “Every purpose is established by counsel …” (Proverbs 20:18). It will gain you priceless wisdom: “He that walketh with wise men shall be wise …” (Proverbs 13:20). You will reduce your risk: “[I]n the multitude of counsellors there is safety” (Proverbs 11:14). Of course, when you seek counsel, you should choose advisers who are successful in the areas you are seeking advice in and who are known for their good judgment (Proverbs 13:20).
If you don’t seek counsel, notice the results: “Where no counsel is, the people fall …. Poverty and shame shall be to him that refuseth instruction …” (Proverbs 11:14; 13:18). “Seest thou a man wise in his own conceit? there is more hope of a fool than of him” (Proverbs 26:12).
When it comes to investing your hard-earned savings, whether in a business venture or other prospect, it is especially important to seek counsel and knowledge. In our February 2007 issue, we examined the Federal Reserve System and how the U.S. money supply is constantly being expanded (and consequently how the dollar’s value has been eroding). We also mentioned the key role of gold and silver in international finance and monetary history. However, we by no means advocate the buying or hoarding of gold and silver as a magic elixir for financial security. The Bible says there will come a time when men will cast their silver into the streets, and their gold will not deliver them (Ezekiel 7:19). However, for the time being it may be part of a prudent investment plan.
The Philadelphia Trumpet is neither pro- nor anti-investing. Our primary purpose is to reveal to you the best long-range investment (read on to find out what that is). If you wish to invest in this world’s securities (stocks, bonds, commodities, etc.), do your homework. Consult experts in the field, but do not put full trust in either the “contrarian” investment letters or the established “name” stockbrokers. Seek a multitude of wise counsel, from all financial viewpoints.
“The rich ruleth over the poor, and the borrower is servant to the lender” clearly states the consequences of debt: slavery (Proverbs 22:7). Therefore, make sure that anytime you borrow money, there is a good reason behind your decision. Although there may be legitimate reasons for taking out a loan (purchasing a home or car or paying for college may be good examples), far too often people take on debt casually.
If you are in debt, you must “service” the debt, meaning pay interest on top of the principle. Remember, lenders only lend money because they are making a profit. Their profit is your loss. A good rule of thumb is to not pay interest on anything that loses value. This is especially true for most types of credit card debt. If you pay credit for dinners out, toys or frivolous gifts and then end up paying 18 or 20 percent interest over several years for it, you’ve paid far more than the ticket price for something you’ve probably long forgotten about.
Debt is particularly bad during economic downturns, especially periods of deflation. When economies shrink and jobs become scarce, debt is servitude and cash is king. So eliminating debt is imperative to preparing financially for your future. In most cases, it makes sense to pay off the higher-interest-rate debt first, although adjustable-rate debt can be very dangerous too, since it has the potential to ratchet up depending on the interest rate set by the government. And it is generally a bad idea to extract equity from your home or take out a second mortgage, especially to finance unnecessary expenditures. The extra debt could come back to haunt you.
Don’t spend more than you earn. Simply put, “if your outgo exceeds your income, your upkeep will be your downfall.” Instead, live beneath your means. Accumulating a healthy savings is essential to weathering financial storms. Always save at least a little bit, no matter how much or how little you make. Monitor and pare down any unnecessary expenses that prevent you from continually increasing your safety net (Proverbs 21:17).
Although this sounds simple, application can be difficult. It requires developing self-control and learning the difference between needs and wants. If you can survive without it, it is a want. You may need to be somewhat ruthless with yourself until your finances are in order.
It is true that the Bible prophesies of difficult times ahead. Some people, however, use this as an excuse not to work hard or plan for the future. The Bible condemns such shortsightedness. Regardless of our age, we should plan and save for the future.
We must take care of ourselves and our families (1 Timothy 5:3-8) and provide for the needs of others where able. God expects us to live responsibly so we don’t burden family members, charitable organizations or even unnecessary government sources of welfare. In fact, Proverbs 13:22 says, “A good [man] leaveth an inheritance to his children’s children ….”
Set aside money each paycheck for known future expenses such as vehicle repairs, tuition costs, home renovations, trips and retirement. Also, save for emergencies and the unexpected, such as job loss, health problems, repairs, accidents or disasters. A prudent strategy would be to work toward building an emergency fund to cover all your expenses for six months to a year. The future can be unpredictable, “for thou knowest not what a day may bring forth” (Proverbs 27:1; also James 4:13-17). Proverbs 21:20 says a wise man saves up treasure while “a foolish man spendeth it up.” King Solomon noted the example of the ant. “Go to the ant, thou sluggard; consider her ways, and be wise: Which … [p]rovideth her meat in the summer, and gathereth her food in the harvest” (Proverbs 6:6-8).
However, the Bible does not advocate a retirement of idleness and ease. Read the parable in Luke 12:15-21. Protecting the increase God provides, then receiving retirement benefits at the appointed time is proper and a wonderful supplement to income. But beware coveting riches in order to end our days without productive work. An idle mind and purposeless days can do mental and spiritual damage. God expects us to labor all the days of our lives (where and how we are able).
Working and managing our increase is a major means by which God can develop our spiritual character. God always wants us to be the best possible stewards with whatever blessings He gives us (Luke 19:12-27; Matthew 24:45-47). Our primary goal in conducting our financial affairs wisely should not be physical wealth, but spiritual (Matthew 6:19-21, 33). Start now, and demonstrate to God you are not only meeting today’s financial demands, but also preparing for the future.
Diversify Your Investments
Many economic analysts say diversification—not putting all your eggs in one basket—is critical in protecting your wealth and ensuring financial security. Ecclesiastes 11:1-2 say, “Cast thy bread upon the waters: for thou shalt find it after many days. Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth.” If you want to purchase stocks, bonds, commodities or other investments, fine. Just understand the risk and refrain from investing if you can’t afford to lose a great portion of it. Spreading the risk among different asset classes can help lower your investment risk.
No Get-Rich-Quick Schemes
When an investment sounds too good to be true, stop—it probably is. The very essence of a get-rich-quick scheme is most often speed and greed. The promoter urges the potential buyer to act quickly before the opportunity is missed and some other investor snaps up the deal and reaps huge financial rewards.
Don’t be fooled. Make the time to fully examine whatever you are investing in (Proverbs 14:15; 22:3). Don’t leap without looking; “everyone who is hasty comes surely to poverty” (Proverbs 21:5; New American Standard). Money does not come easily, so don’t be tricked into carelessly throwing it away. Read Psalm 37:7.
Also, make sure to keep your integrity and honesty; follow the law and stay away from unethical businesses and practices (Proverbs 22:16; 28:6; Romans 13:1, 7). “A faithful man shall abound with blessings: but he that maketh haste to be rich shall not be innocent. … He that hasteth to be rich hath an evil eye, and considereth not that poverty shall come upon him” (Proverbs 28:20, 22). Faithfully stick to the plan of reducing debt and increasing savings little by little until you have enough to meet your needs, emergencies and even some of your wants. Don’t waste hard-earned dollars on gambling, lotteries or schemes.
Also, make sure you finish the course. Oftentimes people quit when just a few more steps would reveal rays of light on the horizon (Proverbs 24:10). Does saving money or reducing debt seem overwhelming? Do not give up. Hebrews 12:1 tells us run our spiritual race with patience, but smartly, casting off those things that impede our progress. The same principle applies in our financial “race.” Seek God’s guidance. See your employer. See your creditor. Talk your situation over with them. Don’t just sit at home and say, “It’s no use!” Don’t procrastinate. Keep thinking. Keep planning. Keep working.
And start giving.
Believe it or not, giving creates a cycle where financial benefits and other blessings return to you. While giving may seem illogical as a wealth-gaining process and you may feel you have nothing to give, God promises that when you go ahead and sacrifice and serve someone else’s needs in whatever way you can, you will be rewarded (Luke 6:38). Therefore, give generously to others as your means allow. As your hard work and financial planning provides increase, share that blessing with the less fortunate (Acts 20:35; Psalm 41:1).
Consider that there may be a time when you will need help from others (2 Corinthians 8:14). Selfishly hoarding all that you gain can actually lead to poverty and curses (Proverbs 11:24-26; 21:25-26).
Most importantly, give generously back to God. He created all things, and He claims the earth and its fullness as His, including all silver and gold (1 Corinthians 10:26; Exodus 19:5; Deuteronomy 10:14; Haggai 2:8). God can make us poor or rich (1 Samuel 2:7). By giving mankind dominion over and allowing us to use His creation, God has in effect made every man and woman His business partner (Psalm 8:6; Matthew 25:14-30). Keep God as your partner by tithing on your increase (Leviticus 27:30).
When you give God His portion—one tenth—of your income, He shares in your profits and then reinvests even more in you and your ventures. God loves, blesses and promises to supply the needs of a cheerful giver (2 Corinthians 9:7-9). As tithe payers and the wealthiest men of their ages, Abraham, Job, King David and Solomon all found out that you cannot outgive God (Job 1:1-3; Hebrews 7:1-2).
Tithing to the organization through whom God is performing His work is mandatory for anyone who wants to prosper in all areas. Christ confirmed that tithing is a command in Matthew 23:23. (For more information on how to tithe, request a copy of our reprint article “Ending Your Financial Worries.”). If your stockbroker disobeyed your command, you’d fire him. Likewise, don’t disobey God’s instructions on tithing, or God may decide you should no longer manage His wealth. If you follow God’s directions, increase what you have been given, and use that increase to serve Him and others, He will take care of you and bless you with more. Study Malachi 3:8-10. Verse 10 reads, “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.” This verse promises what many people discover upon paying tithes—that even if you feel you can’t afford it, God makes certain you can, when you just step out and obey Him.
God wants us to be prosperous both physically and spiritually. Jesus, the Son of God, said that one of the main purposes for His being sent to Earth was that we “might have life” and that we “might have it more abundantly” (John 10:10). The Apostle John concurred: “Beloved, I wish above all things that thou mayest prosper and be in health …” (3 John 2).
Put the Spiritual First
Even though God provides laws for prosperity, that does not mean He intends for you to be filthy rich. For “[t]here is [he] that maketh himself rich, yet hath nothing …” (Proverbs 13:7). God’s laws on proper financial preparation and management are just one set of laws in a way of life intended to make us happy. Obedience to all His laws is what brings true blessings and prosperity (Deuteronomy 30:16).
Jesus explained, “[S]eek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you” (Matthew 6:33). This principle, if applied, is an absolute guarantee against starvation and perpetual poverty. Knowledge of this principle is often the only reason that poor people are able to keep their heads up in the face of adversity. Ignorance of this one principle is the very reason that many wealthy individuals, in the unexpected moment of adversity, consider or commit suicide.
If greed, lust of money, or having riches causes us to neglect our relationship with God or to break His laws, God will remove His blessings (Proverbs 1:19; 28:20). It is far better to be physically poor than spiritually poor (Ecclesiastes 4:13). “For what shall it profit a man, if he shall gain the whole world, and lose his own soul?” (Mark 8:36). Put the focus on storing up spiritual treasure, not physical wealth. If you do so, then as Matthew 6:33 says, all else, including financial security, will be added unto you.
Act now to storm-proof your financial house. Look first to God, who provides and protects (Isaiah 41:17), and build upon God’s rock-solid principles of financial—and, far more importantly, spiritual—success. Then, as Christ said in Luke 6:48-49, when the storm comes and the waves beat against it, while houses built on sand get washed away, yours will remain intact.