Creating a Cycle of Positive, Lasting Financial Change

For far too many people, money is a source of stress or frustration.

Consider these findings from a recent Federal Reserve survey:

• About 46% of U.S. adults said they would be unable to cover a $400 emergency expense without selling something or borrowing the money.
• About 31% of non-retired adults reported having no pension or retirement savings at all.
• Among respondents with a 401(k) or IRA, 48% said they were either “not confident” or only “slightly confident” about their ability to make the right investment decisions.
• About 85% of car purchases are financed. The average loan term is 69 months for new cars and 65 months for used cars.

If you see yourself in any of those stats, or if you’re dealing with some other lingering financial frustration, maybe you’ve been looking for answers in all the wrong places.

More than knowledge

There’s a common myth that managing money well is simply a matter of knowledge and behavior. Just learn what you need to know, and then go do it.

At best, that advice is incomplete. I mean, think about it. Today, there’s no end to the amount of readily, freely available financial knowledge. If you have any question about money, you can find answers—sometimes even credible answers—with a quick Internet search.

And yet, there’s also no end to the number of people who struggle with some aspect of money.

Don’t get me wrong. We need knowledge. We need to understand the difference between a Roth and a traditional IRA, for example, and which one is best for us. But knowledge alone is not enough.

Nor is it enough to follow a set of step-by-step instructions as if building a financial life that works is as simple as building a model airplane.

The end of the line

Wise money management is often described as a linear process. Do this, then this, and then this. And do it in this order.

To a degree, that’s well and good. For example, if you have debt, other than a reasonable mortgage, I encourage you to first fix your debt payments, then build an emergency fund until it has one month’s worth of essential living expenses, and then redirect money you had been putting into savings toward accelerated debt repayment. Once your debt is paid off, redirect that money back toward savings until you have three-to-six months’ worth of living expenses saved. Once your emergency fund is fully stocked, redirect most of that money toward investing.

But it’s one thing to know what to do. It’s something else to find the motivation to actually do it.

Life change is circular

When I started teaching financial workshops, I thought I had discovered the golden key to why so many people struggled with money. People don’t really understand their financial identity and haven’t formed the right attitudes of the heart. Once a person’s attitude is right, I reasoned, the right behaviors would naturally follow.

I held onto a linear approach; I just put identity and heart attitudes—wisdom—at the front of the line.

Then my wife and I bought a house from a couple in which the man was a psychiatrist. He and I struck up a bit of a friendship, and one morning over coffee he helped me see that life change isn’t linear; it’s circular.

When you start to alter an attitude, that can, in fact, lead to behavioral change. But by the same token, a behavioral change can help change or reinforce an attitude. Knowledge is part of the mix as well.

Around and around they go. Attitudes get refined and that refines our behavior. We start doing things differently and that solidifies our new attitudes. We gain some knowledge, and that further guides us toward productive behavior, which reinforces a new attitude.

All three—attitudes, knowledge, and behavior—work together to create positive, lasting life change.

The ultimate source of wisdom

In order to bring about financial change, it’s natural to want to know what to do differently and how. The identity/attitude/wisdom part can feel intangible and too time consuming. But it’s essential, which is why reading and memorizing God’s Word is an essential part of the cycle of financial life change.

Keep this Book of the Law always on your lips; meditate on it day and night, so that you may be careful to do everything written in it. Then you will be prosperous and successful. – Joshua 1:8

If you want to get out of debt, there are important things to know and steps to take. But make sure you memorize and meditate on God’s Truths about who you are (“Yet to all who did receive him, to those who believed in his name, he gave the right to become children of God.” – John 1:12). For a child of God, it makes no sense to carry debt (“The borrower is servant to the lender.” – Proverbs 22:7; “You were bought at a price; do not become slaves of men.” – 1 Corinthians 7:23).

If you want to build savings, there are important things to know and steps to take. But make sure you memorize and meditate on God’s teaching about the importance of maintaining a reserve (“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” – Proverbs 21:20) and God’s warning to not hoard (“You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?” – Luke 12:13-21).

Gain the knowledge and take the steps. But make sure to write God’s Word on your heart.

What about you?

If you could improve one aspect of your financial life, what would it be? What comes most quickly to mind? Now consider: Do you have the knowledge you need? Do you know what steps to take? But don’t neglect to discover what God’s Word has to say on the topic. And then write it on your heart through Scripture memory.

If you’re not sure what the Bible says about a certain financial topic, let me know what you’re working on and I’ll be happy to suggest some verses.