I’m fascinated with the process of life change. So many of us would like to make some changes — in our health, our relationships, our finances. And yet change seems hard. We might make progress for a while, but then we slip back into old familiar patterns. What does it take to make changes that last?
A couple of weeks ago, we looked at the importance of identity. As James Clear, author of Atomic Habits, puts it, “The most effective way to change your habits is to focus not on what you want to achieve, but on who you wish to become.”
As Christ-followers, we know who God made us to be. Financially speaking, we’re stewards or managers of God’s resources. We’re called to be wise builders, building our financial lives on the solid rock of God’s Word.
When faced with a decision, Clear suggests asking ourselves, “What would a person with the identity we aspire to do?”
Because the Bible affirms planning (Proverbs 21:5), one thing a wise builder would do to manage money well is use a plan — a budget, or as I prefer, a cash flow plan. (See Building the Best Possible Financial Life — The Right Tool for the Job.)
How do you put such a plan together?
Putting first things first
There are five things you can do with money. You can:
- Spend it
- Use it for debt payments
- Save it
- Invest it
- Give it away
And that’s the order our consumer culture teaches us to follow. It says, “Great, you’re making $75,000 per year? That means you can drive this type of car, wear that brand of clothes, vacation over there…”
Spending comes first, and when spending comes first, debt always comes along for the ride. If anything is left over after all that spending and after making all those debt payments, some might be saved, invested, and given away, but there isn’t usually much, if anything, left over.
The Bible suggests a very different order:
- Avoid what the Bible describes as the bondage of debt
That’s a really simple framework, and yet it’s profound. Deciding to arrange our finances this way is the first step in putting a cash flow plan together. It’s a huge strategic decision that orients our finances toward success and satisfaction.
A little context
Are you giving generously and saving or investing adequately? More specifically, are you giving at least 10% of your income? And are you saving or investing at least 10%? Does that seem like a stretch?
Think of it this way. If you work a 40-hour week, giving 10% means the money you earn on Monday morning is going to the Lord’s work. Saving or investing 10% means the money you earn on Monday afternoon is going toward building a peace-providing reserve now and providing for your family’s later life needs. That leaves all the money you earn on Tuesday, Wednesday, Thursday, and Friday for spending. That doesn’t seem so unreasonable, does it?
And here’s an important point to know about life change. Just as identity shapes our behavior, our behavior shapes our identity. Doing the things you know a manager of God’s resources — a wise builder — would do, further molds that identity.
So, that’s the big picture. From a really practical perspective, a wise builder prioritizes money this way: Give, save, invest, avoid the bondage of debt, and then spend.
Take it to heart: “Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else’s property, who will give you property of your own?” – Luke 16:10—12
Take action: Write down your monthly gross income on a piece of paper. How much is 10% of that? If you gave away that much each month and saved or invested that much, would you be able to live on the remaining 80%? If it doesn’t seem like it, don’t be discouraged (or upset with me for suggesting those amounts!). If you’re far from being able to do that, just starting to take some steps in that direction will be a win. We’ll take a closer look at why those are even good objectives, and how to pursue them, next week.