[INTRODUCTION]
Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.
Mary Jo: And I’m Mary Jo Lyons.
Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?
Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.
[EPISODE]
Bob: So today’s passage is from Proverbs 8:17-21, but before I read it, I want you to think of the I, me, and why in this passage when it refers to that, and put God and wisdom in its place of that. So as an example, Proverbs 8:17-21 says, “I love those who love me. Wisdom loves those who love wisdom, and those who seek me find me. And those who seek wisdom find wisdom.” So you see. So think about that as I’m going through the scripture. So we’ll start this over. Proverbs 8:17-21, “I love those who love me and those who seek me find me. With me are riches and honor, enduring wealth and prosperity. My fruit is better than fine gold. What I yield surpasses choice silver. I walk in the way of righteousness along the paths of justice, bestowing a rich inheritance on those who love me and making their treasures full.
Mary Jo: As Christians, we tend to rely on biblical principles for guidelines to govern and manage our day to day lives. And if relying on biblical principles for navigating our daily lives provides us comfort, doesn’t it make sense to use similar principles to help us manage our financial lives would also make us feel comfortable?
Bob: Yes, it does.
Mary Jo: Biblical guidelines helps us to live a successful life, and they also illustrate many of the financial principles we’re going to talk about in today’s podcast, as well as those we’ve talked about on previous episodes of Christian Financial Perspectives.
Bob: Yeah. You know when it comes to biblical guidelines, many people don’t realize that there’s over 2,200 scriptures about stewardship and how we handle money that’s written in the Bible. I love a quote from Ron Blue that we just recently had on our podcast who’s written over 17 books on money management. He says, “All good money management principles have their roots in biblical wisdom.” I want to say that one more time. “All Good money management principles have their roots in biblical wisdom.” And we like to say here on Christian Financial Perspectives that financially successful people use wise money principles that they follow consistently. And we’re going to define today and we’re going to go into these 20 money principles, but let’s look at what we consider financially successful. When we think about that on Christian Financial Perspectives, we’re not talking about just what your net worth is when it comes to being financially successful. But what we look at financial success is defined as being content with what you have, living within your means, having adequate reserves set aside to cover those unexpected things that happen in life, and understanding and applying the joy of giving. You know, you don’t have to be a billionaire or even a multimillionaire to be financially content. I love from the book of Philippians what Paul says, he said this in the fourth chapter of the 12th verse. It’s a very well known verse. “I Know what it is to be in need and I know what it is to have plenty.” So you think about Paul, he had both sides. He’s been poor and he’s been wealthy. And he goes on to say, “I’ve learned the secret of being content in any and every situation, whether well fed or hungry or living in plenty or in want.” So he knows that contentment is not going to be found in just a big, huge net worth, but it’s found in Christ.
Mary Jo: Absolutely, Bob. That’s well said and it is all about contentment. And you know, if you don’t govern and manage your money, it will soon govern and manage you. If you’ve been listening to our podcast for a while, you’ve heard me kind of talk about my financial past and I’ve been there. I’ve been where it manages you and it’s not fun. Being in control of your money is so much better. And so do you have a plan and a strategy for making financial decisions? If not, why not? We’re here to help you on today’s podcast to begin establishing those financial principles to live by. And by doing so, you’re taking control of your financial life. And when you do this, you can easily take more control of other areas of your life as well. So as we start the new year, we thought now would be a good time to review some basic financial principles that we think apply to everyone no matter how much you have in the way of financial resources.
Bob: This is part 1 of “20 Money Principles for 2020”, and we’re going to go over the first 10 today to help you become financially successful. And our second part, we’ll go into the last 10 financial principles. We just thought that sharing 20 and one day would be too much. So the first thing is to organize your finances. This means knowing what you have, where it is, and what it’s doing for you. Then, create a roadmap to the financial future that you desire. Because, you think about it, without a roadmap – and here is a financial roadmap – you’re probably going to veer off course and likely become lost and you know that can be very costly. Next, look at your paycheck and your gross pay is and your take home pay is after all the deductions that are taken from it, and get an understanding of that. I believe, Mary Jo, most people don’t really realize what they make.
Mary Jo: Oh, I don’t think they’ve seen a paycheck in a long time. I don’t think a lot of people understand who FICA is. I think I’ve said that before.
Bob: FICA’s there to take 15% of what you earn.
Mary Jo: Well, that’s today. FICA’s gonna want more soon.
Bob: Exactly. And that’s for social security and Medicare and Medicaid. But that’s what we refer to when we say FICA. After that, figure out which income tax bracket you’re in. You know, this is so important and where the next one starts, so you can see where your income is and what kind of wise decisions do you need to make to possibly keep you in that lower tax bracket by putting more into that retirement plan at work to help keep those taxes lower and save for the future. And last, organize those finances. Be a good steward by developing a good spending plan and keeping good records and knowing where all that money is going. So that’s the first thing of our 2020.
Mary Jo: The next principle is avoid the use of debt. In Proverbs 22:7 it says, “The rich rule over the poor and the borrower is the servant to the lender.” So spend less than you make, but know what you spend. When you spend less than you make, you actually can start saving. And what you save can become real wealth over time. This is actually how wealth is created. It’s created by saving and continuing to save and continuing to save. That wealth and that savings accumulates over time, and pretty soon you’ve got a nice nest egg.
Bob: I was thinking about that, Mary Jo. Proverbs 13:11, remember that? “Money gathers little by little, he who gathers little by little makes it grow.” So that’s right in there with that scriptural principle.
Mary Jo: That’s the number one key. So this is the foundation of a solid financial future. And you know, one of the things I hear so much about today is college debt. We’re hearing about student loan programs for paying those off. So, if you’re in high school or you’re a parent of a high schooler and you’re thinking about college, find a way to attend college without relying on student debt. We don’t want to see these kids crippled as soon as they get out in their professional life. Go slowly, take a few classes at a time so that you can pay it through cashflow. Consider a junior college. Hey, get a scholarship. Crack those books.
Bob: Work your way through college. You might appreciate it more.
Mary Jo: And work your way through college. Absolutely. I mean I know college costs have risen so high, and they’re much higher than they were in our day, but I worked two and three jobs my entire college career, and I’m still here to talk about it.
Bob: So the third thing of the 20 is establish and maintain an emergency fund. I love Proverbs 6:6-8. It says, “Go to the ant” and it says “you sluggard.” And I always thought that was just interesting how they put that in there. “Consider its ways and be wise, it has no commander, no overseer or ruler yet it stores his provisions in summer and gathers his food at harvest.” You know, when I was a kid, I loved to watch ants, Mary Jo, and you could put some cracker crumbs down and they’d take that from one area all the way to another area.
Mary Jo: You know, Bob, we have these cutter ants and they’re right here on the side of the house of our next door neighbor. And the other day, we were just standing out there and they’re slowly dismantling this plant and you’ve got millions of them and they’re carrying leaf by leaf over to their ant mound, which is in a neighbor’s yard clear across behind us. But there were millions of these ants, each carrying a leaf away to their mound. It was incredible.
Bob: They’re storing their provisions, aren’t they? I mean, we can learn something from those ants. And you know, a good rule to establish, at a minimum, is three months of living expenses, but as high as 1-2 years if you’re over 60 before investing anything in the stock market. So, this way you’re covered in case of a major illness or a loss of a job or whatever else may come along like a major natural disaster, which y’all definitely know about down there in Rockport when you had Hurricane Harvey.
Mary Jo: That’s the number one rule in my mind – establishing and maintaining an emergency fund. Key principle.
Bob: I’m thinking about how the condos that both you and I owned, and we were lucky to get out from under them, but some of those people are still having to make payments on those condos and they’re still not remodeled yet. So I’m just thinking, boy, if you didn’t have an emergency fund, you’d be in trouble.
Mary Jo: And if you were relying on that condo for the rental income, there are many, many of them that still haven’t been rebuilt two years later. Yeah. Having an emergency fund should be everyone’s first obligation there. Next on our list for money principles for 2020 is number 4, setting financial goals. Do you have a map of what you want your financial future to look like? If not, there’s no time like the present to create one. It doesn’t really matter how old you are. If you’re young and just starting out, think about what you want your financial future to look like. If you’re more mature and not quite where you want to be, take time to sit down and think about what you want to accomplish, what you want your future to look like, and what needs to change. Agree on what your financial goals are for the following year, the next 5 years, the next 10 years, and over the course of your lifetime. Once again, if you don’t master your financial future, it will master you. If you are a newlywed or considering marriage or if you are newly engaged, set time aside for a heart to heart conversation about what you want your financial future to look like and what steps you are willing to take to get there. A good resource was our previous podcast, episode 15, “Setting Financial Goals”. Be sure you take a look at that one.
Bob: It sure would. And I want to say something before I go to this next one, number five. It’s also about newlyweds or considering marriage. It’s best to talk about these things before you get married, then after. We’re just saying this from wisdom, so talk about those financial things like you just said. Number five is know the real cost of things. Okay, I’m going to say that again. Know the real cost of things. Understand how quickly a debt balance can grow when you’re only paying the minimum. If you finance purchases, you know, understand compounding. It can either work in your favor or it can work in the lender’s favor. Be cautious of anything that sounds too good to be true. The bottom line is to apply wisdom and math when hearing sales pitches that try to say there are no strings attached. I had to put the word math in there.
Mary Jo: And you know, Bob, there are always strings. Nothing is a free lunch.
Bob: Unfortunately, we find that out. Now, grace and a relationship with Christ is free, so that is the one thing that we know is free.
Mary Jo: All right, I’ll give you that. I’ll definitely give you that. So the next principle, minimize taxes. Keep more of what you make. And as we consistently do, we refer to scripture. There’s a good one that addresses this and it’s from Mark 12:14-17 Taxes for Caesar, “Teacher, they said. We know how honest you are. You are impartial and don’t play favorites. You teach the way of God truthfully. Now tell us, is it right to pay taxes to Caesar or not? Should we pay them or shouldn’t we? Jesus saw through their hypocrisy and said, why are you trying to trap me? Show me a Roman coin and I’ll tell you. When they handed it to him, he asked whose picture and title are stamped on it? Caesar’s, they replied. Well then, Jesus said, give to Caesar what belongs to Caesar and give to God what belongs to God.”
Bob: Amen, and this is saying we gotta pay our taxes and do it with integrity and do what’s legal.
Mary Jo: Absolutely. All of this within lawful means. So a couple of principles there. You want to plan throughout the year, not just at the end of December. Always be planning is my motto. And you want to take steps to avoid paying unnecessary taxes, which can diminish your assets and your income potential over time. Identify opportunities to manage your tax exposure through various lawful strategies that are available in any given tax year. Think strategically in order to minimize the amount of taxes paid over your lifetime.
Bob: You know, most people don’t think of that, do they?
Mary Jo: Well, it’s becoming more and more important.
Bob: I mean, how much taxes are you paying actually over your lifetime? So if you’re not integrating good, wise, financial principles for minimizing taxes, you could be paying hundreds of thousands dollars more in taxes than you need to.
Mary Jo: Well, and the way you pass money on to next generation when you want to think about how taxes are paid in your lifetime. If you’re fortunate to have more assets, then you’re going to need to support yourself. You want to be thinking about the tax implications of their lifetime and whoever’s going to inherit that money too. And you just got to think very strategically. We also want to recommend that you work closely with a qualified tax expert such as a CPA to help you plan. You know, it wouldn’t hurt to schedule a consultation to discuss your tax situation that could pay off for you and your family over time, and do this apart from your regular annual tax preparation meeting. Actually schedule time to talk to your CPA and say, what are we missing? What opportunities can we take advantage of? And make sure you’re looking and again, planning over the course of a lifetime.
Bob: I always do this. I always do that and I meet with my CPA and yeah, we’re not just talking about the taxes that are owed, but in the middle of the year.
Mary Jo: I just want to refer back to some of our previous episodes and we have done a few on taxes. And in fact, episode number 6 was “Income Tax Strategies in 2018”. Episode number 64 “Year End Tax Planning Tips” and episode 54 which was “Tax Efficient Tithing Strategies”. So some good ones in our archives on that one.
Bob: So here we are going to number seven. Remember we’re going to cover 10 of the 20 money management principles for 2020, and that is the know your credit score and work to maintain it and improve it. You think about this scripture from Proverbs 22:7, “Choose a good reputation over great riches. Being held in high esteem is better than silver or gold.” Well, a good credit score today indicates you’re trustworthy and that you have a good reputation for paying your obligations and your credit worthiness today is reviewed for so many other reasons other than just borrowing. And there is a difference between managing debt and managing credit. And again, we had an amazing episode that we did on this, “Mastering Your Credit Rating”. That was episode number 63 that you’ll find in our archives that I would invite you to go back and listen. Because I tell you, when it comes to employment, when it comes to insurance policies and many other things, whether you’re going to be renting, they’re going to be looking at that credit score and those ratings.
Mary Jo: Our next one, number eight in our top 10 money principles for 2020, is to start early. Prioritize savings from an early age. Teach your kids how to save. You know they have that three bucket strategy to save, give, grow. It’s never too early to teach them that.
Bob: And remember, more is caught than taught.
Mary Jo: That’s right. So develop a vision for what you want your financial future to look like. Make sure your spouse or your potential spouse shares this vision, preferably early on in the relationship, as Bob mentioned earlier. And here is a really important one that supports starting early. Understand the value of compounding. You invest a sum of money in the bank or the stock or bond market. You earn interest on your cash or participate in market growth with your invested assets. And yes, there have been periods of market decline, but over the long haul, the trend is always up and the market has always performed at a positive mode over long stretches of time. And then your balances grow in an ever increasing rate, because not only is your initial investment growing, but the growth or the interest it has earned is growing and generating additional growth. So, your balances grow even faster because you are earning interest on your interest and growth on your growth. And doing this in a tax deferred environment has an even bigger impact because you’re avoiding the impact taxes can have on your savings. Start saving with your first job. Make it a habit, pay yourself first. The longer you wait, the less you can earn through the power of compounding.
Bob: There was a famous man named Benjamin Franklin. He said compounding is one of the major wonders of the world. And we talked about that one time on one of our podcasts about how he put aside a sum of money and said it couldn’t be touched for like 50 years or 80 years. I don’t remember the exact story, but it was phenomenal how that money had compounded. So over time, that’s really important to understand that money is compounding, but you got to start early. All right, we’re getting close to the end. We’re at number nine already. Earn more, if possible, without sacrificing family time. So, if you’re fortunate enough to love what you do and do what you love, then you’re truly blessed, especially if you’re well paid for it. And we’ve noticed, also, that the earlier your salary increases, the greater chances of future raises, and they’re typically based on a percentage of your current salary. So you think about it, the higher your salary, the higher the raise, because 10% of 50,000 is 5,000 but 10% of 100,000 is 10,000 so that’s what we mean by the higher your salary, the higher the chance. But you know, Mary Jo, I think about this too, is the importance of sticking with a company and not hopping around a lot so that you can get those pay raises.
Mary Jo: We talked about the power of compounding, and it works the same way when it comes to your salary and sometimes it does take moving from firm to firm to get those big chunks. You can get sign on bonuses and that’s a good way to increase your salary if you’re stagnated at your current company. I know people don’t tend to stay. Back in my day, we stayed with one company for a very long time, but the trend is different now. But I still think that that is the best way to improve your financial future. I would agree with you, Bob.
Bob: You know many people, they need that extra income to have a brighter financial future.
Mary Jo: It’s so important to diversify your income and to create multiple income streams. So, this is a good one. And you know, Bob, we often refer to our ability to earn a living. And this is called human capital, and it’s the most valuable asset you’ll ever have.
Bob: So I did some research on the internet for ways to make some extra income, and I found many I’d never even thought of. And here’s some. I’m just going to give you some ideas, like becoming a virtual assistant to someone to answer the phone and helping a business owner from your home. This is pretty neat to do today, cause everything’s online through email, fax, zoom online. You know, it’s easier than ever before. So that’s an idea. Another one is, are you good at math or English or history or science or a foreign language or even technology. You could become a private tutor helping others with one of these skills. So get paid for that.
Mary Jo: When you mentioned that, this popped into my mind. There was a process where senior citizens did a lot of online tutoring for students in foreign countries where English was their second language. So it gave the seniors value that they could contribute and they were paid for it, but they were helping somebody learn English while they were tutoring them. And I thought, wow, what a win-win. So I just thought that was really interesting.
Bob: That is. You know, something else I’m finding today is, more than ever, people don’t know how to fix things and they don’t know how to build things or you know, they’re always hiring a specialist. So learn how to do some woodworking or plumbing or painting or any handy work. You’ll be surprised. There’ll be lining up and you know, needing some of that. You might end up going from part time to full time.
Mary Jo: Well and you can flip that around. So if you have those skills, higher them out, because there’s plenty of people that don’t have that skill.
Bob: Another idea is rent out a spare bedroom on AirBnB. You could do that, Mary Jo. But you notice, I put if it’s legal in your area, because a lot of HOA’s now, homeowner associations, are making it illegal to rent spare bedrooms. So make sure that that is legal to do in your area. But people have made some good income by renting out a spare bedroom, maybe not on Airbnb. I think if it’s longterm, most anywhere, you’ll be able to do that though. Spend a few hours a day driving for Uber or Lyft.
Mary Jo: Lots of people are doing that.
Bob: Yeah. Lots of people. I notice a lot of retirees. When I use Uber or Lyft, I’ve noticed that I’ve been getting picked up by a lot of retirees. Make deliveries for a local business or even, this is interesting, or even pet sitting. I saw that one when I did some research and I’m telling you, I saw hundreds. I mean, the list goes on and on. So if you’re wanting to make, you know, a little extra money to have a brighter financial future, it’s definitely out there. And you could just go on the internet and do some searches and find extra ways to make income.
Mary Jo: So,. our 10th money principle for 2020 is to give generously. In 2 Corinthians 9:7, “Each one must do just as he has proposed in his heart, not grudgingly or under compulsion, for God loves a cheerful giver.” Giving releases the bondage of materialism. And that is just so true. We are so tied to our stuff.
Bob: Well, it’s taking that fist and holding it so tight, you know, this is my stuff and realizing, hey, wait a second. This is God’s stuff. It’s hard to be materialistic when you’re giving it away.
Mary Jo: Absolutely. And we want to encourage our listeners to tithe regularly. In Malachi 3:10 it says, “Bring the whole tithe into the storehouse and there may be food in my house. Test me in this, says the Lord almighty, and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.” God knows our hearts. He wants our actions to reflect what’s in our hearts. So, create a giving plan. Even if you’re still in your accumulation phase or you’re young or you just don’t have a lot, there’s always still room to give. For more on generosity and generous giving, you want to take a look back at some of our previous podcasts – number 41 “From FOMO to JOMO”. That was from the fear of missing out to the joy of missing out. And then our episode number 65 on “Generous Giving”. So some great resources there for you.
Bob: So there you have it for today’s podcast for the first 10 of the 20 money principles for 2020. So in our next podcast, we’re going to share those next 10 money principles of the 20 principles for 2020 so make sure and tune in when it comes out in a few weeks. So in closing, we want to end today’s podcast with this final thought, “I will accept personal responsibility for my actions in 2020 to improve my financial future by making wise, knowledgeable, and biblically based financial choices.” Mary Jo, would you just repeat that one so they can hear that one again?
Mary Jo: “I will accept personal responsibility for my actions in 2020 to improve my financial future by making wise, knowledgeable, and biblical based financial choices.”
Bob: And then watch for those positive outcomes.
[CONCLUSION]
Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.
Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.
Mary Jo: That’s all for now until next week.
[DISCLOSURES]
Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.