5 Biblical Money Principles
The Bible has some pretty solid advice when it comes to money management. God’s word says more about money than any other topic with 2,350 Bible verses on money and stewardship. If you feel lost, overwhelmed or unsure if you are managing your finances correctly, you’ll find these five biblical principles of money valuable.
1. Spend Less Than You Earn
“Whoever gathers money little by little makes it grow.” Proverbs 12:11
The first step to biblical money management is to ensure that you are making more money than you spend. This may seem like a no-brainer, but it is amazing how many people live beyond their means. If you want to get ahead financially, you need to make sure that your spending is in line with your income and that you have room for savings.
Most people overspend on lifestyle and then only save what is left over, if any. Lifestyle is the most significant use of money as it typically consumes up to 50-70% of income, and it also drives debt decisions.
If you’d like to know how much you should spend on lifestyle and other areas of your budget, check out our Christian’s Guide to Budgeting.
2. Avoid the Use of Debt
“The rich rules over the poor and the borrower becomes the lender’s slave.” Proverbs 22:7
The Bible says the borrower is the lender’s slave. So why do so many people borrow? They don’t see anything wrong with it because everyone else around them does it. And most of the time, they are convinced that borrowing is a good economic decision. The psychological and spiritual impacts on debt typically get neglected in the thought process.
Economic dangers of debt:
Compounding works against you.
Getting in is always easier than getting out. The money you borrow comes to you tax-free, but then you have to repay it with after tax dollars. Most people miss this!
Debt limits you to a lower standard of living in the future.
Psychological dangers of debt:
Added worry and anxiety.
Studies show that debt can threaten marital security. Borrowing often has a more dramatic impact on women.
Spiritual dangers of debt:
You are making a commitment to repay in the future, but you never know what the future will hold.
You may deny God an opportunity to provide for you.
3. Build Savings
“The wise store up choice food and olive oil, but the fools gulp theirs down.” Proverbs 21:20
The only way to reach long term goals is to save for them. God’s word says the wise “store up” (save) and the foolish “gulp theirs down” (spend). Many people don’t know where to start when it comes to saving. We get asked questions like, “Should I invest in my 401(k)? Should I start a business? Should I pay down debt?” all the time.
Here is the exact order that we recommend saving in:
1) Eliminate all high interest and short-term debt
If you have any credit card debt or consumer debt, paying it off should be your first priority. When you no longer have to pay debt payments, you increase your ability to save for the future.
2) Create an emergency fund
Consider having at least 3-6 months of living expenses for your emergency fund. If you are single, aim for a minimum of 6 months. If you are married and both spouses are working and have stable jobs, aim for a minimum of 3 months.
3) Save for major purchases
If you want to buy a new car, house, furniture or any other major purchase, you will want to save up for the major purchase(s). This will help you avoid taking on any debt to fund the purchase.
4) Invest
Here is where you can start to diversify your savings by investing in low cost, passive index funds to meet your long-term goals. Investing should not be sexy. It should be boring and consistent. Long-term goals may include retirement, education funding for kids, financial independence, or lifestyle changes.
5) Risk taking
If you have completed steps 1-4, you may be ready to take one more risk through ways like starting a business, investing in riskier assets, buying real estate, etc.
4. Set Goals
“The plans of the diligent lead to profit as surely as haste leads to poverty.” Proverbs 21:5
A goal is always a statement of faith and is one of the primary ways that you can see the hand of God in your financial life. If you don’t have goals when it comes to your finances, you can’t easily see what God is doing.
Goals provide direction and purpose. They also help to crystalize our thinking and provide personal motivation.
Most long-term goals can be placed under one of these 6 categories:
Financial independence
Freedom of debt
Lifestyle desires
Family needs
New business
Giving
5. Give Generously
Giving generously is mentioned all throughout the Bible. Giving generously breaks the power of money. The Bible mentions so many reasons to give.
Obedience
“On the first day of every week, each one of you should set aside a sum of money in keeping with your income, saving it up, so that when I come no collections will have to be made.” 1 Corinthians 16:2
To recognize God’s ownership
“Yours, Lord, is the greatness and the power and the glory and the majesty and the splendor for everything in heaven and earth is yours. Yours, Lord, is the kingdom; yo are exalted as head over all. Wealth an honor come from you; you are the ruler of all things. In your hands are strength and power to exalt and give strength to all.” 1 Chronicles 29:11-12
To gain an eternal perspective
“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? No one can serve two masters. Either you will hate one and love the other, or you will be devoted to one and despise the other. You cannot serve both God and money.” Luke 16:11-13
To receive God’s promises
“Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.” Luke 6:38
To feel the love God
“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to bless you abundantly, so that in all things, at all times, having all that you need, you will abound in every good work.” 2 Corinthians 9:6-8
Those who manage their life according to Biblical wisdom and principles will experience contentment under all economic conditions, confidence in their financial decisions and excellent communication at all times resulting in maximized generosity of time, talents and treasure.
Need Help?
If you are in one of the following situations, it may make sense to reach out:
You don’t know how how to manage your finances or align them with biblical principles.
You don’t have time to analyze and optimize your financial situation.
You want an accountability partner to help you accomplish your goals.
Free Financial Assessment
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A free financial assessment consists of:
Reviewing & analyzing your most recent tax return, investment statements & current financial situation.
Giving you recommendations for you and your family to consider.
