6 Steps to a Killer Emergency Fund For When “Stuff” Really Hits the Fan

Emergency Fund

Photo by Miran Rijavec

[Excerpts from this post are taken from Larry’s book, Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan]

Introduction

In Financial Peace University, Dave Ramsey teaches the basic “three to six month’s worth of expenses in a good money market account.” But the preparation ends there at the Baby Step 3 Emergency Fund. I’m not knocking this advice, because I think it is good advice. My family has a rainy day fund such as this for unexpected financial problems.

What happens, though, if for some reason that stash of cash is inaccessible and it is needed sooner than later? What if there is a run on banks? What if there is a global computer virus that turns digital money in online savings accounts into a big fat zero? Lots of weird stuff can happen, especially in today’s unstable world.

Let me present another potential way to put together a rainy day fund. In my own personal plan, I have several layers of emergency funding. And just like Dave talks about, remember that an emergency fund is more in line with an insurance policy—not a way to do something “big” with money. Yes, piles of money will be lying around not growing as fast as they could be, and that’s okay.

Step 1: Purchase a Quality Safe

Depending on how many items need to be stored and how big the safe needs to be, costs for a good safe range from $200 to $1,000. I realize that may seem like a lot of money, but from personal experience, a safe is well worth the investment. Another personal note on safes: always go a little bigger than you think you need to. I bought my family’s current 1.2 cubic-foot safe around ten years ago. This size has been too small for our needs for the last four to five years. I recently added an extra safe about twice as large as the first, primarily to hold all the various Jones family legal documents. Be sure to buy a safe that is well built and has a high fire rating.

Step 2: Put $3,000-$5,000 in Your Safe

Depending on personal comfort level and “prepper” attitude, I would put anywhere between $3,000 to $5,000 cash in a safe. This is the first level of an emergency fund. And no, just like Dave talks about, this isn’t pizza money for dinner or a, “I need to go buy something on Craigslist right now” fund either. Pull together a decent-sized collection of $5s, $10s, and $20s for this first level of an emergency fund. In this way, if a bank account can’t be accessed in a crisis, there is cash at hand that will carry a family through a minor emergency for at least a few weeks.

Step 3: Place $2,000-$5,000 in a Savings Account at the Same Bank as Your Checking Account

Be sure you have both accounts linked together to move money back and forth as needed. This is your second level of an emergency fund. In this way, when you have a financial problem, you can immediately transfer the money you need from savings to checking to spend it immediately via check or debit card. This third step is most likely adequate for the majority of your “regular” emergencies such as car repairs, smaller home repairs, and minor medical emergencies. The next two steps will be the “icing on the cake” for your major, abnormal life emergencies.

Step 4: Save $10,000-$30,000 in a “Higher Yield” Savings Account

This account will be your largest savings account, closer to your three to six months of expenses. Place this money in a separate bank account that will take a few days to access the money. You don’t want to make it too easy to access. I recently found one of the highest percentage yield online accounts over at MySavingsDirect.com. At the time of this writing, it is 1.00% APR. There are many online banks like this. Check out this link at Nerd Wallet.

Step 5: Set-up Recurring Deposits to Your Savings Accounts to Fight Inflation

This next step is going to seem completely “geeky,” but to fight a yearly inflation rate of anywhere between 3 to 5 percent on your primary emergency fund in step four, I would take the high number of 5 percent and subtract the bank account interest gain of 1 percent, leaving you with 4 percent that you are “losing” out with your financial purchase power in your emergency savings due to inflation. Next, I would set up a small recurring deposit into this account to cover inflation losses. So, if a base emergency savings is $10,000, that amount times 5 percent inflation means a loss of around $500 per year. You are making 1 percent ($100) in interest and will need to cover the remaining $400 lost due to inflation. $400 divided by twelve months equals about $33 that would need to be deposited into the account each month. In this way, the three to six months of cash reserves will not lose its purchasing power in the event of a large emergency. Put this small deposit on autopilot between bank accounts. In the words of the great Ron Popeil, “set it and forget it!”

I have this “inflation busting” strategy set up with all our layers of emergency funding. Every month, I add $20 to our cash pile in our home safe (Step 2). I also have a small recurring transfer/deposit that automatically moves from our bank’s checking account over to our savings account (Step 3). All of our emergency money sources now keep pace with inflation.

Step 6: Max Out Your HSA Account

This final step is for those who have high deductible health insurance with an HSA account. Max this account out every year. In the year 2015 (you will need to check these numbers for the current year), a single person can contribute up to $3,350 per year. A family can contribute up to $6,650 per year. These amounts are 100 percent tax deductible (at least for now!) because they are withdrawn in pre-tax dollars. Medical emergencies are the number one reason people end up declaring bankruptcy. I would treat my HSA account as another layer of an emergency fund to protect my family against this bankruptcy statistic. Don’t be tempted after a good health year to cut back the amount deducted from each paycheck toward HSA the following year. Keep on plunking in the maximum amount and treat that HSA account as another layer of emergency funding in the area of health care. At some point it will be needed, so you may as well plan and prepare for a health care emergency.

Conclusion

This six-step approach is a more deliberate, organized plan than just sticking “three to six month’s worth of expense money in a money market account.” A good emergency plan prepares for the worst-case scenario occurring to the banking system. Because this is a debt-laden economy completely run by susceptible computer systems, trouble is inevitable if relying solely on the government and computers to be 100 percent reliable every day. Prepare for the worst and pray for the best!

The information shared in this post can be found Larry’s book in the Amazon Kindle store: Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan.

How Some Whole Life Insurance Policies May Be A Lot Better Than Dave Makes Them Out To Be

Photo by Thomas Hawk

Photo by Thomas Hawk

[Excerpts from this post are taken from Larry’s book, Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan]

The Whole Life Versus Term Life Debate

In Financial Peace University, Dave makes it clear that he hates whole life insurance products. He encourages everyone to buy term life insurance and then invest the difference normally paid for a whole life policy. There are many in the personal finance world chanting the exact same mantra. I get it. I understand most of the reasoning behind the debate.

When I first heard about the whole versus term life insurance debate around 2004, I immediately bought a decent amount of term life insurance to protect my family. Then, I turned around and canceled my variable universal life (VUL) policy that I had been suckered into by a “friend” and his buddy life insurance guy a few years earlier. I was too ignorant back then and didn’t understand the various forms of life insurance. I had no clue on “good” and “bad” forms of life insurance. Fast forward a few years. I now have in place a newer, larger, quality, twenty-year term life policy. I have peace of mind knowing my wife, four daughters, and son will have the resources they need if something happens to me.

Bank On Yourself: The Infinite Banking Concept

A few years after buying this latest term policy, I ran across several books and blogs recommending a new financial product (which is really an older way of doing life insurance) called the Infinite Banking Concept (IBC). The basic idea behind IBC is the reality that most American families will finance large ticket items such as cars, college, and homes. When financing these items through conventional banking methods, borrowers are throwing away thousands of dollars in interest that they could be recapturing for their own personal benefit. When properly set up, an IBC utilizes a form of permanent, whole life insurance to create a personal “bank” of money to borrow from, that also has some tax advantages tied to it (assuming that the Federal government doesn’t mess with these policies in the future).

Let me say upfront that I currently do not have an IBC. At the time of my writing this book, I’m still in the research and investigation phase. My first impression after reading several books and web articles on IBC is that the concept and its application in this way are intriguing. The idea of building up a storehouse of wealth over several years in which the person, in theory, becomes his or her own bank seems rather ingenious to me. But, because I have heard the whole Dave Ramsey rant on whole versus term life insurance for so long, it has taken me a while to process the concept.

In the article “My History With IBC,” economist Robert P. Murphy, PhD addresses the problems that Dave brings up about whole life policies:

… Dave Ramsey is a radio talk show host who (admirably) counsels people on how to get out from their crushing debt load, through obvious but crucial things like making out a budget, communicating with one’s spouse on financial affairs, etc. Ramsey is very entertaining and I can certainly understand why his show is so popular. However, Ramsey absolutely has it out for whole life (and other types of permanent life insurance) policies, advocating instead that people “buy term and invest the difference.” For example, in a post from his website, Ramsey implies that you won’t have any cash value for the first three years of a new policy. He goes on to explicitly say that the rate of return on your money is much higher in mutual funds, that you won’t need life insurance after 20 years if you follow his plan, and that the insurance company keeps your cash values when you die, giving your beneficiary only the death benefit.

Every one of these (typical) objections is either misleading or downright false, at least when it comes to Nelson Nash’s IBC approach of using whole life policies. First, if you set up the policy properly with a “Paid Up Additions (PUA) rider,” then right off the bat, a portion of your periodic payment is buying a chunk of fully paid-up life insurance. Thus, your cash value begins rising immediately, and you can begin borrowing against your policy right away (if you need to).

As far as comparing rates of return, again the problem is that Ramsey is viewing permanent life insurance as an investment, rather than a cash flow management strategy. Yet even if we use the standard tools of financial analysis, it is a non sequitur to point out that a mutual fund is expected to have a higher 30-year (say) average annualized rate of return, compared to the internal rate of return on an insurance policy’s projected cash value growth. Such a bald statement ignores the difference in risk between the two strategies. (Whole life insurance policies have guaranteed minimum rates of return. Do equity-based mutual funds have that?) Ramsey could just as easily “prove” that nobody should ever buy a corporate bond, because stock issued from the same company will always have a higher expected return…

By making these comments, I’m not “proving” that more life insurance is always the best thing to buy, from a conventional “asset class” allocation perspective; otherwise we would have the absurd result that everybody should put every last dollar of his wealth into life insurance policies, with nobody owning stocks, bonds, real estate, or precious metals. (Obviously somebody has to own a share of corporate stock or a piece of real estate, and that ownership must be voluntary. So their prices adjust to make it attractive for someone to acquire and hold.) All I’m making is the modest point that in Ramsey’s critique of whole life and related insurance policies—when he compares them very unfavorably with “buy term and invest the difference in mutual funds”—he isn’t even attempting to set up an apples-to-apples comparison of the two strategies. He’s pulling one set of statistics—internal rates of return—out of context and trumpeting them as if they’re decisive, when the actual situation is much more nuanced.

When IBC policy holders take out a policy loan to personally finance large sums of money, they must set up terms of repayment with interest. The purpose of repayment with interest is in order for the policy to generate the benefits of the storehouse of wealth system. The good news here is that policy owners are paying themselves back with interest. They are able to bypass the greedy, overpaid executives in the large corporate banks in New York City. This is the beauty of IBC.

Potential Uses for Your Storehouse of Wealth

As I continue doing research on IBC over the last several months, I’ve been asking myself a bunch of “what if” questions such as:

  • What if I established an IBC, let that policy mature for a few years, build up a storehouse of wealth, and then put this money to work creating more streams of income that create more streams of income?
  • What if took out a policy loan for a decent amount of money, used it as a down payment for a bargain rental property, and started some new streams of income this way?
  • What if I took out a policy loan to buy an existing business that had decent cash flow to it already?
  • What if I used a policy loan to do some peer-to-peer lending?

I do see the potential to use an IBC as a personal storehouse of wealth to create even more wealth. This money could be put to work at higher interest percentage rates and create multiple streams of income. My own next step in the process is to speak directly to a trained professional in setting up an IBC policy.

IBC Core Details

Here are some of the core details of what I understand about the Infinite Banking Concept. First, the policy (or policies—multiples can be set up for family members) must be established in mutual insurance companies. Second, these policies are not the “run of the mill” whole life policies. They are a very specific, specialty product: high-premium, dividend-paying, whole life insurance policies. Third, seek out trained professionals who know the specific mutual insurance companies as well as the technicalities to set this up an IBC properly. Check out the resources at the end of this chapter to find these professionals. Fourth, it will take a few years (perhaps 3 to 5) of premium payments to establish a policy in a position to be a storehouse of wealth. There are methods to speed up the cash value of a policy to tap into these benefits earlier than this. I recommend speaking with a certified professional in IBC to uncover all the many options.

Fifth, when requesting a policy loan, it is just a matter of filling out a form to request the money—and it will be available a few days. The insurance company won’t ask a bunch of personal financial questions or check credit scores like most lending institutions. The insurance company administers and guarantees the value of the collateral. The company actually doesn’t even care if you repay the policy loan. They will simply deduct that amount from the cash value/death benefit of the policy. But, the policyholder cares if it’s repaid, because repayment with the terms chosen accelerates the growth of the policy. Sixth, an IBC policy shouldn’t be viewed an investment vehicle. It should be viewed as a cash flow management strategy with many unique benefits. Seven, creating an IBC policy (or policies) in a family is a way to move away from the corrupt, fiat money system of a central bank. It creates a personal privatized banking system. This is the key distinction and benefit of the IBC. Conventional, commercial banks create money “out of thin air” as well as create all sorts of national financial problems. A privatized banking system such as IBC is based on actual cash values created within the policy.

The information shared in this post can be found Larry’s book released in the Amazon Kindle store: Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan.

When You Visualize Success, You Can Achieve Success

Photo by Fortune Live Media

Photo by Fortune Live Media

[Excerpts from this post are taken from Larry’s book, Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan]

Sara Blakley and Spanx

Sara Blakely may not be a familiar name in the average American home. Some of the products she has created for women, though, would be recognized through her company called Spanx. As a young woman, Sara pursued several different business opportunities that were not working out for her. Before starting her own company, she was selling fax machines door to door. Sara recalls that this time in her career was a great learning experience for her. She learned how to handle rejection through hearing lots of “no’s.” She also learned how to get to a “yes” as well. The art of the sale was a valuable lesson she learned as she finally launched her own company. She also learned another valuable lesson—visualizing becoming successful.

Photo by Mike Mozart

Photo by Mike Mozart

Blakey says she could see her business succeeding from the beginning. She visualized herself being the successful owner of Spanx. Blakely says, “I believe you can take mental snapshots of your future and what success looks like to you. If you mentally see yourself in a scenario, you’ll start to make decisions in your life that get you there.”

Sara Blakely thinks differently than most people. As a result, Forbes Magazine has recognized her as the youngest self-made female billionaire in the world.

Wealthy People Think Differently

Wealthy people think differently at many different levels. I’m not talking about the NBA basketball player who has the $10 million crib with ten expensive cars parked out front, either. One could make the argument that many professional sports athletes handle their money like poor people who have won the lottery. But, I digress.

Photo by Emma Lopez

Photo by Emma Lopez

When I mention wealthy people, I’m talking about people who have learned to generate income through the purchase of assets and not liabilities. This is the classic Robert Kiyosaki definition that he outlines in his book Rich Dad, Poor Dad. The world has too many people running around today who appear wealthy. If one dug down into their finances, though, they would find they are actually quite poor. They have too many liabilities and not enough assets that generate income for their families.

Wealthy People Ask Questions

Rich thinking doesn’t mean driving a hoopty and living in a double-wide trailer while being the rental house king in our respective city with thousands of dollars in savings and investments. But before signing up for a book of payments on a $40,000 SUV or buying a $750,000 mortgage for the most expensive house in a great neighborhood, many questions should be asked. Wealthy people ask themselves money questions, such as:

  • Am I buying assets or liabilities?
  • Is this the best use of my money right now?
  • Is there a better place or better opportunity to leverage my money?
  • Do I need this particular item right now?
  • Is this a true need or a want?
  • What is the wisest thing I could do with this money, today?

For the Christian who is attempting to live according to these principles, this adds another layer of spiritual thinking. Additional questions could include:

  • Would God be pleased with this purchase? Why or why not?
  • Will this purchase impact my level of giving in the future?
  • Have I prayed about this purchase, or am I engaged in a worldly mindset?
  • Is this the absolute best use of God’s money?
  • If I make this purchase, would God be able to say to me, “Well done thou good and faithful servant”? Why or why not?

There are several key differences between the rich and poor concerning financial thinking. Wealthy people process money information, ask themselves a lot of questions, and seek the wise counsel of others they trust. Poor people follow the poor money habits of the majority of people around them. The poor make emotional purchases based on popular opinion and feelings instead of an overriding financial plan.

The information shared in this post can be found in Larry’s book in the Amazon Kindle store: Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan

A Different Approach To Financial Investing: The Investment Pyramid

Diagram Source: You, Inc. Investment Hierarchy from Financial Fitness: The Offense, Defense, and Playing Field of Personal Finance by LIFE Leadership. Used by permission.

Diagram Source: You, Inc. Investment Hierarchy from Financial Fitness: The Offense, Defense, and Playing Field of Personal Finance by LIFE Leadership. Used by permission.

[Excerpts from this post are taken from Larry’s book, Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan.]

In the book Financial Fitness: The Offense, Defense, and Playing Field of Personal Finance by LIFE Leadership (Brady and Woodward), the authors include a recommended investment strategy they call the “investment pyramid.” The plan starts at the bottom of the pyramid with what the authors view as the safest form of investing. Then, they encourage readers to work their way to the top of the pyramid to what they view as riskier forms of investing. There is validity to the investment pyramid concept, and it is definitely a unique way of looking at investing. This step-by-step investing approach is not taught in Financial Peace University. After a fully funded emergency fund is established in Baby Step 3, Dave jumps into Baby Step 4—Invest 15 percent—and then talks about 401(k)s and IRAs. If you charted Dave’s action on the investment pyramid, he moves from a Level Two emergency fund directly to Level Six stock market investing. He completely bypasses Levels Three, Four, and Five. Dave would appear to have a lot more risk tolerance than Brady and Woodward.

The Seven Levels of the Investment Pyramid

Level One, the bottom of the pyramid and the safest part of this investment strategy, is to invest in one’s self. What Brady and Woodward are referring to in this level is learning to think wealthy thoughts. Investing in education and training will take a person farther into their careers as they believe they can go. This investment into personal growth may even take a person into another career or area of expertise. I’m not talking about spending a bunch of money to go back to college and finish another degree, either; I’m talking about educational investment through reading relevant books, magazines, and blogs. Or, it can be as simple as listening to audio books, training programs, and podcasts, or attending conferences. Allow other leaders in the industry to be mentors. There are many ways to invest in one’s self that will cost more in time than in money. Investing time and money at the base of the financial pyramid will lay a firm foundation before advancing into other complex forms of financial investing.

Steve Siebold is a former professional athlete and national coach. He has spent the past twenty-six years studying the thought processes, habits, and philosophies of world-class performers. Steve has interviewed more than 1,200 of the world’s wealthiest people. According to Siebold’s research, “Self-made millionaires get rich because they’re willing to bet on themselves and project their dreams, goals, and ideas into an unknown future.”

Level Two, the next level of the pyramid in which to invest, is an emergency fund. This level is equal to what Dave teaches in Baby Steps 1 and 3. Baby Step 1 is get $1,000 in savings as fast as possible and then get out of debt as fast as possible. After completing the debt snowball in Baby Step 2, the next goal is to establish a fully funded emergency fund of three to six months of expense money in Baby Step 3. Depending on income, expenses, and needs, this could equal out to a range of approximately $10,000 to $30,000.

Level Three advances to investing in survival preparation. An important point to consider when it comes to this level is that survival preparation is a form of savings. It is translating money into purchasing important goods such as food, water, generators, fuel, guns, and ammo. This is to protect the family during a worst-case scenario and an important part of a sound investment strategy.

Level Four focuses on investing in long-term and targeted savings. Brady and Woodward recommend that regularly saving 10 percent of total income into typical savings accounts. They favor safer investment strategies than Dave does. At this level, they also recommend people have targeted savings accounts (sinking funds) to save for car replacement, new furniture, and so on.

Levels One through Four are conservative levels of investing in one’s self with little risk. They are basic levels of savings. Brady and Woodward contend that if people focused only on these four levels of the investment pyramid, people would do well, financially. The authors reserve the final three levels for what they consider more speculative investing.

In Level Five, people should begin investing money into secure investments such as CDs, money market accounts, and municipal bonds. Many financial experts (including Dave) undervalue these investments because they pay lower interest, but they also carry lower risk.

Brady and Woodward consider Level Six and Seven to be highly speculative investing. In fact, their recommendation is to avoid the top of the pyramid altogether, unless the investor is knowledgeable in the areas of real estate, the stock market, ventures, and start-ups. Deciding to invest in Level Six and Seven involves a willingness to put money in these areas that wouldn’t be missed if it were lost completely.

[The information shared in this post can be found Larry’s book in the Amazon Kindle store: Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan.]

Book Review: From Zero to Hero in Your Finances

From Zero to Hero In Your Finances BookBackground

As a stewardship pastor and blogger, I was recently encouraged to check out the book From Zero to Hero in Your Finances by Dr. Richard Knapp.

Christian stewardship isn’t always the easiest topic to tackle, especially in a book format. If approached in the wrong manner, the subject matter can come across as dry and boring, or even worse, as legalistic and condescending. Dr. Knapp did an excellent job with his approach on the topic of stewardship. I found his book to be entertaining, and at the same time quite convicting!

6 Key Aspects Of The Book That Make This Book Worth The Read

There were several aspects of this book that I really enjoyed. Due to these key parts of the book, I know I will find myself coming back to this book for future research and inspiration in the area of stewardship.

Here are the 6 key aspects of the book I enjoyed:

  1. A Quick and Easy Read. As I mentioned above, the topic of stewardship can be potentially stuffy and boring to many, but I enjoyed Dr. Knapp’s approach to this book. Each chapter was concise, had a good flow, and got straight to the point. Nicely done.
  2. The Concept of Well-Digging. The opening chapter talks about this interesting idea of digging wells. I had never consider this approach in this way before, but it does make complete sense to me. I had one of those “I could have had a V8” experience when I read through this particular chapter. Dr. Knapp explains that “ … wells symbolize God’s provision and blessing. Abraham dug many wells, which were later filled with dirt by the Philistines, a type of the enemy.” You can read Genesis 26:18-19, 22 as well as Isaiah 12:2-3 for the Old Testament inspiration for the overall concept. Here’s a very brief synopsis of what Dr. Knapp writes about “well digging”: “When a well has been properly dug, the water flows freely into it. The water from a functional well will always be available, not only to us, but to others around us. The devil, however, will constantly try to throw unbelief into our wells to dry up our faith in that area … Digging a well is an active spiritual process, not a passive mental one.”
  3. Personal Stories from the Author’s Life. Stories are always excellent ways for an author to connect with his audience. Dr. Knapp shared several of his own personal stewardship stories that were interesting and convicting. His stories were a great reminder that I still have much to learn in the area of stewardship.
  4. Stewardship Testimonies from the Lives of Others. Not only did Dr. Knapp share his own stewardship stories, but he also included several stories and testimonies from others. These were very inspiring as well. I’ll probably be “stealing” some of these stories for a few Giving Talks at my church in the near future.
  5. Tons of Scripture to Support Each Chapter. At the end of every chapter, Dr. Knapp listed a lot of Scripture to support the particular concept he was teaching for that chapter. I will definitely be using this part of the book as a resource as I teach on key areas of stewardship.
  6. Written-Out Stewardship Prayers. Most chapters of the book have a written-out stewardship prayer of confession. I’m definitely coming back to these for inspiration for public prayers with our congregation.

If you have a passionate desire to grow deeper in this area of Christian stewardship, then I highly recommend picking up a copy of this book.

Not Sure Where To Begin? Here’s The Starting Point For Christian Financial Stewardship

Photo by Kelvin Dickinson

Photo by Kelvin Dickinson

Making Plans

People have plans for lots of stuff in this life.

A woman who is about to be married spends hours flipping through wedding magazines, scanning websites, calling florists, and talking to caterers. She has a plan to create the most beautiful wedding known to mankind!

A professional executive in the workplace has a strategic plan and a daily task list. He has a plan to climb the corporate ladder and become a successful CEO one day.

Families often spend weeks planning out their ultimate summer vacation. Since they’re about to spend a lot of money, they want to get the biggest bang for their buck and have a great time.

But, these same people put together a financial plan? Are you kidding me? Nah, they would rather just shoot from the hip and roll the dice. They have thousands of dollars of income flowing into their bank account each month but have no desire to manage what is coming in. That’s too restrictive, constraining, and absolutely zero fun!

So, why do people spend so much time planning for special occasions such as weddings, vacations, or work projects but have no desire to put together a financial plan?

Because there is a sense of pressure and expectation for these other events.

A memorable wedding has high expectations all around it. The bride, groom, parents, family, and even close friends all have certain expectations wrapped up in a couple’s wedding ceremony.

A professional executive position has pressure and expectation from the first day he has been hired. This person is under the gun to perform at a high level to achieve success in their career not only for the company they work for, but also to provide for their family.

A big family vacation may only happen one time a year, but the parents and children all want the biggest return for their time and money. Plus, they want to outdo last year’s trip. They are expecting to have the time of their lives.

I find it interesting, though, that most people don’t put themselves under the same kind of pressure and expectation when it comes to money. And, I find it even more interesting that the majority of Christians have the very same mindset as the rest of the world.

But God has high expectations for those who claim the name of Christ to be excellent managers of money.

God and Money

So, why would God have high expectations for me and my financial life?

Because everything you have belongs to God in the first place. Your money, your house, your car, your career, your talents and abilities, your health, your spouse, and your children are all His, not yours. This is the starting point for an understanding of what Christian stewardship is all about.

“The earth is the Lord’s, and everything in it, the world, and all who live in it;” (Psalm 24:1).

You may be thinking to yourself, “Now, Larry. I worked hard for all I have. I went to college for six years. I climbed the corporate ladder. I amassed all my earthly possessions. I found my spouse and we created children, together.”

Yes, that may all be true, but according to the above verse, God owns everything. And because He owns everything, He is expecting you as a Christian to be an excellent manager of His stuff.

“Moreover it is required in stewards, that a man be found faithful” (I Corinthians 4:2).

Even Jesus taught His followers this principle in the Parable of the Bags of Gold in Matthew 25:14-30 (NIV):

“Again, it will be like a man going on a journey, who called his servants and entrusted his wealth to them. To one he gave five bags of gold, to another two bags, and to another one bag, each according to his ability. Then he went on his journey. The man who had received five bags of gold went at once and put his money to work and gained five bags more.  So also, the one with two bags of gold gained two more. But the man who had received one bag went off, dug a hole in the ground and hid his master’s money.

“After a long time the master of those servants returned and settled accounts with them. The man who had received five bags of gold brought the other five. ‘Master,’ he said, ‘you entrusted me with five bags of gold. See, I have gained five more.’

“His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
“The man with two bags of gold also came. ‘Master,’ he said, ‘you entrusted me with two bags of gold; see, I have gained two more.’

“His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
“Then the man who had received one bag of gold came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.’

“His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.

“‘So take the bag of gold from him and give it to the one who has ten bags. For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.’

From this parable, we see three servants who had plans for the money that had been entrusted to them by their master. Two of the three got the money plan right. The third servant got it wrong. The two servants who got the money plan right were rewarded. The one who got their plan wrong was punished.

Are You Even At The Starting Point?

In this post, we have seen that there are two parts to the starting point for Biblical finances.

First, you must a have a plan. Having a casual approach to money accomplishes nothing. You have to a vision of what you absolutely need to accomplish with the financial resources you have been entrusted with.

Second (and most importantly), you must acknowledge that God own everything that you have – your time, energy, health, relationships, abilities, and, of course, money. As a child of God, He is expecting you to manage His stuff with excellence.

Question: Do you have a financial plan and have you acknowledged that God is the owner of all He has asked you to manage?

What’s The Big Deal About Christian Financial Stewardship Anyway?

Photo by Paval Hadzinski

Photo by Paval Hadzinski

The Light Comes On For Me, Over Time

Stewardship.

Yeah, it’s a weird word. It’s a churchy word, too. Not many people really get it, either.

Twenty years ago, I would associate the word “stewardship” to tithing on Sunday mornings and church building campaigns. That’s what I thought it was all about.

Then, I attended my first Crown Financial Bible Study Class back around 2001-2002, and the light of understanding slowly began to come on as I learned what God’s Word had to say about financial matters. I learned that “my money” was not mine at all. Everything that I possess has been given to me by Almighty God to manage for His kingdom purposes.

This is the core essence of Christian stewardship. As believers, we are called by God to manage the time, money, abilities, and relationships He has given us. We aren’t supposed to squander all these resources on selfish, fleshly desires.

Here’s an excellent synopsis of stewardship taken from Wikipedia:

A biblical world view of stewardship can be consciously defined as: “Utilizing and managing all resources God provides for the glory of God and the betterment of His creation.” The central essence of biblical world view stewardship is managing everything God brings into the believers’ life in a manner that honors God and impacts eternity.

Stewardship begins and ends with the understanding of God’s ownership of all.

After I went through the Crown Financial Bible study, I ran across this blueish-green book in a local book store called Financial Peace by some guy named Dave Ramsey, who I had never heard of before. I’m reading through this book thinking to myself, “this guy makes a lot of sense. Debt is dumb. I need to get my family out of debt with gazelle intensity!” As a result of reading Dave’s book, I started listening to his syndicated radio show and eventually began coordinating Financial Peace University at my church.

All of these baby steps in the area of Christian stewardship eventually led me to take on a secondary role in my church as our Stewardship Pastor. It has certainly been an exciting as well as interesting journey as I have grown in stewardship in my own life and have attempted to teach it to others.

Why Stewardship?

So, why should stewardship be such a big deal in the life of a believer, anyway?

I believe there are several answers to this question.

First, the Bible is filled with financial wisdom and instruction. The estimates on the amount of financial verses in the Bible range from 900 to over 2,000 depending on your criteria. Needless to say, that’s a lot of Bible verses on money!

Second, Jesus Himself spoke a lot about money in the parables He taught the Jewish people. In fact, money was (possibly) His second most discussed topic with the Kingdom of God being the first. There is much theological debate on which parables dealt specifically with the topic of money, but money was a huge issue that Jesus addressed frequently in His ministry here on earth.

Third, money is one of the biggest areas of struggle for most believers. Unfortunately, the majority of Christians have adopted cultural beliefs and practices when it comes to money. Most of us have either forgotten or never been taught Biblical financial principles.

Fourth, stewardship is about more than money. The more I study and practice the principles of Biblical stewardship, the more I understand this important principle. It really encompasses every aspect of your life – your time, natural talents, abilities, money, assets, physical health, and relationships.

My Take

Here’s my own personal take on this area of stewardship. If God’s Word is filled with financial wisdom and Jesus’ own ministry focused a lot of time teaching on money management, then there are certainly good reasons for this instruction. This is an area that the Lord knows we all struggle and need to work on in our life on a continual basis. It’s not a “one and done” kind of deal, either. Stewardship is a life long pursuit.

Every day, we have to surrender our selfish, greedy financial plans and desires over to our Lord and Savior. Our primary concern should be using the resources God has entrusted to our management to advance His Kingdom here on earth and in heaven.

Questions: Do you think stewardship should be a big deal in the life of a believer? Why or why not? Is stewardship a big deal in your own life and the life of your family?

Why Some People Have An Easier Time Giving Consistently Over Others

Photo by 401(k) 2012

Photo by 401(k) 2012

The Excuses

“Larry, I wish I could give more.”

“I wish I could give at the level of ten percent of my income, but things are really tight in my family. You know how I had to take a cut in pay last year? I’m also having to help out a friend in real financial need right now. That’s kind of like tithing, right? Me helping out my friend could count toward my tithe to God, couldn’t it?”

If I had a dollar every time I had a conversation similar to this, I could build up a sizeable love offering for my church!

And while helping out friends in need is a noble deed, I can’t say that those financial gifts can “count” toward the tithe according to God’s Word. God makes it pretty clear that we are to bring His tithe and offerings into the “storehouse” [Malachi 3:10]. In the Old Testament, the storehouse equaled the tabernacle, temple, or synagogue. In the New Testament, the storehouse equals the local church that you attend.

An Easier Way To Giving Consistently

In the area of giving, some people seem to have an easier time giving consistently at the level of ten percent and beyond.

After counseling with people on personal finance issues over the last few years, I believe there are two main reasons some people have an easier time giving back to God and His church than others:

  1. They have a monthly spending plan. You know, the dreaded B word, a “Budget.” They give each dollar a name and tell each dollar what to do.
  2. They make giving to God and His church a priority in their lives. Their offerings are listed at the top of their budget form each and every month. They give God the very best of the “firstfruits” of their income [Proverbs 3:9].

I know in my own family, we have learned important Biblical financial principles – how to give, save, and spend – through ministry programs such as Financial Peace University and Crown Financial. God has blessed us in amazing ways as we have followed what His Word teaches us regarding financial matters.

All this Biblical financial stuff really does work!

In my own personal experience, giving at the level of the tithe can be relatively pain-free if you have a financial plan, if you make giving a priority in your life, and then if you follow through with your planned gift.

Execution of that plan is key!

A great way you can demonstrate your love for God and His Church is through having a financial plan and establishing giving as a priority in your life.

Isaiah 32:8 tells us, “But he who is generous plans generous things, and on generous things he stands.”

See my Giving Talk Video below where I addressed this exact issue:

Questions: Do you have an easy time giving consistently at the level of ten percent? If not, why not? Do you have a monthly financial plan? Have you established giving as a priority in your life?

Book Review: Financial Fitness: The Offense, Defense, And Playing Field Of Personal Finance

Financial-fitness-bookForced To Ponder

I wasn’t sure how to respond.

I recently made a new acquaintance at my church who studies and understands financial matters. We were discussing my stewardship pastor role at the church and my use of Dave Ramsey materials for financial instruction.

He told me that he believes Dave spends too much time on the defensive side of money. All he talks about is budgeting, getting out of debt, and emergency funds.

I really couldn’t argue too much with my new friend. He was making a solid point.

My friend then recommended that I look into the Financial Fitness materials by LIFE Leadership. So, I bought the Kindle version of their book and did a quick read on it in a few days.

In this post, I’ll share a few of the highlights of what I learned.

3 Key Elements I Learned From Reading This Book

Financial Fitness: The Offense, Defense, and Playing Field of Personal Finance by LIFE Leadership Written by Chris Brady and Orrin Woodward

1. I have perhaps spent too much time on the financial defense side of money then the offensive side. Here’s an excellent quote from the book that makes this exact point:

“Most books on personal finance start (and, all too often, end) with a focus on financial defense (how to get out of debt, protect your money, and prepare for contingencies). But defense is the wrong place to start because it creates the wrong mindset. Defense of money is vitally important, but making it the first priority often puts people in an attitude of scarcity rather than abundance. We will cover financial offense (making more money) first and then defense (protecting one’s resources) later because the values and attitudes of financial offense are naturally abundant, aggressive, and bold. Successful financial offense requires initiative, innovation, ingenuity, and tenacity—the entrepreneurial values” (Kindle location 1212).

2. I need to excel in my current job role, and then figure out a side income to throw off passive cash flow. While this wasn’t necessarily a big news flash for me, it was a good reminder for me on how to stay on financial offense. Here are three excellent quotes from this book regarding this point:

“As you truly excel in your current role, you will naturally be given more responsibility, and as you do the same with the new duties, you will build yourself into a better and better leader. This is why the offense side of finances is so important in achieving financial fitness. Whatever you are working on right now in your life, truly excel at it in order to fully invest in yourself. The natural result will be progress and increasing prosperity and opportunities” (Kindle location 1432).

“If you have a job, it means doing the same thing as an intrapreneur—thinking like an entrepreneur, a leader, and an innovator at your work, rather than just fitting in to your job description. It means adopting an ownership mentality, thinking and acting like an owner rather than just settling for an employee mentality. Focus on the owner mentality in your choices, work, interaction with others, and in all tasks, character opportunities, and relationships whether or not you are actually the owner—as an entrepreneur or intrapreneur, or both” (Kindle location 1420).

“One of the key principles of financial fitness is to increase your passive income, even if you continue to work at a primary active income source. Of course, if you are currently employed, don’t quit your job until your passive income has surpassed your active income (and you have sought professional advice, gotten out of debt, done the proper planning, and so forth). As we said earlier, you can keep carrying buckets for your employer, but it is also helpful to begin building your own pipeline of passive income” (Kindle location 1753 ).

3. I need to give more consideration to Emergency Preparation: food, water, power, guns, cash, and precious metals. In my mind, I would think that emergency preparation would fall under the area of financial defense. Brady and Woodard categorize this interestingly enough under financial offense. Here is a lengthy but excellent quote on this topic:

“Saving for a worst case includes the opposite of compounding money, which we will call “impounding.” This means putting away various forms of money just in case catastrophic things happen. Stash some cash in a safe, secure, secret place. And in case inflation ruins the value of the currency, put away some silver coins as well. Silver is better than gold for this purpose because in a worst-case world, gold will be very valuable, so a gold coin will be worth a lot more than the food you will want to buy with it. Small silver coins will be easier to trade for small needs. Gold can be used to effectively protect larger amounts from loss of value due to government inflation (more on this later). Saving for a worst case includes the opposite of compounding money, which we will call “impounding.” By the way, don’t be too extreme about this. We are not doom and gloomers, and we’re not predicting a world with roving bandits and no electricity. It could happen, but so could a lot of things. We are simply suggesting that part of sound money planning is to realize that bank holidays and closed banks can happen. They occurred during the Great Depression, even though the world didn’t end. But people with some cash and silver were able to purchase food and fuel when others could not. And major storms, natural disasters, and other challenges can come also. So be prepared. Don’t be fanatical. Just take some wise precautions. Another valuable investment on this same level is food storage. Get the kind that lasts many years and keep it in a cool, dry place. Many people store guns and bullets with their food and metal coins. Learning to hunt might be a very helpful preparation. Again, this is for last-ditch survival needs, but having it as part of your investment hierarchy can be very valuable” (Kindle location 2323).

My Recommendation

Okay, so here’s my recommendation: I highly recommend reading Financial Fitness, especially if you have been down in the trenches with the Dave Ramsey philosophy for a while. I’m not saying that the Dave philosophy is bad, but you can get too immersed in financial defense for too long. This has the potential for developing a financial scarcity mindset, which isn’t where you want to be, long-term.

This book can help you get turned back around to focusing on financial offense, which leads to abundance thinking. I wonder what this world would be like if people had thoughts of abundance rather than scarcity mindsets?

Questions: Have you read Financial Fitness? What were your takeaways from this book? Would you recommend this book to others?

How To Do More With Less

Illustration by Chris Piascik

Illustration by Chris Piascik

Fewer Resources In A Difficult Economy

Money is tight.

I seriously doubt that statement is too much of a shock to any of my readers.

In the early to mid 2000s, money flowed fast and cheap. People took advantage of the financial system, and then ended up in a world of hurt when the economy slowed way down.

For the last six years, we have lived in challenging economic times. Some people have struggled more than others. Some have been able to successfully make the transition over to surviving and even thriving on less, financially.

Somehow, these people have been able to take a little money and stretch it further than what is even considered possible.

Jesus Transforms The Little Into Much

In the Book of John, Chapter 6, we read the story of Jesus feeding the 5,000.

This accounting was for 5,000 men and didn’t count all the women and children. So, the “real” people count may have been more like 15,000-20,000.

Jesus had taught all day on a mountainside near the Sea of Galilee, and this crowd of people listening to Him was getting hungry.

Jesus went to the disciples and asked them to find food for these 5,000 men, plus the women and children present as well.

One of the disciples, Phillip, told Him, “Lord, there’s no way we can afford to feed all these people. It would cost nearly half a year’s wages.” In today’s numbers, this could equal around $20,000.

Another disciple, Andrew, found a boy with a Jewish Happy Meal – five loaves of bread and two small fish. This boy had a $7 lunch. Andrew thought this amount of food was simply a waste of time. He had a scarcity mindset.

But Jesus didn’t think this way.

He had the people sit down. He took this small amount of food, he gave thanks for it, and he blessed it. Then the disciples distributed these five loaves and two small fish to the people.

In John 6:12-13, we read these words:

When they had all had enough to eat, he said to his disciples, “Gather the pieces that are left over. Let nothing be wasted.” So they gathered them and filled twelve baskets with the pieces of the five barley loaves left over by those who had eaten.

In this amazing miracle by Jesus, we see Him taking a small amount of food, blessing it, and multiplying it to the point that all the people’s physical hunger was satisfied, PLUS they had more than enough leftover.

Abundance Thinking

Jesus had an abundance mindset.

This makes total sense, though. He is God the Son. He owns it all! All resources are at his disposal at any time and any place.

When the disciples brought him the five loaves and two fish to feed thousands of people, He didn’t throw up his hands in frustration and give up.

Instead, He prayed.

He thanked God for the resources that were before Him. He prayed a blessing on the loaves and fishes, and then what happened?

God multiplied the resources and then there was more than enough to feed the people. In fact, there were HUGE amounts of leftovers after the people ate until they were full.

You can do more with less. When God is in something, little can be much.

Questions: Do you, like the disciples, struggle with scarcity thinking, or do you have an abundance mindset? Do you look to God as your ultimate provider of resources? When you come to the time of offering in your church, do you think that you don’t have enough financially to make any kind of impact in the Kingdom of God? Do you think that your giving would be a waste of time and resources?

Key Thought: Whether you have a little or a lot, it doesn’t matter. Be like this boy who obeyed Jesus, gave away his small lunch to the Master, and the Lord blessed these few resources in an amazing way!