Six Financial Planning Principles
The following financial planning principles can help us to manage our money with wisdom and faith:
1. Pay your tithe and offering first.
Put God first in your living and your giving. Give your tithe and offering from the “top” of your paycheck, and then live on whatever remains.
2. Create a budget and track your expenses.
Creating a budget is simply developing a plan in which you tell your money what you want it to do. Tracking your expenses with a budget is like getting on the scales: It allows you to see how you are doing and motivates you to be more careful with your expenditures.
3. Simplify your lifestyle (live below your means).
Because this discipline is critical to the success of any financial plan, next Sunday’s sermon will be devoted to this topic.
4. Establish an emergency fund.
An emergency fund is an account separate from checking or long-term savings that is set aside specifically for emergencies. Dave Ramsey recommends beginning with $1,000 and building that to three months’ worth of income.4 When you have this amount, you won’t need to use your credit cards anymore.
5. Pay off your credit cards, use cash/debit cards for purchases, and use credit wisely.
As you are building your emergency fund, begin to pay off your credit card debt and start using cash or debit cards for purchases. Some experts suggest starting with the credit card that has the highest interest rate. Others suggest paying down the smallest debt first, experiencing that victory, and applying your payments from the first card to the second, and so on, creating a snowball effect to pay off the cards as soon as possible. Cut up your cards as you pay them down so that you are not trapped or leveraged by your future for present-day pleasure, as the prodigal son was. If you must use a credit card, such as when traveling or making purchases online, be sure to pay off the debt monthly. If you are unable to do this, then it is better for you to cut up your cards and stop using them altogether.
6. Practice long-term savings and investing habits.
Saving money is the number-one wise money management principle everyone should practice. We do not save merely for the sake of saving. There is a word for that: hoarding. Hoarding is frowned upon in the Bible as the practice of fools and those who fail to understand the purpose of life. Saving, on the other hand, is meant to be purposeful. There are three types of savings we should have: 1) emergency savings, 2) savings for wants and goals, and 3) retirement savings.
http://www.crown.org/Tools/
This is a fun and helpful budgeting calculator that automatically generates a suggested budget based upon the user’s inputs and Crown’s recommended expenditures.
http://crowncanada.ca/
This is another Crown resources site focused on budgeting and financial freedom. There is good information here.
Getting Out of Debt
Dave Ramsey’s Financial Peace University offers a great deal of online information including his approach to reducing debt found at this site:
www.daveramsey.com/the_truth_
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