Financial principles learned and incorporated over a lifetime
By Steve Prokopchak
The Bible is overflowing with financial wisdom, particularly the Book of Proverbs. Solomon, its author, was the wealthiest man of his time and had exceptional wisdom to go along with his financial prowess. Over time, I’ve been able to locate each verse connected to the use of money or containing a financial principle and have highlighted it in my Bible. Then I’ve attempted to incorporate those principles into both my beliefs and my daily life.
There are no guarantees for prosperity in this life. However, there are biblical principles of wisdom that can help us avoid certain financial disaster. While not all-inclusive, I hope these principles will be as beneficial to you as they have been to me. However, this discussion also comes with a warning to avoid legalistic decision-making. We must always allow for grace to penetrate every situation; if we’re going to err, we should do so on the side of blessing others rather than withholding from them.
The foundation underlying all of these principles is generosity, because generosity is an issue of the heart. At first, perhaps, it is a test of stewardship, but as we give and continually discover returns in various ways, giving becomes a lifestyle. Generosity is a sign of maturity in a believer’s life. It is also highly subjective: Jesus noticed a widow placing two small copper coins in the collections and deemed her generous (see Luke 21:1-4). It seems generosity is based more on what we have left rather than what we actually give (see Mark 12:43-44).
In everything we do, we need to incorporate a spirit of generosity; it is life-giving both to others and ourselves. As Luke 6:28 says, “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.” Proverbs 24:9 counsels, “A generous man will himself be blessed, for he shares his food with the poor.”
100% His, 0% Mine
First and foremost, we must acknowledge the scriptural truth that God gives us the power and the opportunity to create and possess wealth. This confession is where it begins for me. Scripture reveals, “He did all this so you would never say to yourself, ‘I have achieved this wealth with my own strength and energy.’ Remember the Lord your God. He is the one who gives you power to be successful, in order to fulfill the covenant He confirmed to your ancestors with an oath” (Deuteronomy 8:17-18). If God provides for us and shares wealth with us, then my position before Him must be that it is all His, and I am to steward that which He shares with me.
When I tithe, there is not a remaining ninety percent that belongs to me. The entire one hundred percent belongs to the Lord. Giving ten percent of my income to my local church is a starting point, my first step of obedience in honoring the One who provides it all. I then sow offerings and give of my firstfruits to others in missions and various spiritual initiatives that help change lives. “Honor the Lord with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine” (Proverbs 3:9-10).
Giving tithes and offerings is the first step in my financial discipline. It’s a step that demonstrates Jesus as the Lord of my finances. It’s caring for the poor and the marginalized, as He commanded us to do .“Jesus answered, ‘If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven’” (Matthew 19:21). It’s saying that my wealth is not mine, but God’s, and He can use it for His purposes. “A generous man will prosper; he who refreshes others will himself be refreshed” (Proverbs 11:25).
Accountability Is Key
The proper use of finances calls for a certain level of accountability: first to God, then to others. Those who view their income as theirs to do with whatever they please will most certainly encounter financial difficulty. We each need a method of answering for those monies earned and spent: whether a parent, spouse, or financial advisor, someone more knowledgeable than yourself should have the freedom to have regular insight and input into our financial decisions.
It is important to schedule regular meetings with your financial accountability partner to review your finances and financial goals. Are you making progress? What major financial decisions are on the horizon? What changes (immediate or gradual) need to be made? Be accountable, or you might find yourself simply reverting to old habits that lack discipline. If you’re married, cooperate as a team: openly discuss every financial matter, and hold each other accountable.
Financial accountability partners have saved many from a disastrous “sure bet” at the casino or local racetrack, even the lottery. Solomon wrote that ill-gotten treasures are of no value (Proverbs 10:2) because they are neither earned nor deserved. When we are repeatedly handed something of value for which we did not labor, we will not appreciate its true worth. This concept can manifest itself as true especially when we train our children how to earn and manage their money (for example a car, outings with friends, college tuition). “Dishonest money dwindles away, but he who gathers money little by little makes it grow” (Proverbs 13:11).
In marriage, it’s common to see one spouse with a more natural knack for accounting and managing expenses. If you’re married, find out if this is true in your relationship, and allow that person to take care of the budget. Amos 3:3 asks the question, “How can two walk together unless they have agreed to do so?” At the very least, agree on a monthly spending limit, as well as an item limit. That is, how much one spouse can spend on a single purchase without needing to consult the other? When we agree ahead of time to set goals and make a plan, we agree to the sacrifices that will need to be made to stick to that plan and achieve those goals.
This level of agreement and communication has the potential to bring to a halt practically any financial argument that can and will arise. While living eight years in a faith-based ministry together, my wife Mary and I discovered one of the most valuable principles that has stuck with us for over 39 years: we discovered that it wasn’t the amount of money that caused us to argue; it was the differences in the financial values and habits we as individuals had developed in appropriating money.
Matthew 18:19 reveals to us that if two will agree together in prayer, they will receive that for which they unite their hearts and spirits. As a married couple, Mary and I realized that we had the option of “fighting and arguing” (“What causes fights and quarrels among you…you want something but don’t get it…” James 4:1, 2) or “praying and agreeing” (…”You do not have, because you do not as God.” James 4:2). Believe me, praying over a need or a wish is far more unifying than arguing or trying to outwit our mate to get what we want. Together, we would ask God about something, and together, we would expect to receive an answer. What does it mean to ask God together? It means we’re praying to a Source outside of ourselves. We are admitting that we do not have all the resources or all the answers. We are dependent on Another as our provider.
Everyone Needs A Budget
Almost nobody wants one, but everyone needs a budget that identifies on paper or in a computer program exactly what is coming in and what is going out. In the present day, there are few excuses left, with dozens of online budget programs that even sync with mobile applications for smartphones and tablets to help keep us on track. While a budget won’t keep anyone from spending, it will provide a picture of income versus expenses. Used correctly, a budget can help maintain discipline and show where finances have been designated ahead of time. It should reflect an entire year, rather than just one month, because everyone has both annual and semi-annual expenses. Remember to be as generous as possible with your loved ones, since “a greedy man brings trouble to his family” (Proverbs 15:27).
Something that can be extremely helpful, and that I often encourage others who come to me seeking financial advice to do, is to record all spending for several months – every penny. I did this once for an entire year and found that the “miscellaneous” category in our budget was actually much larger than designated amounts. Why? It was all of those small purchases at mini markets, grocery stores, Target, and Wal-Mart adding up. When you create such a thorough record, as painful as it sounds, the entire unknown suddenly becomes known – nothing is hidden. You will then have a far more realistic budget for the following year.
Work at making financial decisions ahead of time as much as possible. Many purchases tend to be emotional or spontaneous and not well thought out, especially with the ubiquity of credit cards. Advertisers, retailers, and salespeople all conduct business by relying on their customers’ emotional responses to drive impulse buys, but wise financial decision-making is all about discipline. Financial wisdom means discovering the order of things. Proverbs 24:27 teaches, “Finish your outdoor work and get your fields ready; after that, build your house.” You don’t just one day decide to build a house; you dream, develop a plan, and save toward that building project. Eventually, you see the foundation of your future home rising out of the dirt.
A good rule of thumb that I use, with certain purchases, is to wait one month. If after thirty days I both still need the item and have budgeted the required finances, then I make the purchase. With this principle, you can establish two purchase lists: a need list and a wish list. The need list is an agreement to purchase items as the funds become available; the wish list is an agreement to purchase items when there are extra, non-designated funds available. Before making major (or even minor) purchases, ask yourself, “Do I really need this?” If your answer is yes, then ask yourself, “Why do I need this, and do I need it right now?” Just because an item is on sale does not justify its immediate purchase. (From my own experience, it’s amazing how many things one can accumulate that were purchased on sale, but are not, in fact, needed and therefore go unused.)
Avoid purchasing something simply because someone you know recently purchased a similar item. People often shop and buy in groups. Avoid the pressure of comparison spending to keep up or compete with others. By fostering an attitude of gratefulness for a coworker’s new car or a friend’s new furniture, you can actually limit the emotional desire for those things yourself. Also, remember that many brand-new purchases come with monthly payments; your coworker or friend may now be in debt because of that item.
Make use of cash as often as possible, especially in retail environments like shopping malls. Studies indicate that we spend approximately 30% more when using a credit card instead of cash. There’s just something about watching cash leave your hand that prompts more consideration before spending. While antiquated, writing a check can have a similar effect. Physically deducting the amount from your checkbook provides an additional level of thought, a reminder to ask, “Do I really need this?”
My suggestion for using credit cards is this: use them the opposite of the way credit card companies want you to. These companies make their profit off the interest on the balance their customers carry over from one month to the next (and the next, and the next, and the next). Don’t give them this opportunity: pay off every month’s balance in full. As a bonus, responsible use improves your credit score, which is crucial to many larger investments, such as mortgage. If at any time you cannot pay a given month’s total balance (at the most, two months’), stop using the card. Stop charging. Not only will this prevent the slippery slope into unmanageable debt, it will protect the credit score you’ve earned. Remember, “Just as the rich rule the poor, so the borrower is servant to the lender” (Proverbs 22:7). No matter from whom you borrow, you become their servant.
Be Your Own Banker
Speaking of planning ahead, do you have a contingency plan for unexpected expenses? For example, what will you do if the refrigerator breaks down? if your family’s car needs a major repair? if you get sick or injured and need to stay more than a day or two in the hospital? One strategy that I’ve put into practice is maintaining a savings account of $2,000 to $3,000 to serve as my own personal “consumer loan.” By borrowing the necessary amount from this savings account rather than from an external source, I can avoid accruing interest as I reimburse that account over the subsequent months. Reimbursing this account is imperative, so that you can remain prepared for future needs of this kind. It’s not that we trust in those riches (“Whoever trusts in his riches will fall…” Proverbs 11:28), but we can be wise by planning ahead and providing for unexpected expenses.
Any savings beyond this level should go into a separate account, such as a money market account, with check-writing or debit card privileges. This secondary level is a larger amount saving for a larger purchase, such as updating your home or upgrading your vehicle. Further, as this fund grows, it can be relied on to provide for your family in case of a long-term unemployment period (three to six months).
Invest in Assets, not Liabilities
Many individuals go through life without comprehending the difference between an asset and a liability, and this can result in a feeling of never being able to come out ahead in finances. An asset is an item of ownership convertible to cash. Assets increase in value over time. Liabilities simply represent monies owed; their value will decrease over time. Major purchases and long-term financial goals should be centered on investing in assets rather than liabilities. A useful example of this is buying a home versus buying a vehicle.
If you take out a $20,000 loan for a car (a liability whose value will decrease the longer you own it), you can end up paying upwards of $30,000 over the next five to ten years due to compound interest rates on that loan, typical vehicle maintenance and repairs. To put it bluntly, borrowing money for a liability that will continually decrease in value is poor use of your hard-earned income, and you will most likely continue to pay more for something that is decreasing in worth the longer you own it. On the other hand, if you take out a mortgage for a piece of real estate, you’re making payments on an asset that typically is always increasing in value. The longer you own your home or a piece of property, the more valuable it can become.
Speaking of loans, Proverbs wisely informs us to stay away from serving as security or surety for another. An example of this is co-signing for a loan, which means that you have to pay off the loan if the other party defaults. Unless you have a lot of spare cash lying around, you could actually lose your house (an asset) in such a process. “Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you” (Proverbs 22:26-27; see also 11:15).
Many people today live from paycheck to paycheck (or loan to loan) and then teach their children to do the same. This perpetuates a cycle that allows others to earn money off of your purchases. When you borrow, you do not own. When you loan, you own. Saving up for and investing in assets instead of liabilities will foster more stable, long-term wealth.
Be creative in your spending. Have a contest to see who can find a needed item at the best price. Watch and use websites like Craigslist and eBay. Swap babysitting nights with friends. Trade skilled labor (e.g., you install a friend’s tile while he completes your electrical work). Use your public library to check out free books and videos. Make use of coupons and store specials; did you know that most grocery sales are repeated on a weekly or monthly basis? Ask the person behind the meat counter when your favorite items will go on sale. They know the sale schedule. If you have the space, plant fruit trees or grow your own food in a backyard garden, or join a food co-op.
Be creative with your income. Hold annual yard sales to make money off of items that you no longer use or that your children have outgrown. Rather than handing them cash, encourage your children to earn their own by offering small services around the neighborhood, such as mowing lawns or shoveling snow. Start a small business in your area of interest; many people have created their own internet-based sales businesses today with handmade jewelry, recycled or “up-cycled” items, estate sale finds, or collectible items. Stick with what you know and enjoy. It can be both fun and income producing. Personally, I cut and sold firewood to help cover our children’s private school tuition, and then I sold cars as a side business to help them with college tuition and expenses. “All hard work brings a profit, but mere talk leads to poverty. The wealth of the wise is their crown” (Proverbs 14:23-24).
As you live in moderation, exercise self-discipline, and are generous with others, you will soon discover more and more leftover money each month. Money and how we make use of it is a visible, external indicator of our invisible, internal selves. Listen to these insightful words of Jesus: “Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else’s property, who will give you property of your own?” (Luke 16:10-12). Our Lord explicitly states here that how you handle your money indicates how you will handle spiritual blessings.
The Blessings of the Upright
There is also a broader picture of financial blessings mentioned in the book of Proverbs. This blessing connects with the righteous and how they affect a community. In Proverbs 11, there is a principle mentioned which in effect states that when the righteous person prospers the city prospers (10a; 11a). How does that work? Greed or generosity can be the end result of prosperity. We tend to either hold on to our resources for our own safety and security or we become generous with those around us who are in need.
Biblical prosperity is wrapped up in becoming a person of generosity toward others, allowing finances to continually flow through us.
When a righteous person owns a business they employ many individuals from their community. It will be their desire to generously meet the needs of their employees. When the righteous makes political decisions they do so to protect their communities and provide for the needy. (Think about the food banks, church pantries, non-profit counseling services and the local rescue missions to name a few.) When the righteous lead in righteousness, the Bible states that the people rejoice. Why? Because their heart is connected to the heart of God to serve and to bless their communities.
Further, people with financial means tend to be influential within their communities. They are respected due to their hard earned wealth. Obviously this can be a negative influence, but when the “upright” blesses others it will often be to their own detriment and self-sacrifice. That kind of blessing creates a different atmosphere, one in which generosity and personal sacrifice is the norm.
In Conclusion, Integrity
I’ve found that integrity is the glue that holds financial decisions together. God desires to prosper us, but righteousness is His requirement: “Prosperity is the reward of the righteous” (Proverbs 13:21b). How does that happen? “The righteous hate what is false” (13:5) and “Righteousness guards the person of integrity” (13:6). Dishonesty in any form will have a direct consequence on your finances; we dare not cheat the government or our employers and expect to prosper. Sometimes it takes humility to admit when we’re wrong, have made a mistake, or sinned, but the Lord honors humility: “Humility and the fear of the Lord bring wealth and honor and life” (22:4).
True wealth is far more than cash, houses, stock market investments, land, retirement accounts, or precious metals and stones. Solomon discovered, among all of his possessions, something far greater in value: “By wisdom a house is built, and through understanding it is established; through knowledge its rooms are filled with rare and beautiful treasures” (Proverbs 24:3-4). Our home has four bedrooms, and three of those four were for our two sons and one daughter – our true treasures. As a father, I could not personally meet all of their needs, but I would have given my life to be assured that all of their needs were met.
For me, each of these principles has stood the test of time. God’s Word has proven true time after time, and I have found that the God who owns the cattle on a thousand hills is the very same God who desires to see us prosper in faithfulness and obedience, so that He can give us ever-greater responsibility in His Kingdom.
More marriage tips in Steve and Mary Prokopchak’s book Staying Together: A Lifelong Affair.
About Steve Prokopchak
Steve serves on the DOVE International Apostolic Council and has been involved in the Christian counseling field for over 40 years. He earned a Master of Human Services from Lincoln University. He is the author of several books, including Called Together, a premarital counseling workbook. He also travels throughout the world teaching and imparting to the lives of many, especially leaders. Read more about Steve or catch up on his blog.