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If you think about it, there are really only five things you can do with money.

  • Earn it
  • Spend it
  • Save it
  • Invest it
  • Give it

That may sound simple. But when it comes to actually doing it, all sorts of questions arise, such as:

  • "How much money do I need to Earn?"
  • "How much should I Save?"
  • "How much should I Spend?"
  • "Where should I Invest it?"
  • "How much should I Give?"

The following Scriptures and advice will help you to begin thinking through these issues:

1) Earning
Most people have to earn an income some way or another. Some people do this by working at a job, others own their own business, and still others earn their living through more unconventional means, such as investing in real estate or the stock market. Whichever way you earn your money, a key decision in this area is determining how much money you actually need to survive.

Many people fall into the trap of working more than they need to, simply because they can't say no to the extra money. They put in overtime at work, thus depriving themselves, their family, their friends, their church, and their community of time they could spend investing in other types of capital, such as social and spiritual capital. Other people don't work enough, thus depriving their family of the things they need and enjoy and causing others to have to pick up the slack. The key is to find the balance so you are able to earn a comfortable living without falling prey to the pitfalls of either extreme. Ask God to guide you in this area.

2) Spending
The first rule of spending is to always spend less than you earn . The minute you start spending more than you're taking in, you incur what is called negative margin or deficit. Deficit is different from a loan in that deficit adds continually to your debt and are unable to pay it back. As you keep overspending each month, your debt just keeps growing and growing. Before long, you and your entire family will become a slave to it. (Proverbs 22:7; 23:4-5).

The way to avoid debt and live within your means is to create a monthly budget with different categories for things like shelter, food, clothing, transportation, and so on. A financial planner can help you develop a budget that's right for you. But simply creating a budget won't solve your financial problems. You have to stick to it. Be disciplined. When the money is gone from a certain category, that's it until next month. Don't borrow against your future, because the future is always uncertain.

If you're already in debt, you'll have to take this into consideration when you create your budget. There are plenty of actions you can take to reduce your debt, such as using some of your margin to pay it off, paying off your high interest loans first, consolidating all of your loans into a single, low interest, monthly payment, cutting back to a single credit card and paying off the balance at the end of each month, and simply learning how to delay gratification so you don't get into this mess again. Once again, a financial planner can help you work through these options.

It seems like incurring some debt is inevitable today, especially when it comes to purchasing costly items such as vehicles or a home. But it's not always necessary, particularly for expendables, such as furniture, appliances, or electronic equipment. However, before you incur any debt of any size, spend time in prayer and evaluate the spiritual, economic, psychological and personal ramifications of that decision. If you stick to doing things on a cash-only basis, you may have to wait a little longer to purchase what you want, but it will definitely be worth it in the long run.

A final area of spending we should mention is taxes (cf. Luke 20:25; Romans 13:7). In this case, you need to strike a balance between your civic duty and paying more than you need to. Cheating on your tax return seems like a victimless crime, and it's easy to let your ethics slide in this area. But honesty is crucial to everything you do—particularly in the little things. So be honest on your tax return, but don't pay more than you have to. A good steward endeavours to reduce taxes as much as is legally possible. Studies have shown that a dollar in hand of an individual consumer is much more effective than it is in hands of government. So by reducing your taxes, you're actually helping out the economy! Plus, you can use the money you receive from your tax return for other things, such as reducing your debt or adding to your giving or savings budgets.

3) Savings
The extra money you have left over (or should have left over) at the end of each month after paying your living expenses, taxes, debts, and meeting your giving budget is called savings or margin. Your savings should always be planned and regular. Determine what percentage of your income you can save each month, and then divide that amount into short-term and long-term savings. Use the short-term savings for things like family vacations and acquiring smaller items, such as a stereo or new appliances. Long-term savings should be set aside for a new vehicle or other expendables that require a significant amount of funds. You should also set aside a contingency fund, usually 3-6 months of income, in the event that you temporarily lose your ability to earn income.
While saving money is prudent and wise, there is a fine line between saving and hoarding. A good way to tell the difference is to ask yourself whether you're putting your trust in your savings or in God. As your savings account grows, make sure your faith in God's provision grows along with it.

4) Investing
Investing your money wisely is crucial to getting the most return on your time and effort. After all, you've worked hard for your money. Isn't it time it did some work for you?

Investing is just like any other financial decision. First, you should pray and ask God how much he wants you to invest and where he wants you to put it. Any financial planner will tell you that your portfolio should contain a mix of low, medium, and high-risk investments. How much is allocated to each area depends on your risk tolerance and your financial goals. Areas to invest include government bonds, GICs, real estate, mutual funds, and individual stocks. We strongly urge you to consult with a financial planner prior to making any major decisions in this area. The last thing you want to do after earning your money is to watch it all drain away through a poor investment strategy.

5) Giving

As with saving, your giving should always be planned and regular. Choose your charities wisely, and make sure they're putting as much of your money as possible into their primary work rather than miring it all in overhead. It's also okay to keep some money aside in a contingency fund for those "spur of the moment" donations. However, regular giving allows you to budget from month to month. It also enables you to take full advantage of the tax credits available, thus increasing your margin. You can use this extra money for additional giving, to defray living expenses or to reduce your debt.

Although tithing or giving one-tenth of your income is a good place to start, it is by no means mandatory - and you definitely don't have to limit yourself to this amount! Ask God where he would like you to direct your giving, and revisit the amount you give each year. Remember: All money is God's money; you are the stewards so don't hold on to it too tightly when he is trying to teach you to live generously. As the Bible says, those who sow generously will also reap generously....

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