Throughout the centuries and even today, the lack of money management skills has challenged the lives of many individuals and couples. In fact, recent surveys revealed financial pressure at home has been the cause of half of all divorces.
HG Tailored Financial Services, LLC is a faith based financial services firm that believes, regardless of the times, the Bible contains the blueprint for addressing the sophisticated financial problems couples and individuals experience today. We therefore integrate biblical stewardship principles with practical financial strategies to offer clients personalized financial advice and services to help build stable foundations, accumulate wealth, plan retirement, and transition wealth to heirs.
Our advice is based on the following stewardship principles:
HE Owns It All!
ALL that we are and ALL that we have belongs to God; HE owns it ALL!
Since God created and owns everything, whatever we possess is not really ours, but is on loan from God. Everything we have and everything we are represent HIS gifts to us; we are simply caretakers of HIS property, not owners. The question becomes how much of God’s assets should you keep for ourselves, rather than how much should we give to God? Honor Him First. Give back to God regularly with priority. Be a generous giver – one who gives with an obedient will, joyful attitude, and compassionate heart. If we are not diligent caretakers with the things HE has entrusted to us, why should HE trust us with more? “Are you willing to establish a stewardship mindset?”
“The earth is the Lord’s and everything in it, the world, and all who live in it.”
“Honor the Lord with your wealth, with the first fruits of all your crops; then your barns will be filled to overflowing.”
“A tithe of everything from the land, whether grain from the soil or fruit from the trees, belongs to the Lord”
“Every good and perfect gift is from above”. Therefore we should give as a response to God’s generosity
Plan and Control Spending
Since we all must ultimately give an account to God of our financial affairs, it makes sense to track our finances now. Just as it is important for me, a financial planner, to keep track of your money and how it’s being managed, it’s important for you to be aware and manage the resources God entrusted to you. Financial success entails constructing a budget (tracking it regularly) as well as a long range plan. Your spending reflects your priorities; seek godly counsel, develop plans for today and tomorrow, then you too can make informed decisions when spending. Budgeting and planning enable the steward to keep and increase giving commitments, prepare for future needs, live within financial means (out of debt), and make timely payment of bills. Every successful company has a monthly budget and a long range plan; why not you?
“Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations.”
“The way of a fool is right in his own eyes, but a wise man is he who listens to counsel.”
"Plans fail for lack of counsel, but with many advisors they succeed.”
“Be very careful, then, how you live – not as unwise but wise, making the most of every opportunity because the days are evil.”
Spend Less Than You Earn – SAVE
Throughout life unexpected expenses will occur. The “wise” is separated from the “foolish” by proactively preparing for the “unexpected”. Proactive preparation includes the establishment of both “short term” and “long term” saving strategies. Short term savings are used to fund emergency expenses; a minimum of 4-6 times monthly expenses is recommended. Long term savings are used to fund things such as retirement or college education. Desire, discipline, and sacrifice are necessities for establishing these contingency plans. Stewardship principles of savings begin with the sequential order of honoring HIM first with your tithes, paying yourself second, then using the balance to pay lifestyle expenses. Unfortunately, in many households the sequence individuals live by is the exact opposite. As a result, HE is often neglected and individuals are ill prepared for those unexpected events. HE will supply our every need if we trust HIM; but we too play a critical role in the process of life.
"Spend less than you earn. “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.”
“Go to the ant, you sluggard, consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores it provisions in the summer and gathers it food at harvest.”
“A prudent man foresees the difficulties ahead and prepares for them but the simple keeps going and suffers the consequences.”
Learning to make informed investment decisions is a key part of becoming a wise steward. The very nature of investing involves risk, yet risk can be minimized by clearly defining investment goals and corresponding strategies. The bible advocates investing rather than keeping money “under your mattress”. Jesus criticized the servant who buried the single talent that was entrusted to him, while praising those servants that earned good returns on their investments (Luke 19). Avoid making decision on emotions, take time to think and pray (Psalms 37:7). Adapting the following practical financial principles should help toward making good investment decisions:
Develop an Investment Strategy – Prior to investing one red cent, determine 3 things – investment goal or purpose, usually driven by a specific financial need (college fund, retirement, estate planning, etc); define your risk parameters-investments should provide a sense of financial security, not a sense of panic (how much risk are you willing to take); investment horizon (when is the money needed), generally, the shorter the investor’s horizon, the less risk you should be willing to accept. These 3 considerations help determine the type of investment to pursue.
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.”
Invest in Products You Understand – As the ol’ saying goes, “if’s it’s too good to be true, it probably is”. Take time to ensure you have a clear understanding of how the investment makes money so that you can recognize when the investment is in trouble.
“By wisdom a house is built, and through understanding it is established; and by knowledge its rooms are filled with rare and beautiful treasures.”
Diversify – It’s never a good idea to invest all your money in a single venture. Instead, it is better to diversify investments so that if one does poorly it can be offset by the gains on other investments. Diversification does not guarantee success, but it does reduce the risks.
“Cast your bread upon the waters: for after many days you will find it again. Give a portion to seven, and also eight; for you do not know what disaster may come upon the land.”
Evaluate Investment Performance Periodically – Cycles of economic prosperity don’t continue forever. A “buy and hold” strategy doesn’t work well in today’s volatile markets. Establish benchmarks for your investments, analyze the performance, make adjustments accordingly.
“Know the conditions of your flock (investments) and pay close attention to your herds (portfolio).
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Seek Wise Counsel – Believers understand the Bible is the living word by which HE communicates HIS directions and truth to all generations. As a result, the Bible should be your first filter when making final decisions. If married, your spouse should be the primary source of human counsel. No matter what the consequence of a decision, if the decision is made together, the marriage is more likely to remain healthy. In financial matters, unless you’re a “do-it-yourselfer” and have the time to conduct detailed research & analysis of investment products, you probably need to seek professional financial advice or assistance. In doing so seek a financial professional that is trusted, respected, and one who demonstrates wisdom with thorough questions and explanations.
“The way of a fool is right in his own eyes, but a wise man is he who listens to counsel.”
“Plans fail for lack of counsel, but with many advisors they succeed.”
“Let the wise listen and add to their learning, and let the discerning get guidance.”
Get Out and Stay Out of Debt
God will use money to enhance and direct our lives; Satan will use it to put you in bondage. The most common financial stress in the lives of Americans is debt. The Bible does not forbid debt but strongly warns of its baggage and bondage. Below are ten key principles to help fight against the bondage:
Do not purchase anything on the assumption that a future increase in salary will compensate for payments.
Attempt to keep “debt-to-income ratio around 36% which includes no more than 25% for mortgage.
Recognize that debt mortgages the future; if you take debt today, you must pay it tomorrow; who knows what tomorrow will bring. Repaying it becomes your #1 financial priority; you no longer have freedom of choice. (James 4:13-14)
Do not co-sign another person’s note or guarantee someone else’s loan. When co-signing a lender is saying the borrower’s financial condition is so unstable that the only way they will extend a loan is for someone else to guarantee it. Therefore, ask yourself, “if a lender won’t take the risk, should you?” Crown Ministries reported that a Federal Trade Commission study found that 50% of those who co-signed for bank loans ended up making the payment. “Do not co-sign another person’s note or put up a guarantee for someone else’s loan. If you can’t pay it, even your bed will be snatched from under you.” (Proverbs 22:26-27)
Budget before you borrow; never borrow without measuring your ability to repay the loan. Debt is best used for non-regularly recurring expenses such as college tuition or major purchases like a car or house.
If in debt, understand why minimum payments are not good enough. Often the minimum does not cover the interest, little (if any) is paid toward the principle.
Create an accurate assessment of your debt. Rank debt from highest interest rate to the lowest; pay minimum payment on all debt except highest interest rate debt. Apply extra funds toward highest interest rate debt.
Repay debt and do so promptly – “the rich rules over the poor, and the borrow becomes the lender’s slave.” (Proverbs 22:7)
To be smart with money one must differentiate between “good” debt and “bad”debt. Typically, purchases that immediately decline in value or have no potential to increase in value is considered “bad” debt. Conversely, debt that creates value (such as student loans or home mortages) or debt that is tax deductible is considered “good” debt.
Compounding can be your best friend or worst enemy; make your money work for you, not against you:
- Invest $10,000 in the market at 10% for 10 years, you’ll earn $25,937, a gain of $15,937.
- To pay off $10,000 in credit card debt at 20% for 10 years you’ll pay $61,917, a cost of $51,917.
Plan for Today and for the Future
As you well know, cycles of economic prosperity do not last forever. Although life’s interruptions can be opportunities from God, one must adequately prepare for economic downturns by planning for both long and short term future. Build a comprehensive plan based on an unknowable future; have a healthy respect for uncertainty by developing strategies encompassing multiple aspects of your life.
Establish SMART Goals – Specific, Measurable, Achievable, Realistic, Time Limited
Goals should be clear and concise; establish specific milestones, then measure your progress; make adjustments as necessary. They help crystallize your thinking and provide both direction and purpose.
Maintain Essential Elements of a Plan – Will, Insurance, Financial Plan containing strategies for Retirement, Investments, and Emergency Funding. Document and share the location of personal and family financial documents with a family member or close friend.
“The plans of the diligent leads to profits as surely as haste leads to poverty.”
“A good man leaves an inheritance for his children’s children…”
“Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts.”
Give to Others
Giving is the first practical action of biblical finance; it exemplifies an understanding of what it means to live a life of stewardship. Giving involves putting God first in our lives and trusting HIM to take care of us. As believers we recognize that God is gracious and generous. Since we were made in HIS image (Genesis 1:26), we should give as a response to HIS goodness and generosity and out of gratefulness for what we have received. Giving disconnects us from the self-serving, temporal minded condition of the world and causes us to become less greedy, selfish, materialistic, and more invested in the lives and souls of others.
“Give generously to him and do so without a grudging heart: then because of this the Lord your God will bless you in all your work and in everything you put your hand to.”
2 Corinthians 9:6-7
“Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”
"He who gives to the poor will lack nothing, but he who closes his eyes to them receives many curses.”
If working with a faith-based financial planning firm appeals to you, we encourage you to consider our firm for your financial services needs. Please give us a call…we’d love to hear from you.