Let’s talk about money
Let’s Talk About Money
Let’s talk about money. That statement makes most people squirm. Most of us didn’t discuss money around the dinner table, didn’t receive a financial education in school, and were taught that it’s impolite to discuss money matters. It’s no surprise that, as a culture, we lack financial literacy, struggle with budgeting, and are often plagued by financial instability. Our standard approach to money hasn’t worked, so it’s time to try something new. Let’s talk about money and discuss a few principles I’ve used over the years to sustainably create, protect, and grow wealth.
#1 Be generous even when it costs you.
I had an unfair advantage growing up. My parents were radically generous. It was my mom’s superpower. She could sense a need a mile away. I’ve seen her fund entire charity programs in their start-up phases, give away her coats and gloves to the homeless, provide hot meals and full presence to the overlooked, and trailers of Christmas gifts to communities in their most challenging seasons. Money doesn’t change people. It makes them more of who they already are. She was generous when it didn’t make logical sense, even when it cost her greatly. I witnessed the abundance that blooms from her consistently and faithfully sowing seeds of generosity in every season, and it is a lesson I will never forget. Don’t wait until you feel wealthy enough to be generous. Plant seeds of generosity in every season, knowing that we can never truly measure the exceeding, abundant potential that lies within each seed. How can you intentionally plan for opportunities to be generous this week?
#2 Pay yourself first.
The first three non-negotiable line item expenses in my budget have remained the same since I started working: God (tithe/offering & charity), Government (withholdings & tax), and Growth (save & invest). My Growth account is something I modeled from the key concept of Clason’s The Richest Man in Babylon. The book taught me that there’s usually nothing left to save if we wait to save what’s left over at the end of the month.
Spending Wallet and Saving Envelope
My first W-2 job was minimum wage with tips at a pizza restaurant. At the end of each night, I’d pull ten percent of my cash tips to stick in a savings envelope. On my biweekly payday, I’d go to the bank to cash my paycheck and deposit the savings envelope and ten percent of my paycheck. I was free to spend the rest of the money as I wished. I slowly started rounding up and increasing the percentage of what I put in the envelope when I noticed that I always spent what was in my wallet, whether it was a fat or lean week. I always seemed to have enough for the weekly essentials plus a slice of pizza and a pint, whether I was living on 100% or 80% of my pay. I was able to keep my spending consistent even when I had a good week in tips because I started stashing a little extra in the envelope instead of my wallet. Similarly, when I got my first raise at my office job, I immediately increased the savings autodraft so I’d never see the extra money in my spending account. Being vigilant against lifestyle creep, or the tendency to spend more when we make more, helped me aggressively build a savings and investment fund. Have you thought about ways to build an extra savings margin into your income?
Two Accounts: Spending and Saving/Investing
Most banks will let you automatically transfer a percentage of your direct deposit paycheck into savings. Transferring it out of your main spending account so you don’t unintentionally spend it is key. I took the Dave Ramey approach by saving up an emergency fund. With the confidence an emergency fund provides, we can invest in cash-producing or value-increasing assets, depending on our goals. For me, real estate made sense because I prefer a hands-on approach and wanted a place to live “rent-free” since that was my biggest expense. I used my savings account as a down payment on a 3-bedroom HUD foreclosure. I rented out the extra rooms to some friends who helped me fix it up, pay down the mortgage, and cover the utilities. Have you separated and automated the funds marked for saving and investment?
#3 Avoid funding liabilities or lifestyle expenses with debt if possible.
Assets and Liabilities
I appreciate Robert Kiyosaki’s simplification of assets and liabilities. An asset puts money in our pocket. A liability takes money out of our pocket. I’ve learned to embrace delayed gratification because I don’t like owing people money. Unless I have the funds in my account to purchase a shiny new liability or doodad, I choose to go without it. Sometimes permanently, sometimes seasonally, until I can figure out how to enjoy it without debt. Financial discipline prompts us to consider intentional sacrifice, patient saving, or diligent income growth as potential alternatives to debt when possible. The joy of a new purchase tends to fade quicker than the 12-month payment plan. Do you have debt or lifestyle expenses that are stealing your financial peace?
Essential Expenses and Lifestyle Expenses
When I mention lifestyle expenses, I’m referencing categories of spending that make life enjoyable, but should be first on our list to cut during job loss or financial hardship. Our family has a list of clearly defined essential expenses, so we don’t mix up what’s essential versus enjoyable. In an emergency, we’ll use our savings to pay essential monthly expenses like mortgage & utilities, groceries & dog food, healthcare & wellness, and vehicle fuel & maintenance. If Bryce or I lost our income, we’d immediately cut lifestyle expenses like dining out, entertainment, shopping, travel, and fun money. Are you and your family in agreement on what’s an essential expense versus a lifestyle expense so you can take quick and confident action as a team during financial hardship?
Replace “I can’t afford it” with Empowering Words
I’ve learned to replace phrases like “I can’t afford it” with:
I don’t see enough value to trade my hard-earned resources for it.
I don’t have the resources YET, but I have the patience and persistence to make it happen.
I don’t think it makes financial sense this season, but I’ll put it in the dream incubator as I continue to steward and grow my resources with diligence.
Propose Alternatives
Last month, our friends asked us to dinner at a nice restaurant. We already used most of our dining and entertainment funds, so the evening would put us over budget. In those situations, we can politely decline, sacrifice other lifestyle categories, create additional income with our resources, or, my personal favorite, propose an alternative. We offered to host dinner at our place. This was a less expensive option that fit our budget and allowed us to make a quality connection with our friends.
Key Ideas Conclusion:
My family is weird, but we choose to be that way because being normal isn’t working out well for most of us. We have book clubs, budget reviews, and business meetings. Some families play Candyland, but we played Cashflow when I was growing up. When money was available, we talked about it. When money was tight, we talked about it. When we want something, we look at our budget to see what we’re willing to sacrifice or brainstorm ideas to fund it. We don’t have it all figured out, and sometimes we make financial decisions we regret, but we handle our mistakes differently than most families. We address money mistakes directly and unemotionally as a team, so we can learn and create better strategies together. Our financial success formula is a commitment to generous, wise, and diligent stewardship of God’s gifts, allowing consistency over time to create, protect, and grow wealth sustainably.
P.S. For the curious, here is a breakdown of our ideal monthly budget:
Gross Income 100%
Giving ~20%
Government/Taxes ~20%
Growth/Savings/Investment ~20%
Essential Expenses ~30%
Lifestyle ~10%
Faith Encouragement:
Luke 6: 38 – 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 13:11 – Dishonest money dwindles away, but whoever gathers money little by little makes it grow.
George Clason – “Rule II: Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field … Rule V: Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.”