At school we learn many helpful things, but one thing they fail to teach us is basic money management. From time to time, I meet people who have gotten themselves into tough situations with their personal finances, which could’ve been avoided with a little bit of knowledge. Below are some of the most common issues which I have come across and a few tips that I’ve learnt along the way. Kingdom economics is very different from what the world teaches us about finances. In the Kingdom, we believe that all that we own and earn, is from God and is therefore not ours (Haggai 2:8; 1 Chronicles 29:12; Leviticus 25:23). Of course, He entrusted us with these finances and we need to steward it well in an earthly manner (we are in this world, after all) and in terms of the Kingdom. I hope you find this beneficial as a starting point to stewarding your finances well.
1 . Buying cars on finance.
The story goes something like this. A young man or woman gets a new job earning – for example – R10,000 a month. They think “Wow I earn a lot, now I can get my dream car!”. They go down to the dealership and discover that they can get the brand new VW Polo for only R4500/pm. This seems like a score for them because they will still have R5500 left over for all of their other expenses. They sign on the dotted line, hand over their banking details, and drive away grinning from ear to ear. Little do they know that after the six years of paying the R4500 at the interest rate given, they would’ve paid almost R100 000 in interest, plus a balloon payment of R20 000 (this is an example of a potential situation). That’s R120 000 gone to interest, which could’ve been used for other things.
My advice: don’t do it. I strongly recommend buying an older second-hand car cash or buying an older second-hand car with a nice deposit and finance the rest – which you can pay off much faster. The goal is to be free of all bad debt and financial commitments which bind you for many years.
2 . Buying on Account
TV’s, appliances, furniture, clothes, groceries – yes even groceries, can all be bought on account these days. That new TV which costs R6500 can now be bought on account for only R700/pm. But again, this service comes at a high cost, at the end of the 12 months you will find that you have paid an extra R1000 on top of the original purchase price in interest. It would have been better to just save up the R700 each month and then buy the TV cash. Avoid all types of accounts as they come at a cost. Be free of contacts and accounts that bind you.
3 . Loans
Revolving Loans, credit cards, overdraft facilities, and your good old-fashioned short-term loan, all offer quick cash at an extremely high price. The price you pay is the high interest. Loans are very risky and need to be approached with extreme care. Before taking out any loan you must be 100% sure that you can pay it back within the required time frame comfortably. I recommend avoiding all types of loans. Many times they become a self digging pit – I have even met people who have taken out loans to pay off other loans… It’s better to approach a close friend or family member who will be able to give you an interest-free loan instead, if it comes to that. Home loans are different, as they offer a long-term investment that would otherwise not have been achievable. Ensure you save to put down a deposit and get a loan that is within your monthly repayment means.
4 . Savings
It’s good practice to save a little money each month because life is full of unexpected situations. For example, one day you may find that your kettle just stops working and you cannot get it fixed, that same week your fridge packs up, and your car tyre has a blowout. To fix all of this comes to R2000 which was completely unforeseen. This is just one reason why it’s good to have some savings available for unplanned hick-ups. You don’t have to save much, even R50/R100 a month is fine. But’s its good practice to have even some savings available.
5 . Invest
There is a saying, “the rich become richer and the poor become poorer”. The reason for this is that with each year that passes our money weakens due to inflation. So R15 today can buy a loaf of bread but in three years’ time to buy that same bread may cost R20. The Rand has weakened as a result of inflation. This is why we need to put our money where it can grow, in order to keep up with or even beat inflation. There are many places you can invest your money so that it can grow. There are: Stocks, Unit Trusts, EFT’s (exchange-traded funds) and Retirement Annuities. These are all places you can put your money where it can grow over time, instead of you paying the interest, the interest comes to you, as your money grows. It’s good practice not just to save, but to invest for the distant future. Again you don’t need much, even R50/R100 a month is enough to start. The point is just to start.
6 . The best thing to do with your money.
But what is the best thing to do with our money? I’ll tell you plainly. The best thing you can do with your money is to invest it into Jesus’ kingdom and to give. Giving and generosity are as important, if not more important, as saving and investing. Giving to the Lord’s work is a must in order to have a healthy financial life, and it helps to protect against greed and envy. When we give (secretly) the Bible tells us that we store up treasures in heaven, but we also receive a reward here on earth. It’s the only investment option which is 100% safe and guaranteed.
“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”2 Corinthians 9:6-8
There’s much more that one can say about finances, but I hope these few points have been enlightening and educational. If you do any of the above, make sure that you practice point number 6 throughout your life.
Some food for thought:
– He who gathers money little by little, makes it grow
– Money was made to serve man, not man to serve money
– You don’t get a job in order to earn money, you work to glorify God, the money will follow..
– The love of money is the root of all evil, and you cannot serve both God and money.
– Those who want to get rich fall into temptation, a trap, and into many foolish and harmful desires that plunge people into ruin and destruction
– Seek first the kingdom of God and His righteousness, everything else will be added unto you.