They say that money makes the world go round, but that it can’t buy happiness. The love of it is “the root of all evil,” and yet we need it to function and thrive in society. Money is coveted by pretty much everyone, but most people are uncomfortable talking about it.

If you think about it, there are really only five things you can do with money: earn it, spend it, save it, invest it, and give it. But when it comes to actually doing those things, all sorts of questions arise! The following advice will help you to begin thinking through these issues:

1. Earning

Most people have to earn an income some way or another. 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 causing others 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.

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. A financial planner can help you work through your 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 items 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.

3. Saving

The extra money you have left over at the end of each month after paying your living expenses, taxes, debt, 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 electronic equipment or new appliances. Long-term savings should be set aside for a new vehicle or other items that require a significant amount of funds. You should also set aside a contingency fund, usually three to six 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; do your research and find out where your money will go. 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, and you are just the steward; don’t hold on to it too tightly when he is trying to teach you to live generously.

updated September 2019