Personally, I was far from having a good understanding of personal money management, the importance of savings and avoiding debt right after college.  Although I made some financial mistakes, I can share some tips today in the hope you won’t do the same. 

10 Tips for Your Financial Life After College

Don’t finance a new car

Most graduates are excited to get a new job and decent salary after all their hard work in school.  But many of them look around and see the new cars their friends have just purchased and immediately feel they deserve the same.  You don’t unless you can pay cash.  You may be driving the car you had in college (if you were lucky to have one) for a while, but avoid financing a new car.  Financing a new car will put you in debt for more than $300 per month and you’ll live with that debt anywhere from 4-6 years.  It’s not worth it.  Rather, begin paying yourself a car payment and save the money until you can buy a good and reliable used car.

Don’t spend more on a credit card than you can pay off each month

Perhaps you already have a credit card, or are thinking of getting one.  A credit card can be good to use in certain situations.  But, make sure you don’t carry-over a balance at the end of each month.  While this may not make much of a difference at first, a hundred dollar balance will eventually turn into several hundred and then a thousand or more.  It happens to many people because using a credit card is so easy to do.  Only spend when you know you have the money for it.

Get on a plan to get out of debt

Speaking of credit cards, did you have one in college?  Chances are you may have some credit card debt and student loans to pay off.  Make sure you have a plan to start paying extra to get out debt as soon as possible.  Once you’re debt free, you can begin to save more of your income for future purchases such as a car and home.

Live on a budget 

Now that you’re earning money, you have to learn to manage money.  The best way to do that is by living on a spending plan, or budget each month.  Create a budget and track your expenses immediately. Personally, I like using a hybrid of the envelope budgeting system where you pay cash for areas such as entertainment and clothing, but use credit or debit for other areas.  

Don’t be too picky about your first job

Hey graduate, did you work hard in school and make good grades?  Congratulations if you did, but don’t be too confident and think you deserve everything the professional world has to offer the day after graduation.  Rather, focus on getting experience before pay.  Chances are your expenses will be minimal after school and you can work for less, but learn a lot about yourself and your future profession.  All this being said, don’t jump at the first opportunity out of school either.  Make sure the position is the right fit for you as well as the company.

Read the Total Money Makeover by Dave Ramsey

I know there are a lot of good personal finance books out there, but the one I probably enjoyed the most that got me even more motivated to get out of debt was Dave Ramsey’s Total Money Makeover.  It’s filled with great practical tips and will help you set your priorities straight.

Set aside a portion to give each month

Money is a powerful thing and we can’t control that power on our own.  If you’re a Christian, I recommend giving from your first pay each month to release the financial bondage money can have on you.  If you learn to give money first you can truly appreciate money as a resource that only comes from God which is your job to manage.

Rent a modest apartment

Are you starting to understand the theme here in this article?  Live modestly and get your finances heading in the right direction before you make a move to a nicer car or buy a home.  Try to find a safe,  but easily affordable apartment you can call home for the first few years.  Earn, give, save and get out of debt in these years and then consider buying a home when it’s affordable and you can make a 20% down payment.

Create a 5 year financial plan

On top of these tips you’ll want to set some goals for yourself.  I would advise doing this after you’ve been out of school and working for a few months.  Setting a five year financial plan can be encouraging because you have some real goals you can accomplish in a short amount of time.  It will also help drive your spending behaviour each month.

Set some money aside in a savings account

As a part of your monthly spending plan you’ll want to carve out at least 5% for savings until you have $1000 put back.  Then, stop saving and pay off any credit cards using that 5% plus any extra you can afford to put on them.  Once completed, you should build up a full month’s of living expenses in savings and then start tackling other forms of debt.  You can get some of the best yields available for your savings by using an online savings account.

Finally, put all these tips together in one big plan by following the Crown Money Map.  The Money Map has been a blessing for many and if you start following it in your life right after college you’ll be miles ahead of so many who have traveled these roads before you.

What do you think about these 10 tips for your financial life after college?

Post #1 Recap

Man’s Assumptions and Thoughts About Money

We could all use a little more money margin in our lives, right? For whatever reasons, at some point in time, it has become the norm to not have money margin.

What is a lack of money margin?  It’s being contacted by creditors, overrun with debt and spending money to please people we don’t care about.  It’s spending more money than you make in a single month!

In the first post, we discussed four common assumptions we have about money when God isn’t in the picture.   To quickly recap, if God isn’t driving your thoughts about money you will more than likely think…

• Money will bring you happiness
• Money will define who you are
• Money is yours to spend as you want to
• You’re not responsible for bad financial situations
• The best advice is found out there in the world in a guru’s brain

God’s viewpoint on money – establishing money margin

However, if God is driving your thoughts about money, your heart and mind will change.  Therefore, your actions and the way you manage it will change.  Now, let’s take a look at each of these assumptions from a Godly or Biblical perspective.  I recommend you preface them with:

If God is driving my thoughts about money, I will think…

Money doesn’t bring happiness

In fact, money can bring you heartache.  The love of money will absolutely harm you.  As we learn in 1 Timothy some people who have put money first and chased after more of it have caused themselves much grief and despair.

⁹People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. ¹⁰For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. (1 Timothy 6: 9–10)

Money can deceive you.  It lies to you.

²⁴“No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money. (Matthew 6:24)

My pastor noted this scripture doesn’t say you can’t serve both God and Satan.  Rather the word money is used instead. Money can become a God or idol quickly if you’re not careful.  The truth is that we can’t control money by our own little wills.  Money isn’t a neutral thing.  It has power and it’s impossible to control it by ourselves.

It is God’s to use for His purposes

God owns everything, including money.

¹⁰ For every animal of the forest is mine, and the cattle on a thousand hills.  ¹¹ I know every bird in the mountains, and the creatures of the field are mine.  ¹² If I were hungry I would not tell you, for the world is mine, and all that is in it. (Psalm 50: 10-12)

There has never been a dollar you’ve earned in your entire life that didn’t come from God.  Even when you might say you’ve worked hard to get a job or a promotion that pays you well; God gave you the health to earn every dollar.

You are fully responsible no matter the condition

I liked the example my pastor mentioned in the sermon. Dave Ramsey once said:   When the tide goes out you can tell who’s been skinny dipping. The tide might be in when you buy that new car.   Things are going well and you think you have the money to make the payments.  However, when the tide goes out, you have to work more to make it.

It’s important you don’t play the blame game.  If you’re in a mess, you have the responsibility to get out of it.  That’s actually the first step in getting yourself out of debt.  You have to take responsibility for the actions you took to get yourself in trouble.  But remember, as my pastor mentioned, you can reset your ways to Christ.

The best money advice is found in the Bible

As a Money Map Coach, I couldn’t agree with this more.  The best financial advice you can find out there is not in one person’s brain.  It is in the brain of Jesus!  There are two principles that Jesus shared that should be the foundation of developing the right perspective on money.

Avoid greed and the pursuit of possessions and more, more, more stuff!

¹⁵Then he said to them, “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions. (Luke 12:15)

Give!  Nothing releases our hold on money more than giving to the Lord’s work and to others.

³⁸Give, 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. (Luke 6:38)

What are the implications of God driving your thoughts about money?

As we discussed in the first post, there are implications of following worldly assumptions about money.  Here is a quick recap:

• Spending tends to be completely selfish.  It’s focused on competitive spending (trying to have as much or more than others) and therapeutic spending (spending to make you feel better)
• Saving will seem senseless.  Why would you want to save if you have to spend to prove something to others?
• Giving will seem senseless.   You would never give money away because you would be losing it.

Implications of following God’s perspective of money

Spending will now be based on contentment

Your focus will now be on managing God’s resources for Him and not spending it for yourself.  Therefore, you will be content based on what God has entrusted you to manage and no longer feel you have to spend to compete with others.

I have learned to be content in whatever circumstances I am.  I know how to get along with humble means, and I also know how to live in prosperity….I can do all thing through Him who strengthens me (Philippians 4:11-13).

Savings is a wise thing to do

Saving is wise because it provides the freedom for you to be used for Godly causes when you are asked to do so.

Giving becomes joyful

The only way to break the iron grip of money is to give it away!!!

³⁵In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive.  (Acts 20: 35).

Your 3 challenges

Our pastor closed the sermon with three challenges.  We were asked to write them down and identify one or more areas we needed to work on.

• Go cash only.  If you go with cash only you are forced to spend only what you have and no more.  As an aside, I’m not against credit cards as long as they can be used wisely and paid off each month.  It’s when the balances start carrying over from month to month when issues with debt arise.
• Save regularly.  I think an ideal goal (outside of retirement savings) is to save 5% of your net spendable income (income after taxes and tithe).  If you can save 5% regularly, you can build an emergency fund that will help stay out of credit card debt.
• Give to the Lord’s work.  Give 10% of your next paycheck and trust God to replenish.  I love this challenge!  We decided to take that same challenge a few years ago and have been blessed more than we could have imagined.

In conclusion, money margin is something you can really have.  You will discover it,  if you follow God’s Biblical financial principles.

So, what will be your challenge?  Will you do one, two or all of these?

Where to Give

There are obviously a number of different places we can give today.  There is of course our local church, secular charities and Christian ministries.  So, how do we choose where to give first and so on?

According to the author of Dollars and Doctrine, Rob Kuban, there is no where in scripture that sets giving priority for us, but Kuban presents a good case for giving to our immediate church family first.

The best answer I can give to this question is that we should always be giving to the work of the Gospel in the world, but never at the expense of those who minister to us.  Giving to a Para-church organization, ministry, or Christian non-profit is an excellent, honorable, and Godly action, but is never to be done in a way that neglects our immediate church family’s needs.

During the early stages of giving my wife and I were a little bit confused as to where we should direct our giving.  There are a few Christian ministries near and dear to our heart in which we wanted to help support financially.  But we also knew we needed to be giving to our church.  So, we prayerfully made the decision to give our first fruits to our local church and to stretch our giving further by supporting other Christian ministries.

Now, there is another important question to ask:  should Christian giving go to secular charities?  There are a lot of good charities out there that focus on helping people and are doing good things in society.

The scripture refers to the money that we give to be set apart because “it is holy to the Lord.” (Lev. 27:30)

My belief is in-line with what Rob Kuban mentioned in his book on this subject as well.  If you are a Christian, I think it is wise to contribute your extended giving to places where they are working to minister to others in their work.

I believe the Bible requires our contributions to be “Christian.”  Our giving is to be in places where the glory of God through the pursuit of Christ is of first importance.

All that being said, if you feel compelled to give to a secular organization, or participate in a charity event such as a run in a race for a disease; I think it is perfectly fine to do so as long as you keep giving to your local church in first place.

Giving to the needy

Giving to the needy has been another conviction for my wife and me.  Beyond giving to our church, we have felt compelled to do more for those who are in need.  One of the most convicting or sobering scriptures about giving to the needy is found in Matthew 25: 34-45.

45 He will reply, I tell you the truth, whatever you did not do for one of the least of these, you did not do for me.

There are a number of ways in which you can stretch your giving beyond your local church.  Obviously, Jesus had a warm heart towards those in need.  Personally, my wife and I have found a local ministry focused on the homeless that we can give to each month in addition to our regular giving.

How much to give

This is probably one of the top questions I receive as a Money Map coach and one that I can never exactly answer for people.  I can certainly tell them what I do, but ultimately a giving decision is between you and God.

I think it’s important to start with the subject of financial stewardship and refer back to the question:  who is the owner of money?  We know from 1 Chronicles 29:11 God is the owner of everything.

We shouldn’t ever give thinking the money is ours, or that the remainder after giving is ours.  It’s all still God’s and should be managed wisely for His kingdom.  That’s why I see giving as a component of good financial stewardship because that money, God’s money, is going to further the growth of His work.

I’ll wrap up this subject with a profound excerpt from an article by Crown on the subject of whether or not the tithe is the limit.

Most people need a starting point.  As well as I can tell, God never asked less than a tenth from anyone.  But if 10 percent bothers people, there no reason why they can’t give 11 percent, 12 percent, or twice as much if they so desire.

The law of grace means we’re not compelled to do anything by virtue of a written law.  It is unmerited and unearned favor.  But grace is not a license to do nothing.  As Paul said in Romans 7:7, the law was given to show us sin.  We, who are under grace, can surely outdo those who gave according to the law.

So it’s important to know that we are under no giving law because of God’s grace.  But God still calls us to give!  I want to encourage you look at the money you’ve been given.  Listen to what God tells you through prayer and His word on how much you need to direct back to Him and furthering His kingdom work.

How do you feel about where to direct your giving and how much to give?

Each of the posts from the Bible and Money series are based on principles discussed during Money Map Coaching sessions and the Money Map Coach participants’ guide.  You can learn more about Money Map Coaching at Crown Financial Ministries.  You can also visit my Money Map Coaching page.

Download this post here!

This week’s post is on the subject of giving.  I tend to have a lot to say about giving because it’s near and dear to my heart.  Therefore, I’m going to go off plan a bit and break this post up into two parts.  The second part will be posted tomorrow.

When I think about giving I consider it as an opportunity and blessing for our family to do so.  Jesus said it is more blessed to give than to receive (Acts 20:35).  I can faithfully say this is a true statement based on my personal experience.

My wife and I weren’t always givers.  I’ve mentioned in past posts how we felt convicted because we were not giving enough to the Lord’s work and specifically to those who directly teach and minister to us.

Through prayer and much faith we decided to stretch giving beyond what seemed possible (and comfortable) in considering our monthly expenses.  But I believe the decision we made allowed us to put our complete faith and trust in God.  And it’s never been better ever since.

Blessings for the giver

There are many blessings for the person who decides to make giving a priority in their life.

1. You can grow closer in your relationship with God.  Crown Financial Ministries says:  “above all else, giving directs our attention and heart to Christ.”

Where your treasure is, there will your heart be also (Matthew 6:21).

2. Giving provides the opportunity for us to make a deposit in heaven.

Not that I seek the gift itself, but I seek for the profit which increases to your account (Philippians 4:17).

3. Giving can sometimes provide an increase on earth.

He who sows bountifully shall also reap bountifully (2 Corinthians 9:6).

I can definitely say that God has met our needs and sometimes in abundance.  Certainly God has a plan for everyone and it may differ from person to person.  But the ultimate blessing is knowing that we’ve put Him first and He will provide.

Attitude in giving

Attitude in giving can be difficult sometimes, but it’s the most important thing to consider.  The key in having the right attitude is to make sure your giving is out of love.  You can truly get a sense of God’s love in John 3:16.

For God so loved the world that he gave his only begotten Son.

God looks to the heart of the giver.  This is more important than the amount.  I think the best way to insure you have the right attitude is to give your gift to Christ himself when the offering plate is passed around, or you pay online.  The perspective on the faithful act of giving quickly changes when we focus on who is the recipient.

I think one of the biggest challenges today in giving is the convenience (at least for me).  Truthfully, there are times when giving has become similar to paying another electronic payment online. But the times it has been the most rewarding is when my wife and I take the time to focus and pray about the gift and then reflect on why we are doing so.

How do you feel about the blessings for the giver I outlined and having the proper attitude in giving?

Each of the posts from the Bible and Money series are based on principles discussed during Money Map Coaching sessions and the Money Map Coach participants’ guide.  You can learn more about Money Map Coaching at Crown Financial Ministries.  You can also visit my Money Map Coaching page.

Download this post here!

Where to give

The first resource I found this week was an article titled “Where to Give” and was provided by Free Money Finance.  The article was a well chosen book excerpt from Dollars and Doctrine.  I haven’t read the book, but the Amazon review says it is organized as a handbook for a Biblical approach to personal finance.  Side note:  It sounds right up my alley, so I may look at purchasing it.

The excerpt spends some time discussing giving beyond the local church.  By the way, the author does a good job explaining the reasons why the local church should be the first place to give for believers, so I recommend reading all of it. 

I found the section of giving beyond the local church particularly interesting because I think this can be a point of confusion for many.  There is often question of giving priorities (local church, ministries, etc.) and I think the author provides some good guidance.  For example, we should never neglect our immediate church family’s needs in place of a Para-church:

The early church supplied the needs not only of their local Christian community, but also throughout the world.  Believers are called to give beyond their local church.  Returning to our original question of whether or not giving to a Para-church organization is the same as giving to our church, the Biblical answer is yes and no.  The New Testament does not give a clear distinction between “church” and “non-church.”  The best answer I can give to this question is that we should always be giving to the work of the Gospel in the world, but never at the expense of those who minister to us.  Giving to a Para-church organization, ministry, or Christian non-profit is an excellent, honorable, and Godly action, but is never to be done in a way that neglects our immediate church family’s needs.  If we don’t give to those who minister to us, we are not following the commands of scripture.  Outside of this, it is impossible to pin down a theology with any kind of authority.  The only thing that can be said with certainty is that Christians are called to give to both their church and beyond.

To wrap up this section, I will offer some pragmatic solutions.  Many Christian thinkers have arrived at a simple solution to the dilemma of where to give:  tithe (10%) to your local church and then all contributions beyond that go to the places the Lord leads you (even if that is giving more to your church).  We are required to give to the places that minister to us, but that does not inhibit us from giving to ministries we are not personally involved in.  (All Christians are involved in the work of the Gospel around the world.)  The believer’s primary concern with giving is to support those meeting our spiritual needs, then secondly, to support those places meeting the needs of others.

The scripture refers to the money that we give to be set apart because “it is holy to the Lord.” (Lev. 27:30)  I believe the Bible requires our contributions to be “Christian.”  Our giving is to be in places where the glory of God through the pursuit of Christ is of first importance.  Giving to medical research, pet adoption agencies, and your local school’s PTA are all great things, but this is not the portion that a believer has set apart unto God.  Just because the IRS treats them as the same thing doesn’t mean we should.  The Christian is called to be marked with generosity, and therefore will inevitably find himself giving to many “non-Christian” things, but this must be separate from what he has allocated to the Lord.

Minstry Watch:  Is a ministry worth of financial support

Perhaps you are already giving to a ministry, or would like to start to give to one as an additional step in your giving.  The second resource I found this week titled “Ministry Watch”, was provided by Crown Financial Ministries and is a summary from an episode of MoneyLife, their daily radio program.  It discusses MinistryWatch.com which is a website dedicated to helping people determine if a ministry is worthy of financial support. 

The founder, Rusty Leonard started the website so that people could make wise decisions about giving and to direct their giving to the ministries that are truly trying to advance the kingdom. 

Each year, $15 billion is given to the ministries in the MinistryWatch database. Rusty believes that $1 billion of that money is being given to less effective ministries. The goal is to steer that money toward more worthy ministries.

Transparency is one of the criteria used to evaluate a ministry.  Apparently, there are quite a few out there that don’t care to be open about how they manage or use donations. 

The first criteria in the evaluation is whether a ministry is transparent. Ministries need to be open about what they do with the donations they receive. Some don’t want to share that information, about 30-40 ministries. There’s not a lot of government regulation of non-profit ministries. Transparency is the best way to combat scam artists.

Some ministries are transparent, but don’t do well with managing the donations they receive.

Some ministries aren’t well managed though they are well-intentioned. You can determine that when you analyze their budgets and expenditures. You look at how much is being spent on fundraising versus actual ministry and helping people. Donors want money to be used as intended, and you can get that information at the MinistryWatch.com Web site.

After looking around a bit at MinistryWatch.com, I found it helpful to use the find a ministry feature to look up some ministries in which I was familiar.  Also available are the Donor Alert Ministries and Shining Light Ministries lists.  You may want to pay attention to both lists if you’re thinking about adding a ministry to your giving plan.  The Shining Light are 30 of the best ministries according to MinistryWatch.com.  The Donor Alert list are donors that have at least one alert or concern associated with them.

Final thought

Overall, I think the excerpt from Dollars and Doctrine is one of the best in explaining giving as it relates to Christian ministries I’ve come across.  In fact, I don’t recall where I’ve read anything that discusses it so well.  While giving to Christian Ministries is important (and Biblical according to the author), it’s good to know that giving to our local church should be our first priority.  A website like MinistryWatch.com can also help make sure those who give to ministries are giving to the ministries that again are doing their best to further the kingdom.

What do you think about what the author of Dollar and Doctrine had to say about giving to ministries?  Do you think knowing when to give to Christian ministries (in the scope of overall giving) is confusing or possibly unknown to many people?   Do you think MinistryWatch.com is a helpful resource to support you in your giving decisions?  Please share your thoughts on any or all of these questions in the comments.

Based on a strong conviction and again a leap in faith we decided to give more.  We stretched even though we knew other expenses we had planned for the year couldn’t be met.  Our conviction was replaced with peace.  Peace because we knew at that point we had released complete control of our finances to God.  Faith entered into our financial lives , our needs have been met, and things have never been better.

A conviction to help the poor

Recently I’ve encountered a similar conviction.  A conviction to help the poor through the use of the blessings we have received.  For the purposes of this post, I’m thinking of the homeless, but I suppose the poor or needy could expand well beyond the homeless.

We’ve heard messages at church on this particular subject and I knew we needed to consider stretching our giving further for this area, but we’ve never taken a step forward.  Don’t get me wrong, we’ve given to people on the streets in our metropolitan area from time to time.  I work in downtown where there are homeless asking for money from time to time.  I’ve given in some of these cases, but honestly, it’s a second thought.  Its never really been a planned decision to give to the needy each month.

What does the Bible say about and giving to the poor

I mentioned my conviction and scripture has some powerful things to say about giving in this area of our lives.   Jesus identified with the poor and when we are not sharing with them we are not sharing with Jesus in the same way.

Then the King will say…’for I was hungry, and you gave Me something to eat; I was thirsty, and you gave Me something to drink’…The the righteous will answer Him, saying, ‘Lord, when did we see You hungry, and feed You, or thirsty, and give You something to drink?…The King will answer and say to them, ‘Truly I say to you, to the extent that you did it to one of these brothers of Mine, even the least of them, you did it to Me.’  Then He will say to those on His left, ‘Depart from me, accursed ones, into the eternal fire…for I was hungry, and you gave Me nothing to eat; I was thirsty, and you gave Me nothing to drink…to the extent that you did not do it one to one of the least of these, you did not do it to Me’ Matthew 25:34-45 (New International Version).”

Our part in giving to the poor

I think part of the reason why this has never been a deliberate area of giving for our family is that we’ve always thought that our gifts wouldn’t be used wisely.  There was an article in our metro newspaper several years ago that I’ll never forget about.  The article investigated some of the homeless (and interviewed some) in different areas of the city and reported on what they did on a day to day basis.  Some were found to take gifts and use for alcohol and others were found not be homeless at all.  They dressed the part and collected donations each day only to return to their homes in the evening.  I was disgusted by the report and unfortunately, it removed any motivation I had for helping the needy on our streets.

But it wasn’t until recently I was reminded that my part in giving  is simply to make the gift.  After extending the gift, it’s up to that person and God.  In other words, it’s not for me to worry or consider how the gift will be used beyond extending it.

I learned this through an example of giving away a professional sports ticket this year.  I gave a ticket to someone outside of a stadium and found they really didn’t seem all that grateful.  I was looking for more and I guess I wanted to have some satisfaction or receive praise out of my giving.  However, my wife kindly reminded that the gift was not about me.

How to give to the poor

Taking action is the only thing that I can say is hindering us from stretching our giving further to help the poor.  I want to find a way that we can do this each month and have had several ideas, some during the writing of this article, popped into my head.  Here is a short list.

• Find an organization that directly cares for the homeless and contribute to it each month.
• Serve in a homeless shelter once per month by providing food or other help.
• Carry cash with me during my daily commutes to work.  Always offer some cash to someone who asks or is in need.

Do you give to the poor? What ideas do you have to give of your time and resources to the poor?

Photo by pedrosimoes.

Material Pursuit

I’ve caught myself in the past thinking that  just another raise or bonus would provide more for our family and yes, maybe we would be happier.  Maybe not necessarily a truck load more of material possessions, but more money would allow us to experience more travel and vacations.  Or, it might help us become financially free and give more of our time and money to others.

I admit there are sometimes thoughts of having some material possessions that would only come with an increase in income.  I’ve dreamt of many of them.  And there have been past empty moments of material pursuit when the item, after getting it home, didn’t really mean that much to me after all.  I think the excitement seems to be in the purchase of the item itself and not a long-term investment of happiness.

Contentment

I’ve found that part of living in financial peace is to be content with the income and possessions I have today and not count on more tomorrow.  It’s my job to manage them wisely for today.

I recently read an article in the Dallas Morning News about money and happiness.  I thought the article was interesting because it talked about scientific studies that have tested the happiness level of people when they had more discretionary income and could buy more material things.   The studies prove people are not happier when they increase their material possessions.

Positive psychologists and so-called behavioral economists both turned their attention to the money-happiness nexus.  Mapping financial statistics against people’s self-reported happiness, the researches sifted data from rich nations and poor nations, from people up and down the economic ladder, and from individuals as their economic fortunes improved or deteriorated.  The connection between wealth and happiness, they found, was pretty weak.

The article reminded me of so many people who have climbed to the top of the financial mountain only to find themselves without anything once they were there.  They have all the money anyone could possibly imagine having, yet they are alone and unhappy at the top.  Pursuits of material possessions and more money for individualist reasons are empty endeavors, again as studies have proven.

Interestingly, the article discussed other types of spending that can indeed make us happier simply because they are more socially oriented.

One of the most consistent findings of the happiness literature is that having a social network is an excellent predictor of happiness, and it seemed plausible that you could use money to buy happiness that way.

There were two forms of social related spending discussed in which the results have shown to make people happier.

Giving

One of the studies conducted, showed spending money on helping others, or giving, makes people happier.  Most people enjoy helping others; they feel good about it and enjoy the selfless act they are performing.

Higher prosocial spending – gifts for others and donations to charity – was indeed correlated with higher self-reported happiness.

I can say that my wife and I have personally experienced reward with our tithing and giving.  We are happier and have feelings of comfort because we are using money to help people and at the same time giving related to our faith.

In the past, we’ve either cut out giving or reduced it for various reasons.  There was a feeling of emptiness associated with this decision that wasn’t filled until we began our giving again.  Primarily for reasons of faith and probably somewhat an empty feeling, we will continue to give and increase our giving as our wealth increases.

Experience Spending

Studies have show that experience type purchases can generate more happiness because they put happy memories in our minds.  Sure, sometimes you need a vacation from the vacation because some experiences might not be so positive, but apparently, the negative thoughts are often replaced with the positive ones.

Experiences are inherently more social – when we vacation or eat out or go to the movies it’s usually with other people, and we’re liable also to relive the experience when we see those people again.

I can relate to these feelings as I’m sure you probably can too.  Before we had children we had more discretionary income and could afford to travel more and take larger vacations.  If we had the choice of furniture or improving our house, we would typically choose the experience, or vacation over the material item.  There was a positive experience we received in the travel or vacation.  We thought of the furniture as just another item in our house that would soon grow old, but our experience would last forever in our minds.

Final Thoughts

If more money and material items beyond essential needs can’t buy happiness, but experiences and giving can, does that change the way we should think about spending our discretionary income?  I think it can, if we’re conscious about it.

It would seem that discretionary income could be used to stretch giving and also be used towards a moderate amount of material and experience purchases.  Even though the article mentioned experience spending makes us happier, I think  spending all discretionary income on such purchases may not make us happier because we’re focused entirely on ourselves.

Why not take the happiness path to financial freedom? My view of financial freedom is having more money and time to help others after acheiving such goals as funding retirement and eliminating all debt including the home mortgage.  And why couldn’t part of this financial freedom include some experience spending?

What do you think?  Do you think we are happier when using discretionary income for giving and experience spending?

Picture by emdot.

As you may or may not know, One Money Design is about helping people manage money wisely for everyday life. In other words, the content here is focused on helping people become better managers of what God, the owner of everthing has entrusted to our care.  Through the content, I try to share Biblical truths about money at least once per week.

Tithing

One of the things we are called to do is to give back to God 10%, at a minimum, of what is already His. When we don’t give back to God, scripture tells us we are robbing Him.

8 “Will a man rob God?” Yet you rob me. ‘But you ask, How do we rob you?’ “In tithes and offerings. 9 You are under a curse—the whole nation of you—because you are robbing me. 10 Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the LORD Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.” Malachi 3:8-10 (NIV)

Robbing God of the tithe

I will throw open the floodgates of heaven and pour out so much bless that you will not have room enough for it.

God will provide

Why giving isn’t a top priority

For Christian families and individuals, giving must be the first priority in the budget.  Crown Financial Ministries says “for many Christians, the tithe should be the beginning of their giving, not the limit.”

Remember the words of the Lord Jesus, that He Himself said, “It is more blessed to give than to receive” (Acts 20:35)

Society is quite the opposite with much of the focus on receiving or getting

As with many others, our family didn’t always give as a top priority.  We always felt like we needed to find a way to give more, but we let other priorities and obstacles get in our way.  Time spent reading what the Bible has to say about giving and through learning in Biblical studies; God convicted us to take a leap of faith.

We found we were looking at giving backwards.  In other words, we were adding up expenses we felt like we needed and after the expenses couldn’t find much to give each month.

Focus on giving 10%

After prayer and discussion, we decided to eliminate saving for such expenses as Christmas and refocus our monthly budget to give 10% of gross income.

This was quite a liberating experience .  We knew God was now in control of our finances and if it was meant to have money for Christmas and other expenses,  He would provide for us.  Afterall, we believe Christmas is about Christ’s birth.  Through a pay raise and bonus that year, our family was provided enough money to meet all expenses.  We believe God provided for us because we gave first to Him and this has not changed since.

He who sows sparingly will also reap sparingly, and he who sows bountifully will also reap bountifully (2 Corinthians 9: 6-11)

Times are tough today and it’s always easy to find an obstacle to giving.  However, giving requires a change of heart and the proper attitude of giving to God out of your love for Him.  If this is your belief, nothing could be more important than making giving the top priority in your family budget.

How to move giving to the top of the priority list

• Start with a minimum monthly tithe.  10% of gross income is easy to compute.  Ask God to direct you if He wants you to give more.
• Pick a set time to give each month.  The first two payments after receiving each paycheck should be giving first, and debt reduction or savings goals.
• Take advantage of giving conveniences.  You can give through many online bill pay services or online with your church.
• Create a giving based budget.  Prioritize your expenses with giving 10% of gross first by considering nothing else.  Then, allocate the remaining funds to other expenses.   If you are short on expenses, consider adjusting your spending habits.  If debt or other issues are preventing you from meeting those remaining expenses, seek the assistance of a financial counselor.

I understand you purchase the charity gift card as you would any gift card.  First determine the amount of money for the donation and then purchase through several different organizations on the web.  Once you give the card, the recipient can then choose from a list of charities to direct the money or gift.  As an example, Network for Good offers the Good Card.

I wasn’t sure about the gift card giving idea at first, but the more I’ve thought about the concept, the more I like it.  But before discussing why, I should mention I don’t support the charity gift card in place of tithing to your local church.  If already tithing, I think the charity gift card can be a great way to stretch your giving.

Why I like the charity gift card

1. It can put someone in the giving spirit.  Someone who isn’t used to giving can understand what it means to give to those in need.

2. It provides flexibility.  Simply giving on behalf of the recipient doesn’t allow that person to choose the charity.   If you ask a friend if you can make a donation in their name, they might politely decline.  With the charity gift card they can choose the organization they most closely associate with or support.

3. It may provide an opportunity to tell someone about your experiences. The person may become curious and want to learn more about your giving beliefs and/or tithing.

4. The giving may provide funds for a charity that might not otherwise receive them.  In other words, this provides a new avenue of giving that could help charities or ministries.

Things to consider before choosing a charity gift card

1. Only the purchaser of the card can claim the deduction on their taxes.  This is commonly confused because the donation has been made by the person purchasing the card. The person receiving the card is choosing or directing the money to the charity of their choice.

2. Their are some fees associated with the card. Most of them do not exceed 15% of the total amount given and appear to be quite a bit less, but this should be kept in mind.   Sure, some might think it’s better to just give the money in the name of the person so money isn’t used for the fees, but again, purchasing the card opens up the above opportunities or benefits.

3. Before choosing a card, check the charity organizations available for donation for that particular card. The list differs based on the card you choose.

4. Always read the terms and conditions before purchasing the card. If they’re not available, don’t purchase the card.

5. Keep in mind their are termination periods for the cards and if not used, most of the time the funds go to the organization which sold the card.  You might communicate this to the recipient.

What do you think about the charity gift card?  Do you have any experiences you can share?