God's Will in Finances

Gaining Perspective

3.8 billion people in the world today live in countries with a per capita Gross National Product that is less than the Alaska Permanent Fund! The Gross National Produce (GNP) is the total of goods and services produced in a country in a particular year divided by the number of people residing in that country. In most third world countries, there is a very uneven distribution of wealth. This means that the GNP figures are probably more than the average person actually has to spend.

I'm always interested in asking immigrants or visitors from other countries what most surprised them when they first got to America. Sometimes the answers are funny. One Russian woman said she was surprised that so many people were selling their garages! A man from Vietnam said he was surprised that we place so little value on poetry. In the daily newspaper where he's from, everyone reads the poem first! Many people are surprised by how much we throw away. I read somewhere that you can tell someone from a third world country has become thoroughly acculturated to America when he/she throws out usable garbage like jars and cans without a second thought.

In K.P. Yohannan's book, Revolution in World Missions, he recounts his initial impression as a native missionary-in-training coming to the United States for the first time:

As I changed planes for Dallas at JFK International in New York, I was overcome at the sights and sounds around me. Those of us who grow up in Europe and Asia hear stories about the affluence and prosperity of America, but until you see it with your own eyes, the stories seem like fairy tales.

Americans are more than just unaware of their affluence—they almost seem to despise it at times. Finding a lounge chair, I stared in amazement at how they treated their beautiful clothes and shoes. The richness of the fabrics and colors was beyond anything I had ever seen. As I would discover again and again, this nation routinely takes its astonishing wealth for granted.

K.P. goes on to describe taking away one after another of the things we Americans take for granted until we arrive at the lifestyle lived by the majority of people in the world. Take away most furniture, all appliances, most food, the running water, the electricity, the books, the government services, and the hospitals. Then move the family into the tool shed. That's the norm in India, K.P.'s home. He goes on:

In Texas, a land that in many ways epitomizes America, I reeled with shock at the most common things. My hosts eagerly pointed out what they considered their greatest achievements. I nodded with politeness as they showed me their huge churches, high-rise buildings and universities. But these didn't impress me very much. After all, I had seen the Golden Temple in Amritsar, the Taj Mahal, the Palace of Jhans, the University of Baroda in Gujarat.

What impresses visitors from the Third World are the simple things Americans take for granted: fresh water available twenty-four hours a day, unlimited electrical power, telephones that work and a most remarkable network of paved roads.... My American hosts seemed to have TV sets in every room—and operating day and night. This ever-present blast of media disturbed me. For some reason, Americans seemed to have a need to surround themselves with noise all the time.

Why do they always have to be either entertained or entertaining? I wondered. It was as if they were trying to escape from a guilt they had not yet defined or even identified.

I was constantly aware of how large—and overweight—most Americans seemed to be. I was amazed at how important eating, drinking, smoking and even drug use were in the Western lifestyle.

One of the ironies is the relatively small price North Americans pay for food. One study showed that in the United States only 17% of disposable income is spent on food. In India it is 67%. When you have $10,000 to spend, that 17% works out to a comfortable $1,700. For the Indian family earning $200, 67% is $134. Many native missionaries and their families experience days without food, not because they are fasting voluntarily but because they have no money to buy rice.

Yet all our worldly wealth is nothing compared to what we will inherit as children of God. There's a joke about a very wealthy Christian man who was dying. He knew that you aren't supposed to be able to take it with him, but he prayed to God for a special exception. Eventually God relented and said OK, he could take one suitcase with him.

When he got to the pearly gates, he was asked to relinquish his suitcase. "You can't take it with you," he was told. "But I have special permission," he said. "All right, let's have a look at it."

The suitcase was opened to reveal blocks and blocks of shining gold. The angel looked at him in shock and said, "You brought pavement?"

We don't value eternal life or heaven properly because we don't have any conception of it. If you offer a little child a choice between trinkets and a stock certificate worth millions, which would she choose? She doesn't have any conception of the value of the certificate. She'd choose the trinkets, just as we tend to choose the temporary benefits and comforts of this world.

Seek first His kingdom and His righteousness, and all these things will be given unto you as well. (Matthew 25:33)

Remember Who Owns Everything

Although most Christians would mentally assent that God owns everything, it doesn't often work that way in day-to-day life. It's part of our nature to want to own and hoard things, and to never be satisfied with what we have. Some people find it freeing to get blank deeds and actually sign their assets over to God. Unfortunately, you can't do that with liabilities. God, as the owner, has rights. We, as the stewards, have responsibilities. Even our children belong to God. We are stewards of all we "own."

For we brought nothing into this world and it is certain we can carry nothing out. (1 Timothy 6:7)

The Law of Reciprocity

Even non-Christians have discovered what is called the law of reciprocity, that you must give in order to receive. It's included in secular books about how to get and stay rich!

Money and Anxiety

Who of you by worrying can add a single hour to his life? (Matthew 25:27)

An absence of anxiety about money should separate Christians from the world.

Learn to live well below your means. Frugality is the cornerstone of wealth building.
Consider financial independence more important than high social status.
Sacrifice now for BIG dividends later. Rich people buy luxuries last. Poor people buy them first.
Don't even think about getting rich quick. Get rich slowly.
Cultivate personal self discipline. It's the #1 delineating factor between rich and poor.
Avoid a consumptive lifestyle. It's your biggest enemy.
Get the power of compounding to work FOR you rather than AGAINST you.
Control your money. If you don't control it, it will control you.
Remember that money is amoral. It has great potential for good as well as for evil.
Appearances don't tell you much. Many people with luxury houses and cars have no wealth. Many wealthy people live in average neighborhoods.
Even if you have NO money, you can begin to become educated. With every dollar you spend, you are choosing your future.

Following Up on Your Net Worth Statement

Were surprised at your net worth? I've seen people in tears after figuring it out. Putting it down on paper is like going to the doctor when you think something may be seriously wrong. You avoid it, thinking it might go away if you ignore it.

No matter what it is, get past any shame or blame as quickly as you can. Grieve and then make peace with the past. There's nothing you can do about the past, but you can change the future. In particular, you can learn from your mistakes and attempt to teach your children what you wish you'd known. I highly recommend the book Debt-Proof Your Kids by Mary Hunt.

Some interesting statistics:

The average net worth in America, according to one source, is $206,000. This average is greatly affected by the financial elite.
The median (typical) household in America has a net worth of $56,000, excluding home equity.
90% of Americans report that they struggle financially.
The typical household has $38,000 in debt (as of 1995).
70% of the American public lives from paycheck to paycheck.

Figure out your propensity to borrow by dividing your liabilities by your assets. This will give a percentage showing your likelihood to borrow to reach your goals. Zero percent means no borrowing. 100% or greater shows you are essentially bankrupt. Make it a goal to lower this percentage.

Figure out your propensity to accumulate by dividing your net worth by the number of years you have worked. This indicates how much accumulation on average has taken place each year. You can project how long it will take to reach certain financial goals at your current rate of accumulation.

Figure out how wealthy you are (financially speaking) by multiplying your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth theoretically should be. Compare that with what it actually is.

What Types of Assets Do You Own?

Liquid assets can be converted to cash immediately with no loss of principal. They include bank accounts and money market funds.
Productive assets generate income. Wealthy people tend to spend their money on productive assets rather than consumer items, and that's their secret.

Figure out if you have enough liquid assets by dividing your liquid assets by your short-term liabilities. The result should be at least 2. If it is less than one, you'll probably have trouble paying debts as they come due. Total liquid assets should equal 25% of disposable income.

One multimillionaire writer has the controversial opinion that a home is not really an asset but a liability because it increases expenses rather than income.

Homework: Figure Out Your Cash Flow

Inflows:

Salary
Business income
Earnings or investments
Pension or retirement income

Outflows:

Giving
Taxes
Debt repayment
Living expenses
Accumulation

Make guesstimates for now, then keep track of your spending for awhile to get accurate numbers. Any surprises?

What is your cash flow margin? That means what is left after giving, taxes, expenses and debt payments?