"Financial Planning Overview"

Stewardship Lesson #5

 

As mentioned earlier, there are some natural laws involved with finances. When we understand those natural laws, decisions in spending become easier. It is easier for us to make spiritual decisions regarding money when we realize the principles God has already set into place.

Financial planning is allocating limited financial resources among various unlimited alternatives. As we have discussed, there are always more ways to spend money than there is money, regardless of how much money you have at your disposal. Financial planning is simply determining before you spend the money how that money will be spent. It is a map, if you will, of your spending for the future. There is a cliche that says, “People don't plan to fail, they just fail to plan.” This is very true with finances. No one says, “I want to be broke all the time. I think I'll go spend every penny I have & then borrow more to spend so that I can be broke. Being without money is great fun!” NO! We don't plan to fail, we just fail to plan. Hopefully, you can learn how to plan so that you are successful in the management of the resources God gives to you.

There are four overriding factors involved with all financial planning:

1. Everyone has limited resources: It makes no difference if you have ten million dollars in the bank or if you have only ten dollars. Your resources are limited. Knowing this, you must learn to live within whatever your resources are.

John & Gail Douglas are missionaries in Africa. Their nation is one that is torn by war & strife. Famine & drought have taken their toll on the livelihood of the people they work with. People live here whose possessions all fit in one trash bag. They live on less than $150 per year. Yet, the Douglas' teach the people that they must learn to live within what has been provided for them by God. Absurd you say? No, not at all. The people of that locality continue to live regardless of their state of comparative poverty. You see, everything dealing with money is comparative. There will always be those wealthier than you & those poorer than you. And we are all limited in our resources.

2. There are more alternative uses of money than money available. We talk about this previously. You will always have more choices to spend money than you have money. What then, can help you know how to properly spend what you have?

3. Today's decisions determine destiny. A dollar spent is gone forever & can never be used in the future for anything else. And if you spend money today that you will need tomorrow, what will you use tomorrow?

Our nation has become a nation of overachievers when it comes to spending money for consumption. We reason that if we want something, let's buy it. After all, we can save some of next week's paycheck for retirement. We will be diligent about our spending at some later date – but not now. For now we want to buy what we want - & we'll pay for it later. But what if we loose our job? What if illness comes? What if we don;t make the money we thought we were going to make? What then?

Every penny you spend today determines, financially, what tomorrow will be for you. Once a dollar is spent you can't retrieve it. When it's gone, it's gone forever.

4. The longer the term of perspective, the better the decision making. The further into the future you can look, the further into the future you can see your needs - & if you will buy accordingly, the better decision you will make. If, for example, you know you need shelter now, & you have a choice to rent or buy, the further into the future you can see, the better your decision. If you know you will be in a locality for a few years, & you can afford to do so, purchasing a house is a better decision than renting. To rent is a temporary decision. To buy is long-term perspective.

The same is true with cars. If you need transportation now & you know you will also need it in the future, it is better to buy a car that will last than one that is all glitz. The longer the term perspective, the better the decision making. When considering a purchase, always ask: “How will this serve me five years from now? Ten years from now? Twenty years from now?”

Obviously, some items cannot be considered for long-term usage because they are not long-term items, but the principle still holds true. The longer the term of perspective, the better the decision.

Recap:

1. List the four Biblical principles of finances (lessons 1-4).
2. Now list the four natural laws of financial planning (in this lesson).
3. How do each of these laws apply to you personally?