Four stages reflect Christian values, priorities
Family financial management for Christians involves the family doing basic financial planning from a Christian perspective. Basic principles of this process are summarized in four stages listed below. It’s important for Christians to make sure each stage reflects our Christian values and priorities.
Step 1: Set short-term and long-term goals.
Goals might include …
• Reduce or eliminate credit card debt;
• Establish an emergency fund;
• Save for college or to purchase a home, etc.;
• Save enough to have adequate retirement income.
Since an entire family is affected by financial planning decisions, the family should be involved in setting the goals.
Step 2: Assess your current financial status.
Add up total assets and liabilities (debts). Your assets less your liability equals your net worth. A family cannot plan appropriately for the future without a realistic assessment of their situation. Recalculate your net worth each year to see if progress is being made. If net worth goes down without a solid reason, it means there is a need for serious work on your financial plan.
Step 3: Prepare a three-part family budget.
First, itemize anticipated income from all sources.
Second, identify fixed expenses such as housing, utilities, insurance, taxes, etc.
Third, estimate flexible expenses. These include food, clothing, entertainment and many other things over which we can make choices regarding the level of expenses we will have.
Keep the budget simple enough that it will be used. Remember, family members with no input in making the budget will also tend to ignore it.
Make sure the budget reflects a Christian perspective. Include the tithe as a fixed expense. Other charitable giving may be listed as flexible expenses.
Step 4: Implement the plan.
The plan will only be as effective as its implementation. Keep simple but adequate records in order to monitor progress and stay on track with the plan and goals.
“The two great tests of character are wealth and poverty.”
Don Spencer is Kentucky Baptist Convention Church Financial Beneﬁts Counselor.