A Christian View of Financial Stewardship

Advice to getting your financial situation better for the sake of you and your family. This advice can be generally applied to persons living outside the USA, but please consider that much of the advice here is specific to the USA.

Topics Covered:

  • My Qualifications
  • The Christian Perspective
  • The Difference Between Gambling and Taking Responsible Risk
    • Understanding Risk
    • Why Gambling is Always Wrong
  • The Difference Between Seeking a Return and Loving Money
  • Flee From Multi-Level Marketing Schemes
  • The Practical Key Elements to a Successful Christian Stewardship
    • Wisdom
      • General Areas
      • What to do With Your Money that You Can Save
    • Knowledge
      • General Points to Learn
      • Financial Advisors
      • Inheritance
      • Getting a Will or a Trust and Nominated Beneficiaries
    • Time
  • Basic Debt Management and Improving Your Credit Score

My Qualifications:

I am not a licensed financial advisor and only offer the following advice as education only, with the understanding that everyone should exercise their own due diligence, and, if necessary, to seek out a financial advisor to apply these suggestions to their specific situation.

  • I have a perfect to near perfect credit rating
    • A perfect score of 850, for five months over the last year, over 800 for several years
  • Formerly had a series 7 securities license, which is a stockbroker’s license to buy and sell securities, namely, stocks, bonds, options, etc.
  • Formerly had a life insurance license
  • Experience working in the banking and investment industry for over twenty years

The Christian perspective on finances will help you, but it is not a guarantee of prosperity. Avoid anyone who promises you wealth. Such persons are swindlers who drain people of their time and money by selling a mere dream [Various Texts].

1 Timothy 6:6-11 But godliness actually is a means of great gain when accompanied by contentment. For we have brought nothing into the world, so we cannot take anything out of it either. If we have food and covering, with these we shall be content. But those who want to get rich fall into temptation and a snare and many foolish and harmful desires which plunge men into ruin and destruction. For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs. But flee from these things, you man of God, and pursue righteousness, godliness, faith, love, perseverance and gentleness.

Are you content regardless of your financial circumstances, in the sense that you are convinced and know that being in a state of godliness is the greatest wealth that you can possess? Now you may have trials due to being financially vulnerable and you would like to naturally see a financial situation that is not such a trial, but when are we in the wrong regarding these things? When is our consideration of our wealth a wrong preoccupation with just wanting to get rich? It is important for us to understand rightly the Christian perspective on our finances.

The Christian Perspective

  • Ours is a stewardship, we will give an account to our Lord [Various Texts]
  • We are under obligation to show a return, to be a good steward [Various Texts]
  • We are under obligation to provide for our own [1 Tim.5:8]
  • We are to seek first His kingdom and righteousness, not to seek out wealth as the priority of our lives, even if poor we can have peace, knowing that our Lord loves and cares for us [Matthew 6:25-34]
  • It is necessarily a long-term view, as opposed to get-rich schemes, which are nothing less than gambling
  • Regardless of any wealth stored up, the Christian Perspective is one in which we sincerely pray, “Give us this day our daily bread” because we know that day by day we look to the Lord who gives and who takes away [Matthew 6:11; Job 1:21]

The Difference Between Gambling and Taking Responsible Risk

When it comes to fulfilling our stewardship with our money there are some Christians who think investing in the stock market is just gambling and that people should avoid it. This is seriously wrong and fails to recognize the important difference between gambling and taking responsible risk. We are not being a responsible steward if we are earning 4% interest with our money in the bank and yet inflation is at 5% or higher, because we are effectively losing 1%.

Understanding Risk

Risk is the steward’s world. Even if we loan money to a friend that we implicitly trust there is risk, for that friend may not be able to pay us back because of unforeseen reasons. The steward may have filled the barn with grain because of hard work but the risk of fire, flood, and contamination, means that in order to be a good steward one should also consider safe guards and insurance.

When our Lord Jesus said that money should have been deposited in the bank so that there might be a return with interest there was implied risk [Matthew 25:27]. Any bank could fail, any venture could fail, and any business concern could fail. The bible acknowledges this and the answer it gives is that the steward is to recognize the risk and responsibly assess it. Our Lord Jesus is not ignorant of risk, but what He emphasizes in His teaching is that a steward has a responsibility to provide a return. Jesus is not impressed with those who do nothing for the sake of avoiding risk.

How then would our Lord have us to face the risk that is all around us?

Luke 14:28-30 “For which one of you, when he wants to build a tower, does not first sit down and calculate the cost to see if he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who observe it begin to ridicule him, saying, ‘This man began to build and was not able to finish.’”

Notice in our Lord’s teaching the implied risk of building a tower. The answer is not to avoid risk but to ‘first sit down and calculate the cost to see if he has enough to complete it’. If it is because of ignorance that we avoid the stock market or any business venture, it does mean that if we were to invest with such ignorance, it would be nothing more than gambling. What often makes an investment gambling is ignorance, which is not characteristic of a faithful steward. Again, risk is what a steward responsibly calculates, not what he avoids, because there is no such thing as a stewardship that does not involve risk.

There are “investments” that are merely gambling, but again, it is important to understand the nature of the investment and to fulfill the necessary ‘due diligence’ of the faithful steward. Investments such as futures, commodities, options, selling short, and the like, may be ways to protect against the risk of fluctuations in price, hedging to protect against loss, and even ways to make money regardless of market direction. The consideration of any investment is part of being a faithful and responsible steward, but for others it can be a temptation to dive into without the necessary due diligence of understanding. If we invest in anything without understanding then we are reducing our stewardship to mere gambling.

Why Gambling is Always Wrong

God intended that we should love Him and love our neighbor as we do business in this world. To gamble is to seek wealth at the expense of loving God first, by not trusting in Him. To gamble is to not love our neighbor because we are endeavoring to obtain wealth at the expense of another. The winnings in gambling are always funded by the losses of others. God intended commerce and all business transactions to be according to a just scale [Proverbs 16:11]. God’s will is that we transact in business and investments with the perspective of seeing our neighbor also benefit as well. The swindler only cares about himself profiting and does not have any love for God and for his neighbor.

The Difference Between Seeking a Return and Loving Money

Remember Paul’s warning above. Please read this again.

1 Timothy 6:10 For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs.

Prayerfully consider it. Heed God’s Word and use it as a means of grace to keep on the right track in consideration of your wealth or want of it.

Some Christians avoid fulfilling a responsible stewardship simply because of fear that they will fall into loving money. Some even take on a false piety that financial impoverishment is how to live the Christian life, but then they cannot explain wealthy persons in the Bible like Job, Abraham, Isaac, Jacob, Joseph, David, and others, who could be wealthy and yet also right with God.

Understand and know that seeking a return as a faithful and responsible steward is not loving money.

I think we would all agree that to be a slave is a picture perfect example of being in financial trial. Today there are still literal slaves, which is unlawful and a sin, in which sinful men and women steal away a God given right belonging to all mankind. Paul refers to those who literally steal personal freedom away from others as ‘kidnappers’ (literally ‘slave traders’) [1 Timothy 1:8-11], and necessarily, as those who are contrary to the will of God.

For our study I am thinking primarily of modern slaves. By ‘modern slaves’ I mean those who are currently in debt and without sufficient income and are burdened and unable to get ahead or to provide for their loved ones in such a way that the next generation is better off. It is essentially the legacy of being a slave. This present consideration is about improving the financial situation of those who see themselves in such a situation.

Paul addresses a right perspective regarding being a slave.

1 Corinthians 7:20-24 Each man must remain in that condition in which he was called. Were you called while a slave? Do not worry about it; but if you are able also to become free, rather do that. For he who was called in the Lord while a slave, is the Lord’s freedman; likewise he who was called while free, is Christ’s slave. You were bought with a price; do not become slaves of men. Brethren, each one is to remain with God in that condition in which he was called.

Paul is referring to literal slavery that was not due to being kidnapped, in which men steal the God given freedom reflected in the 8th commandment ‘Thou shall not steal’, but what was a common economic situation because of indebtedness or as an outcome of war. The point here is that Paul says that such a person, who is a literal slave in a biblical form of slavery, is to not worry about it if they cannot obtain their freedom – but if they are able to obtain their freedom – then Paul says ‘rather do that.’

Paul does not say that they are to avoid the consideration of whether or not to improve their financial situation, but rather to consider it. Paul clearly says it is better to be free from slavery. If a literal slave has a right to consider improving their situation, how much more a modern slave? Paul is promoting a better return than slavery and is not promoting a love of money in such a consideration.

Notice the Proverbs 31 woman. There is an emphasis on pursuing a return for her household.

Proverbs 31:10-31 An excellent wife, who can find? For her worth is far above jewels. The heart of her husband trusts in her, and he will have no lack of gain. She does him good and not evil all the days of her life. She looks for wool and flax and works with her hands in delight. She is like merchant ships; she brings her food from afar. She rises also while it is still night and gives food to her household and portions to her maidens. She considers a field and buys it; from her earnings she plants a vineyard. She girds herself with strength and makes her arms strong. She senses that her gain is good; her lamp does not go out at night. She stretches out her hands to the distaff, and her hands grasp the spindle. She extends her hand to the poor, and she stretches out her hands to the needy. She is not afraid of the snow for her household, for all her household are clothed with scarlet. She makes coverings for herself; her clothing is fine linen and purple. Her husband is known in the gates, when he sits among the elders of the land. She makes linen garments and sells them, and supplies belts to the tradesmen. Strength and dignity are her clothing, and she smiles at the future. She opens her mouth in wisdom, and the teaching of kindness is on her tongue. She looks well to the ways of her household, and does not eat the bread of idleness. Her children rise up and bless her; her husband also, and he praises her, saying: “Many daughters have done nobly, but you excel them all.” Charm is deceitful and beauty is vain, but a woman who fears the LORD, she shall be praised. Give her the product of her hands, and let her works praise her in the gates.

Interestingly, this woman is not commended because she prays and goes to bible studies, but because of her financial resourcefulness. Out of her mouth comes wisdom and ‘the teaching of kindness’ but she also has strong arms, is dressed in ‘fine linen and purple’, and busies herself with practical material returns. She seeks a return ‘from afar’ and from her earnings she then multiplies further returns. She is not afraid of the future because she is wise with her stewardship.

Flee From Multi-Level Marketing Schemes

Churches are plagued with infiltrators coming into the church spreading multi-level marketing schemes, promising financial independence and are often supported by motivational speakers devoid of the true gospel. Do not fall prey to schemes even if they do work because God does not want you to pursue wealth in itself, but rather, He wants you to pursue a faithful stewardship, which may or may not ultimately result in wealth.

Regardless of how good a product may be, if the meetings consist of exciting promises of wealth and financial independence then run for the door!

Countless Christians waste time and money pursuing a mere dream. Yes, it works for some people, but those persons have built their success on a swindler’s spin that necessitates the participation of several people who are a means to an end. The multi-level marketing scheme only requires the ongoing success of convincing people to spend their money and time promoting a fantastical idea, that appeals to a fleshly desire for wealth. If you can get people excited about being wealthy, just to dream about it, you will make money, but realize that the bible says that swindlers will not inherit the kingdom of God [various texts]. Is it worth losing your soul as you adversely impact other people?

Do not weary yourself to gain wealth, cease from your consideration of it.

Proverbs 23:4

We are to not seek wealth, meaning we are not to weary ourselves in order to be rich or to be considered wealthy. This proverb is not saying that we should not be a wise steward that seeks to make a return on what is entrusted to him. You know the difference, whether your heart is that of a faithful steward seeking a profitable return or if your heart is intent on riches. Keep a guard on your heart.

The Practical Key Elements to a Successful Christian Stewardship

Understanding these essential points of the Christian perspective of our stewardship we can now address the subject of fulfilling our stewardship. In order to fulfill our stewardship we need three practical key elements. It is not possible to fulfill our stewardship without these essential elements. Please understand that the key elements that I am referring to are the practical things, not spiritual characteristics that are necessary, such as the fruits of the Spirit.

  • Wisdom
  • Knowledge
  • Time

Wisdom

Proverbs 6:6-11 Go to the ant, O sluggard, Observe her ways and be wise, which, having no chief, officer or ruler, prepares her food in the summer and gathers her provision in the harvest. How long will you lie down, O sluggard? When will you arise from your sleep? “A little sleep, a little slumber, A little folding of the hands to rest”– Your poverty will come in like a vagabond And your need like an armed man.

Proverbs 21:17 He who loves pleasure will become a poor man; He who loves wine and oil will not become rich.

Often it is the case that we cannot change our income, but we can endeavor to maximize our resources. Our resources are all those things that our Lord has given to us that are of value. This is most commonly cash, but it also includes possessions of value. As a steward we must endeavor to make as much of our resources, as possible, available for the best fulfillment of our stewardship.

General Areas to Consider for Improving One’s Stewardship

  • Are your resources overly spent on items of value that uselessly sit on a shelf? Ok, maybe don’t sell them but learn from your mistakes.
  • Are too many of your resources tied up and dependent upon uncertain valuations, such as rare coins, precious metals, collectibles, and the like, which do not provide any current income?
  • Is too much money tied up in your means of transportation that is only costing you resources and does not provide for any present return?
  • Are too much of your resources tied up in your principal dwelling or is your mortgage interest costing you too much, when you could possibly downsize? Important considerations are both the actual amount of money you put into the dwelling and its current worth. Current worth is not necessarily what you may get for it and in selling such an asset you may or may not have regrets.
  • Take an inventory of your expenses every now and then – are you overspending or what can you do without?
  • Take an inventory of things you can sell to more wisely put to work for the sake of your family or to give to charity
  • Do you have an Emergency Savings for 3 to 6 months of living expenses? (It is imperative before investing or loaning money that you have a savings)
  • Keep in mind the need for liquidity in order to prevent over extending yourself necessarily resulting in an adverse situation. Do not tie up all your resources.
  • Do not generally buy things with debt unless it is an appreciable asset or necessary to make money
  • If at all possible pay off credit card debt every month
  • If under the burden of debt, especially with high rates of interest, take out a personal loan and have a plan to pay off the debt. This will help to maximize your cash for better use.
  • If currently you are unable to find available cash for investing/saving consider the following changes to your expenses:
    • cancel subscriptions
    • buy in bulk and freeze items when they go on sale (e.g. corned beef is cheaper around St. Patrick’s Day)
    • don’t eat out, bring a lunch to work, don’t get that coffee on the way to work
    • if your mortgage too large, consider refinancing or selling
    • if your rent is too expensive, would you save money with a longer commute
    • downsize, economize, etc.
    • get a good insurance broker, who is not solely committed to one company, but can shop around for you
    • use coupons and apps for your grocery store to save on items

What to do With Your Money that You Can Save

There are two ways to invest from a reasonable amount of your resources. Either loan out your money or buy something. If you loan your money how much will you earn and for how long are you tying up your money? If you buy something will it increase in value and will it produce any ongoing income? These are important questions and there are still more questions to ask for each approach.

You can either loan your money to receive interest from a bank, U.S. treasuries, business or utility bonds, or you can purchase real estate or an ownership in a business, which can either be as a director who runs the business or as an investor, such as in buying stocks.

Knowledge

Proverbs 10:4 Wise men store up knowledge, but with the mouth of the foolish, ruin is at hand.

Proverbs 13:16 Every prudent man acts with knowledge, but a fool displays folly.

Proverbs 24:4 And by knowledge the rooms are filled with all precious and pleasant riches.

It is your responsibility to do the due diligence regarding your own resources. Do not pursue anything without reasonable soundness, otherwise it is mere gambling. God does not want you to roll the dice. In Luke 14, our Lord emphasizes ‘sitting down and calculating’ a measure before undertaking it [Luke 14]. Any steward that rushes headlong, without a reasonable consideration, is being an unrighteous steward.

When it comes to either loaning out your money for interest or investing in the market, there is safety in a multitude of counselors [Proverbs 11:14]. Have more than one resource of learning. Just as you should “not put all your eggs in one basket,” do not listen to only one advisor.

Things to Study in Order to be a Knowledgeable Steward

  • Bull market and Bear market and what to buy and sell during each cycle
  • Understand the difference between being a long term investor and a trader
  • Stocks, mutual funds, bonds, treasuries, C.D.’s
  • ‘Top-Down and Bottom-Up Investing’ – understanding both the Macro and Micro factors impacting your stewardship (both are important perspectives of investing)
  • Diversification (holding 25 or more stocks or investing in mutual funds, or both) [Ecclesiastes 11:1,2]
  • Dollar cost averaging – every paycheck take a small portion and make an investment and this will spread your risk over time as opposed to dumping all your money at one time into a market subject to normal ups and downs
  • The impact of interest rates and how that affects the market and the value of debt securities (loaning our money) before they mature – understanding when bad news (e.g., higher unemployment rate) is good news (rates going down) and when is bad news simply bad news.
  • Dividends (what they are and when to have dividends to automatically reinvest or paid to as a source of income)
  • The risks of loss of capital in owning shares (no FDIC protection)
  • Warren Buffet said, “Bad news is an investor’s best friend’ (i.e. understanding when to buy low, avoid buying high)
  • The value of a long-term strategy rather than trying to “time the market”
  • Many strongly suggest the advantage of just investing in a low cost S&P 500 Index Fund such as SPY (paired with SPX) or QQQ (paired with the NASDAQ), also the Vanguard S&P 500 ETF (VOO) as an effective way to invest with a long term strategy and this really does present a low risk choice because the index funds are the best companies in the U.S.A. and bad ones are removed!
  • The dangers in real estate (pros and cons)
  • The pros and cons of tax-sheltered investments, like IRA’s ROTH IRA’s, 401k’s (best to have both tax-sheltered and non tax-sheltered investments)
  • Tax implications

Understand annuities. They are often sold as a more conservative investment. Annuities are not an investment, they are a type of insurance. To sell an annuity one must have a life insurance license because an annuity addresses a type of risk regarding how long we live. Life insurance addresses the risk of dying too early, while an annuity is insurance against the risk of living too long, namely running out of money before you die. What return you get from an annuity is often determined by the generosity of the insurance company. There are variable annuities that allow funds to be invested in the market, but there are usually high fees and commissions to buy an annuity. The very worst type of annuity will keep all of your deposit if you should die, leaving your heirs nothing. So, if you are at risk of running out of money before you die, consider carefully the details of the policy.

Financial Advisors

If you must defer the due diligence to another, seek out a financial advisor. Look for an advisor who charges a flat fee as opposed to a commission rate, as the later is inclined to just offer what pays the highest commission. I personally recommend opening a Charles Schwab Investor Checking Account, which will include opening a brokerage account. Great resource of free information and both their accounts and checking and brokerage transactions are fee free. Vanguard is a fantastic company as well. I highly recommend Vanguard and Charles Schwab.

One company is Facet, a fee only advisor service providing a full range of options covering insurance and taxation needs. Nevertheless, due the best you can with your own fact checking. I have received incorrect advice from a local advisor not associated with Facet that would have adversely impacted me. Does the advisor go to sources such as irs.gov for answers or just to other financial companies?

Inheritance

Proverbs 13:22 A good man leaves an inheritance to his children’s children, and the wealth of the sinner is stored up for the righteous.

Both those who leave wealth and those who inherit wealth have a responsibility to understand implications so that a faithful stewardship is fulfilled.

Consider the following:

  • Life Insurance – for the purpose of leaving an inheritance if your are not self-insured. Buy only term life insurance and invest the difference, as opposed to buying whole life insurance policies that are too expensive and only provide a return based on the policy – get enough life insurance coverage to pay off all debts, pay for funeral, time off work, and if able, to improve their situation
  • Tax implications for those who inherit
  • How to avoid probate and burdens for your loved ones
  • Inherited IRAs – there is a lot of confusion regarding the rules that one must adhere to when inheriting an IRA. If you are a spouse there are one set of rules, if a non-spouse, another set of rules. Get your answers right from the source. IRS link regarding inheriting an IRA. [if outdated, search at irs.gov under ‘Retirement Topics – Beneficiary’].

As far as leaving an inheritance to your family consider investing in stocks with an ultra-long strategy in mind and you will most likely leave a huge inheritance for your posterity. But there is something very important to be aware of because of the changes to tax-sheltered investments, namely inherited IRAs.

Consider the following outcome. Think of buying equities (i.e. stocks) like buying land that you leave to your loved ones. You would be shocked to learn that if you left land to your family that they were then required by law to sell that land within ten years, would you not? Well, if you buy stocks in a tax-sheltered product, such as an IRA, any non-spouse that inherits your stocks in an IRA will have to deplete it in full within 10 years of your death.

Instead, buy your stocks in a normal taxable Brokerage account and then it is like land that your family can keep for as long as they like and the dividends that they earn can be a source of income. It is imperative to have your dividends set to reinvest as the outcome is almost always tremendously better, unless you need the income. Teach your family that they should also do dividend reinvestment as much as possible for the continuing growth of the estate.

Getting a Will or a Trust and Nominated Beneficiaries

It is imperative as a matter of fulfilling our stewardship that we set up legally binding instructions regarding our estate. Do not leave your children with an irresponsible mess to resolve. At the very least you should have will and it should be clearly understood. If your estate is over a million dollars you should hire a lawyer to create a trust as this will help to avoid probate.

Understand that nominated beneficiaries are more authoritative than a will. So take care to nominate specific names on each account you have (bank account, brokerage account, IRA, 401k). Be aware that if you add a person as a joint owner of an account that the will and nominated beneficiary will not come into affect until all owners are deceased. Parents often add one sibling to their bank accounts in order to help with paying bills, but then don’t realize that upon their death that one sibling owns the funds that they had actually intended the other children to have inherited as well, effectively cutting of all the other siblings.

Time

James 5:7 Therefore be patient, brethren, until the coming of the Lord. The farmer waits for the precious produce of the soil, being patient about it, until it gets the early and late rains.

The practical key element of time necessitates patience. Just as the farmer waits for the precious produce of the soil, so any steward waits upon the Lord as they apply the other practical key elements. James is addressing the waiting for our Lord’s return, but he does so by drawing analogy to waiting for a crop to grow. Do not pursue get-rich schemes that promise quick returns. Be patient and like a farmer wait for the increase, based upon the knowledgeable allocation of your resources.

As you continue to grow in your knowledge allow for time. In other words, as you keep learning, allocate your resources over time. Over time you will learn to navigate a changing market and use the opportunity to learn from the experience, as the market is cyclical, meaning that history will keep repeating itself. Learn what investments are good in a bull market and what are good in a bear market.

Do not try to ‘time the market’, when it comes to investing in the stock market. Joined with knowledge utilize Dollar Cost Averaging to spread out your risk over time. Obviously, utilize your knowledge in order to avoid buying high instead of buying low, but understand that trying to time the market is not the answer to a good stewardship. Understand that it is principally allowing for time that will produce a return.

Basic Debt Management and Improving Your Credit Score

Some people will only live on cash and never use credit. It is important to establish a good credit rating as this will necessarily positively impact a number of things. If you want to rent an apartment, set up utilities, apply for a personal loan, apply for certain jobs, or take out a mortgage, then people are going to want to know what your credit rating is. A good credit rating will substantially improve the rate of interest you will pay on your debts and will make business transactions easier.

Yes, some cannot handle the responsibility and temptation of having a credit card. If this is the case, then such a person will also not be able to handle responsibly an extra $1000 in their bank account.

Therefore, deal with the responsibility and be an overcomer with the help of the Lord, as you would with any temptation. Do not neglect your stewardship just because there is risk involved. What steward is not daily faced with risk? Do your work in furthering your knowledge about credit and how to manage your spending and this will help you to pursue a responsible stewardship.

If your resources are stretched then only use your credit card for one purchase each month and be sure to set up an automatic payment. To have a good credit score you need to use credit and never be late on your due date for payment. It is imperative to pay off your credit card every month so that you avoid interest.

If you are under a burden of debt, stop using the card except for an automatic charge of a minimal amount. Consider the following:

  • Consolidate your debt with a Personal loan that has a better rate of interest
  • Ask the Credit Card companies for help (e.g. set up a payment plan, reduced interest rate for a period of time)
  • Transfer the debt on your card to another credit card that is offering no interest for six months – BUT DO NOT USE THE NEW CARD AT ALL AND MAKE A PLAN FOR YOURSELF TO PAY IT OFF BEFORE THE NEW RATE BEGINS