Nothing makes you think about your finances like a disruption to them. COVID-19 has disrupted finances not just here in Japan, but all around the world. Many people have had reduced hours resulting in reduced income. Some people have lost their income altogether as job opportunities fell through or businesses had to close or cut back. While we can’t control world economies, the bible does teach us how to be wise with our own finances and how we can manage them well.
It’s never too late or too early to begin managing your finances. Why? Because we want to be good stewards of what God has given us so that we can be a greater blessing to the world around us! For a lot of people, the hardest part of managing finances is knowing “what’s my next step?”. Here are 7 steps to financial freedom based on Christian author Dave Ramsay’s book “The Total Money Makeover”. These are to help you find your next step for financial management.
(1 Corinthians 4:2 NIV) Now it is required that those who have been given a trust must prove faithful.
(Matthew 25:23 NIV) His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
STEP 1. Get A Plan For Your Money – Budget Each Month
“A budget is telling your money where to go, not wondering where it went!” -John Maxwell
“If you aim at nothing you will hit it every time” -Zig Ziglar
A budget doesn’t have to be complicated, just think about and write down where your finances go each month. Make sure they are going where they need to first, then you can plan where else you want them to go – and stop them going where they don’t need to. The best rule of thumb – don’t spend what you don’t have.
(Proverbs 21:5 NIV) The plans of the diligent lead to profit as surely as haste leads to poverty.
(Luke 14:28 NIV) Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?
STEP 2. Save a Beginner Emergency Fund
If you haven’t started saving before, set yourself a realistic first goal. It will help you as you look to your next steps and larger goals.
(Zechariah 4:10a NLT) Do not despise these small beginnings, for the Lord rejoices to see the work begin
(Proverbs 21:20 NIV) The wise store up choice food and olive oil, but fools gulp theirs down.
STEP 3. Get Out of Debt – The Borrower Is Slave To The Lender
It’s hard to move into the future while dragging the past like a ball and chain behind you. Things like credit card debt don’t add value to your future, they just make you spend finance on the past instead of looking to your next step.
(Proverbs 22:7 NIV) The rich rule over the poor, and the borrower is slave to the lender.
(Proverbs 6:1-5 NIV) My son, if you have put up security for your neighbor, if you have shaken hands in pledge for a stranger, (2) you have been trapped by what you said, ensnared by the words of your mouth. (3) So do this, my son, to free yourself, since you have fallen into your neighbor’s hands: Go—to the point of exhaustion—and give your neighbor no rest! (4) Allow no sleep to your eyes, no slumber to your eyelids. (5) Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler.
STEP 4. Save A Full 3-6 Month Emergency Fund
Take your time and save so that when disruptions come you don’t have to go back to the third step.
(Proverbs 6:6-8 NIV) Go to the ant, you sluggard; consider its ways and be wise! (7) It has no commander, no overseer or ruler, (8) yet it stores its provisions in summer and gathers its food at harvest.
STEP 5. Invest For The Future
How can you move from simply saving for what might happen to investing in the future? This isn’t just for the typical idea of investments like property, it’s also about gaining new knowledge and skills to invest into your career, your family’s future, or even starting your own business.
(Matthew 25:19-21 NIV) “After a long time the master of those servants returned and settled accounts with them. (20) The man who had received five bags of gold brought the other five. ‘Master,’ he said, ‘you entrusted me with five bags of gold. See, I have gained five more.’ (21) “His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
STEP 6. Steward God’s Blessing
Don’t look at your progress and forget about God, His provision, and why we want to be financially free. Thank God for the blessing, ask how you can use it well not just to build for yourself but to build for God. Don’t forget about the progress you made since step 1, live within your means and regularly update your budget to be a great steward of what God has given you.
(Deuteronomy 8:11-14 NIV) Be careful that you do not forget the Lord your God, failing to observe his commands, his laws and his decrees that I am giving you this day. (12) Otherwise, when you eat and are satisfied, when you build fine houses and settle down, (13) and when your herds and flocks grow large and your silver and gold increase and all you have is multiplied, (14) then your heart will become proud and you will forget the Lord your God, who brought you out of Egypt, out of the land of slavery.
(Proverbs 24:27 NIV) Put your outdoor work in order and get your fields ready; after that, build your house.
STEP 7. Build Wealth, Be Incredibly Generous and Leave A Legacy
Generousity is God’s heart, and is a trait that all Christians should be recognisable for. We aren’t being financially free just for ourselves, we want freedom so that we can be a testimony of God’s provision and a blessing to others.
(2 Corinthians 9:7 NIV) Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.
(Proverbs 13:22 NASB) A good man leaves an inheritance to his children’s children.
If you would like a more in depth look at the 7 Steps to Financial Freedom, please visit the Blue Book online via the link below.