Bear Stearns! Bailed out. IndyMac! Taken over by the federal government. Lehman Brothers! Filed bankruptcy. Merrill Lynch! Bought by Bank of America for pennies on the dollar. FreddieMac and FannieMae! Taken over by the federal government. Yet, we are told not to panic, that everything is alright, and that the economy is financially sound. Oh! Did I mention the ongoing bailouts of the airline industry and that General Motors is standing in line for a handout? Sounds pretty sound to you, right? Wrong! It is obvious that we cannot depend upon our government to tell us the truth about the country’s financial situation. We’re told that the economy has grown over the last 8 years, while median incomes have fell by an average of $5,000.00 per year. We are told that the economy is financially stable while 150-year old companies are going under (Did I mention AIG?). We are told to weather the storm while thousands of people lose their jobs each month with no viable prospects in sight. Well I, for one, am tired of the smoke and mirrors. It’s time that someone told us the truth about what is really going on. The real reason that we are told not to panic is so that we will not pull our life savings out of the banks and cash out our retirement plans for fear of losing them. If that happens, we will have a real crisis. While panic is not the answer, sound judgment will do just fine. In my book, Mastering Money Management, I outlined seven things that everyday people can do to help protect themselves against times like these. If you begin to implement these seven steps into your financial decision-making process, you will begin the wealth-building process, no matter what the economy looks like. Remember, wealth is not measured by the size of your portfolio. It is measured by your freedom from this world’s financial system and the ability to live a kingdom lifestyle in spite of what the current situation may be.
7 Principles for Building Wealth
1. Pay God First
· While things may be tight, this is not the time to lose focus on what is important. I truly believe that this nation is in the predicament that it is in because it is turning away from God. I don’t know how true it is, but I have heard that our government is in the process of taking “In God We Trust” off the currency. Honor God by donating a tenth of your money to ministries that are helping those who are in need. Pray to God to give you some insight as to who to sow into, and He will direct you in the right path. Trust me, you will not miss it. As a matter of fact, you will be blessed because of it.
2. Pay You Second
· Before you pay any bills, set aside between 5 to 20% of your income for yourself. Don’t allow the bill collectors to take all of your seed leaving you unable to invest in your future. If you give them all of your money and have nothing left, you are no better off than when you started. Make payment arrangements if you have to, but DO NOT give them all of your money. Use the following strategy as an initial guide.
3-Tier Savings and Investing Strategy
· Short-term goals are first (6-12 months)
· Mid-term goals are next (between 1 and 5 years)
· Long-term goals are last (over 5 years)
§ 3-Circles of Money Approach to Long-Term Investing
· Taxable Money (easily accessible in a time of need)
· Tax-deferred investments (for retirement savings)
· Tax-free investments (to offset taxes from tax-deferred investments)
§ Develop A Plan of Action
o Utilize the 3 financial statements (profit & loss, balance sheet, and statement of cash flow)
o Shoe-box method (save all receipts for expenditures in a month to gauge how much you are actually spending)
o Balancing a household budget is the first true test of becoming an entrepreneur
3. Understand Money Principles
· Pro 4:7 Wisdom is the principal thing; therefore get wisdom: and with all thy getting get understanding.
· Hos 4:6 My people are destroyed for lack of knowledge:
· Train up a child in the way he should go: and when he is old, he will not depart from it. The rich ruleth over the poor, and the borrower is servant to the lender. He that soweth iniquity shall reap vanity: and the rod of his anger shall fail. He that hath a bountiful eye shall be blessed; for he giveth of his bread to the poor. (Pro 22:6-9 KJVR)
· Learn as much as you can about the following subjects. The more you know, the better you will be able to handle any financial situation before it occurs. Be proactive with your finances, not reactive. I suggest reading a book a month on each subject.
4. Money Must Have a Purpose
· Hab 2:2 And the LORD answered me, and said, Write the vision, and make it plain upon tables, that he may run that readeth it.
· Hab 2:3 For the vision is yet for an appointed time, but at the end it shall speak, and not lie: though it tarry, wait for it; because it will surely come, it will not tarry.
· Plan how you will distribute your seed
§ Business Ventures
§ Charitable Gifts
§ Daily Living Expenses
· Plan Your Work and Work Your Plan
§ Set Financial Goals
§ Establish short-term objectives for reaching each goal
§ Track your progress to increase your chance of success
5. Use Debt Wisely
· The blessing of the LORD, it maketh rich, and he addeth no sorrow with it. (Pro 10:22 KJVR)
· Deu 28:12 The LORD shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow. · Deu 28:13 And the LORD shall make thee the head, and not the tail; and thou shalt be above only, and thou shalt not be beneath; if that thou hearken unto the commandments of the LORD thy God, which I command thee this day, to observe and to do them:
§ Do not refinance your home to pay off credit cards
§ Use the equity in your home to create more wealth
§ Only charge what you can afford to pay off the next month
§ Do not use debt to fund a lifestyle
§ Make it your goal to stop using credit unnecessarily from this day forward
§ Start today implementing a pay-as-you-go program. If you cannot afford to buy it now and cannot pay it off within 30 days, you don’t need it.
6. Create Multiple Revenue Streams
· Earned Income (Money earned from working a job)
· Portfolio Income (Your money working for you through sound investments)
· Passive Income (Your money working for you through investments in real estate)
· Gifted Income (Money sowed to you because you sowed to someone else)
7. Always Be Sowing
· 2Co 9:6 But this I say, He which soweth sparingly shall reap also sparingly; and he which soweth bountifully shall reap also bountifully.
· Gal 6:7 Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap.
§ The greatest billionaires of our time are where they are because they realize the importance of sowing. If you put nothing in, you get nothing out. Learn how to properly use this principle and position yourself for wealth beyond your imagination. Many may feel that this is a time to hold onto every extra penny you have. Doing so, won’t gain you anything.
Use these principles to begin to distribute your seed wisely and you will put yourself in position to have revenue coming in from more ways than you can count. This economy will not be fixed from the top down. It is going to take a bottom up approach in order to set things right. If we begin to handle our money wisely, it will have a trickle up effect that the corporations and government will have to take notice of. But it starts with us. If you believe that the Godly principles that this country was founded on still work, forward this to everyone you know and love. Then, begin to implement these principles in your life. It doesn’t take a Harvard graduate or a life-long member of Congress to know that God’s way is still the only way. Once our leaders realize that, then God will heal our land and prosperity will flow like we have never seen before.
But it starts with us.