The other day (Sunday, 26th August 2012) my husband was speaking at church here in Gent about 'Financial Stewardship'. His key scripture was Matt 25:14-30 NIV, The parable of the Talents. This is deep in our hearts, to see people manage their finances properly. He was telling the listeners, 'Our money is really not our own. We are merely stewards of what we have been given by God. We have the priveledge of being stewards, like for all other resources we have received (time, relationships, health, intellect etc), which calls for responsibility. When you are slack or wasteful with your money, it is not your money you are wasting, but Gods. In so doing, you waste your life. Why work so hard, sweat your strength out, earn, only to spend the income (the seeds) buying liabilities and luxuries (riches): Bigger TVs, Smarter mobile phones, better cars etc, chasing the tech-wind?’ These only impoverish you, so you become poorer and have to keep on working. BTW the moment you touch it, it is used (second-hand) so the resale value plummets!
Instead, one should buy assets - things that makes you wealthy like real estate (land, own house, rental houses), commodities (Gold, Silver and Oil), stocks, money market, mutual funds, shares in OTC market etc, and generate passive income (that is money working hard for you to get you more money). One can then spend the earnings (the fruits) from the assets (the tree) to buy luxuries and riches, for charity and enjoying life. This way of thinking and doing things is never taught in school! No wonder many people including graduates have little or no practical knowledge on managing their finances well. We share this secret with you, whether you do it or not that is a personal decision. Most Youth would you rather have a smart phone worth 600 EUR, and sneer at the proposal of buying an acre of bush land (with Title!) or a high-yielding Dividend stock somewhere in Africa worth about the same amount. Five years down the line, what is the scenario? Smart phone, kaput! Became too old with technology changing by the hour. The acre of land, always appreciating, and stock paying you dividends plus bonuses. We yearn that you can learn the difference and practice it in your life, then teach others.
It starts with learning by reading books (starting with the Book of Proverbs in the Bible) and practicing what one learns (Prov. 19:8). It is important to invest time and energy to learn to be a good investor. Saving alone is not enough! Save and invest in assets, period! Learn the difference between Assets and Liabilities. Assets bring money to your pocket while liabilities impoverish you. Buy assets (Fig. 1) while you are younger in order to live richer lives when you will become older (Prov. 23:21).
Then, track your Net worth (All what you own minus all that you owe) (Prov. 27.23) (Fig. 2). This is your Balance Sheet.
The more income you have they more your net worth can grow. Sources of money (Fig. 3) include:
- Employment – You trade time and skill for money.
- Self-employment – Profits from his own effort but is limited to only his personal effort.
- Business owner – combine his effort with effort of others and that of his money. Management issues.
- Investor – Works hard and smart, saves, invests and re-invests and uses it to work for him (He saves & invests in assets; and re-invests the gains to get more income).
Aim to increase both your working and passive income so that even when you are not able to work, loose your job or retire, the assets can still earn an income for you. Working income is money earned in active working or in business, while passive income is money earned without you working. Never have a ceiling to your income/how much you can earn. Think biggest when it comes to earning. This means you have to be smart and diligent in whatever you do in exchange of money. God honours diligence, and most people, employers and organisations do too! The more diligent you are in what you do, they more likely that you will keep your job or business, and the more you can earn (Prov. 12:11; 10:14).
We will pick up from here in the next post......