Tuesday, January 26, 2010

Managing Our Finances

Jessi and I recently started a personal finance class put on by our church. The curriculum is called Managing Our Finances God's Way and was created by Crown Financial Ministries (lead by Rick Warren who wrote Purpose Driven Life). We're just getting started, but already it's got us thinking.

In all honesty, I didn't really want to go originally because I'm not a really a fan of spending a ton of time thinking about finances. I don't like creating and tracking budgets. I don't follow the stock market. I don't compare 401K and IRA plans. I don't like trying to figure out the right amount of life insurance. I don't calculate my personal saving rate or any other measures of "success". The only thing I really look at is my bank balance twice a month which tells me how much I can spend. That's just about the most time I want to spend managing my finances. I'm able to do this by following Timothy Ferriss' 4-Hour Workweek plan: I invested the time upfront to create a system I could walk away from (I give credit to Timothy for helping me articulate and refine a system I had already created).

I also didn't want to go because I had a feeling the class was designed for employees. Robert Kiyosaki has a visual he uses (you can see it on the cover of Cashflow Quadrant) to talk about employees, self-employed, business owners, and investors. It isn't that any group is better or worse than the other, they just have different values when looking at life. We all occupy each in some way in our life, it's just that some tend to dominate others. Here's a quick description of the different values:

E values security
S values independence
B values teams work
I values financial freedom

I'm trying to transition my thinking from an employee to a business owner. Talking about retirement planning is boring (unless it's with my mom. She does it for a living and we get into awesome debates). Instead, I'd rather talk about businesses and investments. I want to know how to structure and run a business that glorifies God. Again, I don't want to spend my time thinking about finances, I want to spend my time living life and working on a business.

Even though I don't spend much time thinking about finances, it doesn't mean I have a super simple structure. Here's how I set up my system: I currently have 10 checking/saving accounts (ING is amazing because it's so easy to set up new accounts as I need them) where each one has a specific purpose which draws automatically from my main checking account. For example, I have a car maintenance account, emergency savings, rental reserves, travel fund, gift fund, and charity fund, etc. Trust me, it's really hard to spend extra money when it's all in separate accounts and all I see, and can access when shopping, is the money transfered to my living expenses account. Plus, since everything gets transfered automatically, I don't have to remember to do anything. Thanks to Mint, I've aggregated everything together so keeping track of it all is a breeze too. I literally spend less than an hour a month quickly checking over everything to confirm the system is working.

I remember when I first proposed this structure to Jessi she thought I was crazy. She wanted to have one joint account that we did everything out of. I had her read The Automatic Millionaire by David Bach who gave me the original foundation for this structure (I always give her permission to skim the technical parts :-). She loved it and quickly saw the benefits. She no longer has to track everything in a spreadsheet. She no longer has to remember, or rely on will-power, to transfer money or save. All of this translates into less time thinking, and typically worrying, about finances. It has freed us up to do more important things, like actually living life.

Maybe you can see my apprehension to join this class. I already have a sleek system in place that works. At the least, this class would waste a couple hours for the next 7 weeks. At the worst, it would create more work which I didn't want.

Thankfully, after going to a couple of classes, I don't think either one of these will be the case. I probably won't need to change much in my system, but I can already feel a shift in my attitude toward managing our finances: from wishing I didn't have to, to respecting it's importance and remember the purpose behind finances. Plus, this gives me an opportunity to share here.

The first thing we learned (and my original topic when I sat down to write) was the importance of managing our finances. The Bible has 2,350 verses in the Bible about money. Clearly it's important, but why?

How you manage your finances is preparation for Heaven. Luke 16:11 says "If you are untrustworthy about worldly wealth, who will trust you with the true riches of heaven?" In Paul's letter to Timothy about the people of Ephesus he says, "Tell them to use their money to do good... by doing this they will be storing up real treasure for themselves in heaven - it is the only safe investment for eternity!" (1 Timothy 6:18a, 19a).

What does this mean practically? Well, I'm not 100% sure yet. What I do know is that whatever I do I need to do it purposefully and carefully. God will be watching to see how I do with this small(ish) task. It's OK to spend time thinking and planning about finances as long as it's done for the right reason. Furthermore, running a business that is designed to glorify God has two benefits. 1) It glorifies Him. 2) It uses our finances for a good purpose.

Over the next few weeks I hope to learn more about how to successfully manage our money. I'm pretty sure we're doing it right, but the reason why we're doing it right will probably shift slightly. I'm also pretty sure the focus will be 100% on personal finances.

To end with, we were shared a prayer from Agur in Proverbs 30:8-9. I really liked it because it talks about balance in respect to finances.

"Don't let me too poor or too rich.
Give me just what I need. If I have too much to eat,
I might forget about you; if I don't have enough,
I might steal and disgrace your name."


  1. I think ING is kind of cool. We have two savings and two checking accounts at two different banks and it is a PAIN to transfer money between them. My current system is to use Excel to breakdown our savings so that every penny is allotted to a certain purpose. The 10 accounts would be a lot easier.

  2. Thanks for the comment Kellie. I used to have one of those but it became too difficult for me to maintain. :) I'll admit that my method requires trust that ING's system will work. I'm not concerned about it. When I did the spreadsheet, I spent 99% of my time tracking a mistake I made. That wasn't worth it in my opinion, but I know some who don't trust bank balances and have to do the math themselves.