Do we ever stop to ask ourselves what we are going to do when we get there?  I know what you’re thinking:  “Of course I do!  I am going to sleep in, spend time with my kids, stare at the ocean, and do something really significant with my time–you know, give back.”  We all have an endless list of things to do when “financial independence” finally moves into the guest bedroom.  However, the point I am trying to make here is that most of us never REALLY stop and think about what would come after reaching this elusive utopian destination.

If I had to boil it down into its simplest terms, I find that we usually go in one of two directions:  luxury or philanthopy.  Regarding the first option, the Bible speaks rather clearly.  Jesus told a parable about a rich man who had reached what we would call “financial independence”.

“Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions.  And he told them this parable: ‘The ground of a certain rich man yielded an abundant harvest. He thought to himself, ‘What shall I do? I have no place to store my crops.’  Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain.  And I’ll say to myself, ‘You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.’  But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’  This is how it will be with whoever stores up things for themselves but is not rich toward God.” (Luke 12:15-21, NIV)

Plain and simple:  The Bible teaches that a life long pursuit of wealth in the name of personal comfort, luxury, and ease is greedy and foolish.  Though it may seem appealing on the surface, this approach to life is nothing more than a self-revolving, self-indulging, pursuit of short-term and superficial satisfaction.  And, sadly, this person’s deepest hopes are placed in temporal things with no guarantee they will actually get to enjoy what they have stored up.  There is nothing wrong with working hard to enjoy some of the fruit of your labor, but the life dedicated only to this purpose is ultimately meaningless, self-absorbed greed.

The rest of us place our bets on door number two (philanthropy).  Often Christians aware of the parable above defend their pursuit of financial independence in terms like:  “Once I get there, I will serve and give, etc.”  We have dreams of using our adundant resources to help others…once we get our stockpile high enough.  We tend to be quite stingy now as we strive towards our goal, and push our generosity off to the day our ship comes in.  Let’s stop and think about that.  Will we really dedicate our life to something we never have the time for now?  Are we fooling ourselves?

Jesus told another parable along these lines, the parable of the talents (Matt. 25:14-30).

“You have been faithful with a few things; I will put you in charge of many things.” (23)  Would God be wise to bless our pursuit of financial independence if we don’t do what we are supposed to with the little amount we have?  I don’t think so.

In conclusion, I will leave us with two principles to consider:  First, supposed “financial independence” is not evil unless it is the only thing we are trying to define our life by (greed).  Second, we fool ourselves if we think we will be a different sort of person when our assets increase.  We should feel free to work towards this goal, but should never define our lives by it or convince ourselves we can wait until then to start acting like we ought.

Goals help create the road map to financial freedom.  A lot people don’t believe in setting goals, but in reality, we all have little goals we set throughout each day.  You most likely have a goal to get out of bed in the morning (right?) get to work on-time and eat lunch.

These are all small goals set to help determine the course you’ll take for the day.  Well, financial goals are really no different.  Think about your goals as little steps to getting to where you want to go.  Sure, you have to have big picture goals for the future, but sometimes those can be overwhelming to think about.

Spend most of your time focusing on 1-2 short-term goals.  Before you know it, you’ll have those achieved and will be a little bit further along your financial journey.

Step 1:  Determine Your Starting Point, or Where You are Today

The best way to do this is to create personal financial statement.  You can download a template here.

Assets and Liabilities

In order to create a financial statement, you’ll need to identify all of your assets and liabilities.  An asset is something of value you own.  You may own a car, house, clothes, jewelry, etc.  Add up what you think all of these things are worth.  Liabilities are what you owe to someone.  You may own a car, but if you have a car payment, the total amount you owe to pay off the car is your liability.

Subtract your liabilities from your assets to determine your financial net worth.  Now, don’t worry if it’s low or even negative.  You’re going to set some goals to increase your financial net worth over time, so try to be patient. 

Step 2: Learn Some Characteristics of Financial Goals

Long-term and short-term financial goals

It’s important to distinguish between short-term (next 5 years) and long-term goals (beyond 5 years).  Short-term goals are the ones you’ll focus on the most.  It’s good to have 1 or 2 short-term goals that you’re focussing on at one time because anymore becomes overwhelming and your efforts might become dilutted.

It’s still good to keep in mind the long-term goals (how about achieving true financial freedom with no more debt and a fully funded retirement), but don’t let them overwhelm you right now.  Focus will be your best friend and key to achieving the long-term goals someday.

Goals Change at Differnet Stages in Life

Also keep in mind your financial goals may change depending on your stage in life.  For instance, many younger parents now have a goal to save for their childrens’ education.  But that certainly won’t be the case for someone in their 60′s.

Step 3:  Make a List of Financial Goals You Want to Achieve

Okay, it’s time to identify some financial goals.  As mentioned earlier, we have all have some goals, even if you’re not a goal-oriented person.

What are some examples of financial goals?  Here’s a hint:  common goals include to creating a budget, saving more money, becoming debt free and buying a house or car.  You might even have a goal to get spending under control.  Have you been to Starbucks, or the mall a little too much lately?

In determining your goals, here are some questions you can ask yourself to prompt some thinking:

• Do I have a budget?
• Do I need to establish or grow emergency savings?
• Do I have debt which I would like to pay off?
• Do I have children and plan to fund their college education?
• Do I have retirement savings?
• Do I desire to save for family vacations?
• Do I need to financially support other family members?
• Do I want to own or operate my own business?

Start making a list of the things you feel you need to accomplish.  It can be rough list at first.  Just get our pen to paper and list everything that comes to mind.

Your Values and Goals

Keep in mind the importance of values when it comes to goal setting.  Whether you realize it or not, your values, what you care most about in life, will determine what actions you take and your perspective on certain matters.  For instance, a Christian may value giving or tithing to the Lord as one of the most important financial goals.  Don’t dismiss what you care deeply about in creating goals.

What About Important Goals you Don’t Know Anything About?

While  you might be able to get some great goals listed, you may not know everything you need to accomplish.  That’s okay because you may not consider yourself a financial expert.  That’s where resources such as Dave Ramsey’s Baby Steps, or the Crown Financial Ministries Money Map come in [Note:  you can read a series on the Money Map and Baby Steps which provides information for both approaches].  They both provide great roadmaps to financial freedom and can give you some ideas of goals you need to accomplish.

SMART Goals are Important Too

After you’ve write them down, try to reword them into SMART goals which means:  specific, measurable, attainable, realistic and timely (when you plan to obtain it).  For example, I will pay off all of my credit cards in 1 year by getting a new part-time job, selling my boat and paying an extra $200 per month towards them.

Review and Update Your Goals Often

Once established, you should plan to review your financial goals at least once per year, but mostly likely every 6 months.  As mentioned, your goals will change based on different stages of life and certainly a goal might change within a year.

Step 4: Determine the Right Priorities for Each Financial Goal

Dave Ramsey’s Baby Steps are a great practical tool to help tackle financial goals in the right order and to get out of debt.  Again, you don’t want to dilute your efforts by trying to work on too much at once.  This oftenleads to very little forward progress and frustration and is why many people throw their hands in the air.

If you have a goal to get out of debt, find where it may be located along the Baby Steps.  In setting priorities, list all your goals in order according to Baby Steps.  You can also use the Crown Money Map for the same purpose.

1. $1,000 In An Emergency Fund
2. Pay Off All Debt With The Debt Snowball
3. To 6 Months Expenses In Savings
4. Invest 15% Of Income Into Roth IRAs And Pre-Tax Retirement Plans
5. College Funding
6. Pay Off Your Home Early
7. Build Wealth And Give!

Once you have your goals and have set the priorities, you’re read to start setting up a plan and tracking it.  You may even want to set up a 5 year financial plan to track the goals you’ll accomplish within those 5 years.

Having a good mission is important to know where we’re going.  The mission is what we’ll do each day to get there.

The road to financial freedom

I gave financial freedom a lot of thought as I chose those words.  I would imagine it can mean a lot of things to different people.  Here are some of the things it means to me.

• Debt free (including mortgage)
• Retirement funded
• Kids college funded
• Emergency savings funded
• No longer dependent on full-time employment
• Able to give freely of time and resources to help others and live out your purpose

You’re not on the road to financial freedom if you…

• are trying to get rich quick.
• have a goal to retire and do nothing.
• are using debt as leverage to get rich.
• are spending money without a plan.
• are constantly coveting others’ possessions or chasing after material things.
• believe people are the source of money.
• do not make it a priority to save.
• love money above everything else in your life (you can usually determine this be looking at your checking account).
• conduct dishonest acts (small or large) with money.
• are ignoring our responsibility to help the poor.
• are ignoring personal financial issues and not working to identify and solve the root cause.

You’re on the road to financial freedom if you…

• recognize God as the owner of everything, including money.
• recognize yourself as a manager or the steward of the money God has entrusted to your care.
• are working to manage money wisely on a daily basis.
• are out of debt or have a plan to get out of debt.
• are learning to be content with what you have today.
• are honest with money, even in the smallest matters.
• make giving/tithing the top priority with your finances.
• make saving or getting out of debt the second priority with your finances (depending on your situation).
• recognize it is our responsibility to help the poor.
• openly talk about financial issues with trusted counselors and spouses and are taking action to correct them.
• are taking steps towards funding your financial future so that you may freely give more of your time and resources to help others.

How to achieve financial freedom

So, how do we get to the point of financial freedom?  Well, I think that’s where the mission of One Money Design comes in.  It’s a daily exercise and sometimes a battle, to manage money wisely.  It’s all about managing money wisely for everyday life, right?

Small steps in the right direction are what count.  It’s definitely not something achieved over night, but the small acts of having a spending plan, tracking expenses and getting out of debt will advance our journey.

Why make the financial freedom journey

I believe the financial freedom journey is an act of fulfilling our responsibility to be wise financial stewards.  I don’t want to waste what has been provided to me and my family.

It’s also about financial peace.  Personal finance is a common area of stress and one of the leading causes of divorce.  The Bible has over 2300 scriptures to help bring financial peace into our lives.

Next Steps for One Money Design

As I continue the mission here, I hope to build a strong readership and community that will share this vision of financial freedom with a Biblical money design.

There are a few things you can do to get involved.

• If you have an opinion, or more information about a topic, I’d like to encourage you to let me and the other readers know in the comments.
• If you like the content and think it’s helpful, please share it with your friends.
• Follow along and stay in touch by RSS Feed, Facebook, Twitter, or get posts by email.

Most importantly, if you have feedback, questions, or are interested in seeing content about particular areas of personal finance, send me a note and let me know your thoughts.

What do you think about finding financial freedom with a Biblical money design and what does financial freedom mean to you?

Picture by Nicholas T.

3 debt quotes

I thought it would be interesting to see what others have said about debt.  Below are three quotes about debt that provide perspective on debt in our society, its impact on people, and a warning from the Bible.

Anonymous (found in Howard Dayton’s book, Your Money Map: A Proven 7-Step Guide to True Financial Freedom)

We have so much debt in our nation that the average person has been described as someone driving on a bond-financed highway, in a bank-financed car, fueled by credit-card-financed gasoline, going to purchase furniture on the installment plan to put in his mortgaged-to-the-hilt home.

I like this quote from anonymous because it gives us such a sobering view of debt in our society today.  From government, to families and individuals, sadly, debt is seen as leverage or a tool to get more of what is wanted now since the money isn’t available.

Dave Ramsey

Debt is dumb.  Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you’re in debt, then you’re a slave because you do not have the freedom to use your money to help change your family tree.

Dave is a straight shooter and tells you like it is.  I think that’s why I enjoy listening to his radio programs so much.  He accurately describes debt as slavery which we can also find in the Bible.  People can’t achieve financial freedom to give more of their time and money if they are hand cuffed by debt.

The rich rule over the poor, and the borrower is servant to the lender  (Proverbs 22:7 NIV).

Crown Financial Ministries

God’s Word doesn’t say we can’t borrow, but it does warn us against excessive debt, and that’s called surety.  Surety is the condition of being in debt without having a sure way to repay.

Surety is a Biblical principle that is often overlooked.  It is taking on an obligation to pay later without a way to pay for it now.

Do you have quotes or insight you would like to share related to debt?

Can you tell me who owns the house you live in, the car you drive and the money in your wallet or checking account?

What do you think the answer would be from the majority of people? Most people would tell you they own it.

God is the owner

Contrary to common belief, scripture tells us God is the owner of everything (Psalm 24:1) and we are the managers or stewards (1 Corinthians 4:1-2) of what has been trusted to our care.

We are the financial stewards

A steward is someone who is responsible for managing that which belongs to another. The money and possessions we have been given, God’s money and possessions, are under our care and God expects us to manage them well.

Understanding the management of money as our responsibility should motivate and encourage us to organize and plan our personal finances better, control spending, reduce and avoid debt, save and give back to God’s work for greater purposes.

Financial freedom

Knowing and following God’s plan is financial freedom. It is freedom from worry, stress and anxiety because God is under control as the owner and provider. Yes, there are challenges, but as faithful stewards and by putting God’s principles first, he will provide for our needs (Matthew 6:33).