Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. (1 Tim. 6:17-18)

Monday, September 27, 2010

Is it time to grow up in your personal finances?

The Problem

There are a lot of adults today who act like spoiled brats when it comes to their personal finances. They want what they want, when they want it, and if they don't get what they want, they throw a temper tantrum. They act like children.

You see this happening a lot with married couples. You know the drill - opposites attract. The mature, responsible saver meets the fun-loving spender. They fall in love, get married, start a family, and their finances begin to tighten up. They assume that they need to buy a big house for their growing family, so they overextend themselves on a huge house payment. Then, of course, they need to buy a Suburban to haul around the little crumb crunchers. Again, they're overextended in a car payment or maybe even two. The cycle of debt begins as the family continues to grow.

The Solution

I know this may seem overly simplistic, but the solution to this problem is that it's time for this couple to grow up! In 1 Corinthians 13:11 we read, When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put childish ways behind me. The childish approach to our finances is to not have a plan, to shoot from the hip, and to base our decision making on what "feels good" in the moment. Children cannot think forward into the future. They deal primarily in the present. They cannot project the future, long-term consequences upon the decisions they make in the moment. Unfortunately, a lot of people in their 20s, 30s, and 40s are handling their money like kids when they should have already grown up by now. When they reach retirement age, they will have wished that they had planned ahead.

I read somewhere recently (I wish I could remember the source), that we spend our 20s educating ourselves and getting our careers off the ground. It's during this time period that we typically rack up the most debt because of school bills and living expenses. Our outgo way exceeds our income. We then spend our 30s in an accumulation period when we get married and start having children. It's at this point in our lives where even larger expenses begin. If we exit our 20s with a lot of debt and enter our 30s without addressing the debt issue, then this will give us additional problems as we get older. At this key point in our lives, we need to mature in our financial mindset and get out of debt as quickly as possible in order to provide for our families and future retirement in a more effective manner. It's time to temporarily lower our standard of living, get on a budget, and increase our income to pay off our debt as quickly as we can.

No matter what your age, it's never too late to stop, address some of these childish financial mistakes, and develop a more mature financial mindset. So, is it time for you to grow up in your personal finances?

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1 comment:

  1. God gave pharaoh via Joseph a 7 year warning to save for the lean future that was looming on their horizon.

    Therefore we should plan and save for at least 7 years down the line (for their famine lasted 14 years).

    E.g. in 20s plan and save for needs in your 30s and don't just spend it all.