Financial Health - Where To Begin?

Unless you work in a financial industry, you probably don't think a lot about finances.  We all want to achieve financial health, but where do we begin and how do we know we are on the right track?

There is piece of mind knowing there is a plan for your financial future and knowing that it's rooted in biblical principal.  I have found a simple way to get on the right track financially that doesn't require a finance degree to understand.  Dave Ramsey talks about the 7 Baby Steps and I want to share them with you.  As of the date of this blog post, I am currently on step 2 and just months away from beginning step 3.  It is simple, but it isn't always easy.

Dave Ramsey's 7 Baby Steps:

1. $1,000 Emergency fund - Your first step to financial health is to stop borrowing and the only way to do that is have some sort of emergency fund.  This will keep you from hitting the credit card if something comes up and sets you up for success on step 2.
2. Debt snowball - Pay off every debt except your mortgage.  This includes, but not limited to, credit cards, automobiles, home equity limes of credit, student loans, etc.  Start with the smallest debt and work your way up to the largest debt.  It is like a snowball rolling down a hill because you roll your previous payment on to the next debt every time you pay something off.  Don't be afraid to sell stuff, starting with that new car.
3. 3-6 Months emergency fund - Now you can begin to build an adequate emergency fund.  This is 3 - 6 months of expenses in a savings account or money market.  You need to be able to get to it in case of emergency so don't put it in CD's or bet it in the stock market.
4. 15% for retirement - Begin putting 15% of your income into your retirement.  Don't be a financial burden to your children because you wanted stuff now.  Plan for the future.
5. Save for college - Don't let your children be saddled with enormous student loans.  Start saving for their education if College is in their future.
6. Pay off the house early - Get rid of that final debt and live DEBT FREE!  How amazing would that be?  Don't believe the lie that there is good debt and bad debt.  Proverbs 22:7 says "The borrower is slave to the lender", so end that slavery.
7. Build wealth and give it away - It's not time to blow through your money.  Build your wealth and give like no one else.  What a joy it is to invest in eternity through giving.  You can enjoy the fruit of your labor, but I'm pretty sure you will get a bigger kick out of spending it on others.

In order for you to do these 7 steps, you will need a budget.  You can check out my post titled "Budget Basics" to help you get started.  Like a said earlier, it's simple, but not easy.  It is a lot better than being a slave to your financial situation or having no idea if you are headed in the right direction though. Now, go get financially healthy.

If you have any questions, please post them in the comments section below.

Wealth Creation Through Giving?

We have all heard that it is better to give than receive, but why is that?  Is their some magical reason that giving might allow us to receive more blessing?  My hope is that by the end of this post, you have a better understanding about how giving away wealth can actually build wealth.

We all understand the concept of Investing but tend to put giving in the spending category.  The reality is that systematic giving such as tithing can actually build wealth.  Though we don't give in order to receive, giving is truly an investment not only in this life, but the next.

Here are five reasons why I view giving as a great investment:

1. Giving takes the focus off yourself - When we are so focused on ourselves that we are unyielding of the resources God entrusted to us, it affects the way we interact with others.  Others will pick up on your inward focus and be less likely to trust you.  This will affect your ability to create the needed connections in the marketplace that will help you advance.
2. Giving feels good - When we spend money on ourselves, the euphoria does not last long and soon we are left with remorse over wasting money on something that didn't actually make a lasting difference.  If you used that same money on others, you will get the same euphoria, but are not left with the remorse because you actually made a lasting contribution.  This affects your own self confidence because you feel good about the choices you are making, which in turn affects how you approach your career and are likely to use that confidence to take bold steps forward in life.
3. Giving draws you close to God - The initial step of deciding to give 10% of your income requires a lot of trust in God.  This step allows us to trust in Him rather than in our money, talents, or abilities.  We all trust people that we have close and intimate relationship with.  You can' have intimacy without trust, and I promise that trusting God will build intimacy with God.
4. Giving creates opportunities - God promises that He will pour out blessing on us when we give and this is usually in the form of opportunities.  It's the sudden promotion, that new client, the unexpected gift.  Look around you, givers tend to get more opportunities.  At a minimum it will help you see the blessings in your life because you are not focused on yourself and your negative circumstances.  A few of God's promises regarding giving are found here: Malachi 3:10-11; Luke 6:38; Matthew 7:7-12
5. Giving develops contentment - A giver tends to be comfortable with their current stuff level.  Because you have taken the focus off yourself, you will begin to feel significant, rely on God, see opportunities clearly, and you will be less likely to try and seek significance in your stuff accumulation.  You'll know that the high of the next purchase cannot compare with that of giving, and you aren't trying to impress your friends and neighbors because that won't compare with the intimacy of God. When you aren't spending everything you make, you are able to invest it and build wealth. 

I see giving as the best investment out there because it has so many benefits both tangible and intangible.  I know there are many more ways that giving is a great investment and I would love to hear them.  Put a reason why you think giving is a great investment in the comments section below.

Finding Your Motivation

I have never considered myself disciplined.  Ask my mother how disciplined I was as a child and she could recount story after story of procrastination on homework assignments, brushing my teeth, or cleaning my room.  She literally would have to turn on the lights in my room and steal my blankets to get me out of bed in the morning.  So you can imagine my surprise when someone recently lamented that they wish they could be as disciplined as me.  Knowing that I was not a disciplined person in the classic sense, I replied "I'm not disciplined, I'm just motivated."

I have figured out that finding motivation for an activity or habit is key to getting my lazy behind to do something that I know is good for me, but don't really want to do.  There are certain things that I need no motivation for like eating and watching T.V., but my life would be uneventful and rather useless if I stuck to the things that I needed no motivation for.  Here are a few things I have learned in my road to "discipline".

• Your willpower is greatest in the morning.  If you think of willpower as a battery, your battery gets charged overnight and you are likely to make the best choices in the morning.  Toward the end of the day you run out of willpower and can end up making terrible decisions.  I do it all the time, that is why I pray, exercise, and decide what I will eat for the day before I head off to work.  Check out the book "What The Most Successful People Do Before Breakfast" for more insights on this.
• When you get motivated to do something, do it.  I am writing this blog post a week before my deadline because I am motivated now and likely won't be a week from now.  Warning - It will take less willpower to get your project started, but it may take some willpower to finish.  Make sure you finish or at least come to a natural stopping point in the process.  You can't always rely on your natural motivation to get you moving so when you have it, use it.
• Get inspired.  Surround yourself with things that will inspire you.  I listen to many audio books and podcasts to inspire me and, in turn, motivate me to action in some area of my life. I even watch certain inspirational television programs to motivate me in some way.  The Biggest Loser gets me inspired to eat right and exercise and a show like the X Factor inspires me to get out my guitar and practice or write a song.  The next time you feel inspired to do something, take note of what inspired you and surround yourself with similar inspiration.
• Set goals for yourself.  Get inspired and then set some goals.  Write them down and put them in a place where you have to look at them.  I use my mirror next to my bed because it is the first thing I see in the morning and the last I see at night.  Make sure they are SMART goals. Specific, Measurable, Attainable, Result-Based, and Time Bound.  I want to also mention that they should be your own because you will almost never accomplish the goals of someone else.  I set goals annually in 7 areas of my life: Career, Financial, Spiritual, Physical, Intellectual, Family, and Social.  If you are just getting started with setting goals, set a smaller goal to get a quick win and that accomplishment will move you to an even bigger goal.

Now you just need to take some time to figure out what you want your life to look like and what things you would like to achieve.  Once you have that figured out, find your motivation and  get to work.

UPDATE:  I recently taught a seminar on this very subject called "Where's My Motivation?".  It goes into more depth and there are even real life examples.  Just click the links below:
    Where's My Motivation - Audio
    Where's My Motivation - Handout

I also recently wrote a post about goal setting called "Setting Goals That Matter"