There are a lot of experts in my life. My insurance agent says adequate coverage for all scenarios would take about 15 percent of my income. My home mortgage provider approved us for a loan that would use up 40 percent of my income. My CPA advises at least 25 percent toward taxes to avoid paying in at year's end. The kids' college fund needs another 5 percent. Our nutritionist, pastor, and car salesman would like to see at least 15 percent going in each of those directions. That totals 130 percent of my present income!
All exaggeration aside, I think you see my point. What the experts suggest as adequate preparation in any one area of life would probably mean shortchanging another or several others. There are too many Caesars, and I need to 'render unto” each one!
What can an ordinary person do to set things up in the right order when everything seems to need priority? Let's step back and look at this biblically. God's promise to supply our need is fulfilled for nearly every person living in the United States of America. We struggle to accept this supply as adequate because our society pressures us to measure ourselves against each other and powerful marketing campaigns, rather than Scripture. When we look at Scripture, we get the impression that food, clothing, and shelter are God's answer to our need. Advertisers would have us believe that 'need” is defined as a specific lifestyle and that the answer to our apparent shortfall is more credit.
As Americans we will always struggle to hold these messages in tension. For now, let's try to get at the element of truth underlying the advertising that influences our lives. This financial hierarchy of needs can be used as a measuring rod to put financial decisions in their context:
- A spending plan to prevent further indebtedness
- A will to indicate legal guardians for minor children
- Life insurance equal to all debts including the home
That's it! Obviously this list is incomplete. My point is that we're starting with what God has promised, and working toward the 'ideal” promoted in the media. Let's build on that previous list, realizing that as we do so, God is blessing us far beyond His promise in Scripture:
- Health insurance
- Emergency savings to prevent further indebtedness ($1,000 minimum)
- Retirement savings (5 to 25 percent of your income, depending on the age you begin)
What do people do when God blesses them further? In many ways the cycle is repeated, going back to the beginning of the list (food, shelter, clothing) and improving one or all of those, then proceeding to the next group and improving, and so on.
Please consider for a moment that many of the mistakes I have seen in financial preparation have to do, not with the individual components being met, but with the priority in which they are addressed. Did you purchase your first home before you started an emergency savings fund or obtained life insurance? Did you trade your car in on a newer model after 90,000 miles instead of 'upgrading” your retirement deduction first? Perhaps in retrospect you were choosing a 'want” over a 'need.”
This sense of priority can only become clear in the context of a biblical definition of 'wants” versus 'needs”. In fact, people who begin this journey often find that God blesses them with the gift of giving. In other words, they choose to fund Kingdom enterprises before their own needs are upgraded to higher-quality wants. What a challenge to us!