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Financial Planning
By David Feddes

Let me start simply by asking: do you think you're more talented than the average person? Do you figure on things going well for you in the future? Most of us do. We think highly of ourselves and we plan on a bright future. In fact, we tend to be more optimistic than reality warrants. Most of us think we're better at driving a car than the average driver on the road, and nothing can change our mind about that.

One study asked drivers who had severe car crashes how skillful they were at driving. These drivers, including those the police had found responsible for the wrecks, and even those who’d been so severely injured that they had to answer the survey from hospital beds, insisted that they were more skilled drivers than average.

Another survey asked people who were starting new businesses how likely they were to succeed. Eighty-one percent estimated their chances were at least seven in ten. In reality, two-thirds of new businesses fail within five years. In other words, despite just one chance in three of success, most—the overwhelming majority—expect to succeed.

People are also overly optimistic about their investments. This isn’t just a matter of always expecting markets to rise. Most people expect that whatever the general market does, their particular investments will beat the market. A survey found that 74% of investors expected to beat the market index every year. In reality, most funds fail to beat the index in any year, let alone every year. Maybe one reason these investors thought too highly of the future of their investments was that they had no realistic picture of the past performance of their investments. When researchers checked the portfolios of people who claimed to have beaten the market in the past, it turned out that 88% had exaggerated views of their returns. So 88% didn't even know what their actual returns were, but they thought they'd beaten the market.

We think we're more talented than average and more likely to succeed. We think we drive better, we plan better, we invest better, and we expect that we'll have a better life as a result. But reality doesn't always match our fantasies about ourselves, and the result can be disastrous.

Pride produces bad planning. If you count on markets always going up, your business always churning out big profits, and your job always being stable, you won't save extra money to get you through lean times—who would ever have lean times?—and you'll be in trouble if things don't go as well as you'd hoped. If you count on your driving skills to protect you from accidents, your good health to protect you from medical expenses, and your good luck to protect your home from fire, flood, and other damages, you may think you don't need to make insurance plans. But if something bad does happen, the huge bills will leave you financially ruined.

Pride produces bad planning when it makes you feel superior to others and when you make plans assuming that life has to go your way. But pride is at its worst when you assume you can carry out your plans without God. That's the worst planning mistake you can make: leaving God out of the picture.

You might plan a trip and take it for granted that you'll arrive safely. You might map out financial plans well into the future and take it for granted that you'll be alive and that things will unfold pretty much as you expect. But the Bible says, "Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’ Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, ‘If it is the Lord's will, we will live and do this or that’" (James 4:13–15).

God doesn't like being ignored. He belongs at the center of our travel plans, at the center of our financial plans, at the center of all our other plans. Every plan we make is conditional on the ultimate "if": If it is the Lord's will, we will remain alive and do what we're planning.

Now planning isn't bad. In fact, the Bible says it's foolish not to plan ahead. The Lord isn't against planning. He's against making plans as though we're in charge and not God. It's okay to plan hard and work hard—but don't be a blowhard. Don't brag as though you control the future. You can go places and do things if the Lord gives you life and ability. But you can't do anything if God has other plans.

God is all-powerful and all-knowing. And you? Well, your life is as fleeting and foggy as mist. You can't see even one day into the future or know for sure whether you'll be alive. The Bible says, "In his heart a man plans his course, but the Lord determines his steps" (Proverbs 16:9). There are many proverbs along this similar line: "Many are the plans in a man's heart, but it is the Lord's purpose that prevails" (Proverbs 19:21); "A man's steps are directed by the Lord. How then can anyone understand his own way?" (Proverbs 20:24); "Do not boast about tomorrow, for you do not know what a day may bring forth" (Proverbs 27:1); "Pride goes before destruction, a haughty spirit before a fall" (Proverbs 16:18).

So don't plan proudly. Jesus told the story of a brilliant financial planner. This man wasn't just fooling himself about his financial skill like some of us do. He really was better than average at business and handling money. He got superior returns on his investments. He was healthy and wealthy, and he had big plans for the future. He said to himself, "I'm going to build bigger warehouses, accumulate even more wealth, and have a fabulous lifestyle for a long time to come. And I'm going to relax and enjoy it." But while the rich man was making his plans, God had other plans. 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, says Jesus, is how it will be with anyone who stores up things for himself but is not rich toward God (Luke 12:16–21).

This financial wizard was very smart, yet he was very dumb. He ignored God's will in at least two ways. First, he focused on his own self-centered goals without asking what God might want him to do with his wealth. And second, he never considered the ultimate "if." He never considered if God would keep him alive long enough to carry out his goals. It never entered his mind to say, "If it is the Lord's will, I will live and do this or that."

Are you any different when you're making financial plans? Do you think of God in setting your priorities? Is your main goal to be rich toward God—or just to be rich? As you move into the future, do you overconfidently expect everything to go as you expect, or are you prepared in case God has other plans for you? In financial planning and in all your planning, make this your motto: "If it is the Lord's will, I will live and do this or that."

So don't be overconfident when you're making financial plans. But don't be full of worry either. Worry won't help a thing. Jesus tells his followers not to worry about material needs. He says that if God provides food for birds and provides clothing for flowers, then your heavenly Father will certainly meet your needs. Jesus says, "I tell you, do not worry about your life, what you will eat, or about your body, what you will wear... Who of you by worrying can add a single hour to his life? Since you cannot do this very little thing, why do you worry about the rest?" (Luke 12:22, 25–26).

Trust God. That’s the key to calm, realistic, worry-free planning. There's a huge difference between planning and worrying. In worrying, you trouble your mind with things you can't know, and you waste energy on things you can't control and which may not happen at all. In planning, you focus your mind on things you can figure out, and you focus your energy on things that are within your power. And then you commit the outcome to God, trusting his loving care for you and resting in his will for your future.

So don't worry. Just plan. Get ready for the future, even if you don't know exactly what it holds.

We've seen that it's foolish to make proud plans, counting on all sorts of pleasant things that may not happen. And we've seen that it's foolish to be a worrywart, afraid of all sorts of bad things that may not happen. God wants us to make plans based on what seems likely to happen, to prepare also for some things that are less likely but quite possible, and all the while to recognize that our plans are always subject to God's plans.

The motto for all our planning must be: if it is the Lord's will, we will live and do this or that. Be ready at every moment for the ultimate future, when God requires your soul of you and you have to face him. And the only way you can be ready for that—the only way you can spend eternity in heaven and not in hell—is through faith in Jesus Christ, a living faith that transforms your life.

Jesus' story of the rich man who died suddenly reminds us that we must never lose sight of eternity but always be ready to meet the Lord at any moment.

So to sum up, when we think about pride and about worry, the antidote to those are godly fear and faith. When we're making our plans, the fear of God keeps us from pride. Proverbs says, "There is no wisdom, no insight, no plan that can succeed against the Lord." So don't be proud. Know that every plan you make is subject to God's will. And at the same time, have faith in God so you don't worry. Commit to the Lord whatever you do, and your plans will succeed. Against God, no plan can succeed. With God, your plans will succeed. That's the perspective to have when we're making our plans—including financial plans.

Some people prefer not to plan ahead, or they just don't plan ahead, and they have various reasons for that. For some it's a matter of faith. They say, "God will take care of my future. I should just trust him, not try to plan for it." Well, let me ask you: if you have that attitude—“I'm not going to do it because God will take care of it”—when you got up this morning, did you simply stand there, hold your arms out, and wait for the clothes to land on your body? When you went downstairs to the kitchen table, did you wait for the food to leap from your breakfast bowl into your mouth?

Well, God provides clothing. God provides food. Jesus says God provides clothing and food. So why would you put on your clothes? Why would you put food in your mouth? That's God's job! Come on—we know that's not how it works. God in his generosity provides us with food and clothing, but he does expect us to put the clothes on. He does expect us to put the food in our mouths.

And God has our future in his hands, but he also expects us to use the wisdom he gives us to plan for that future. And so we shouldn't fall into misguided faith that just says, "Because God is in charge and because God cares for me, I don't even have to think about it."

Another reason not to plan ahead is just neglect. "I haven't paid attention to finances. I've been too busy with other things, and I just can't be bothered with planning for finances." And so you just leave it alone and don't do it. Another reason closely related is laziness. And you might say, "Well, I'm not lazy. I work hard." Yeah, but do you work hard at planning your finances?

You can be lazy in one area of life and not in others. You may say to yourself, "Oh, budgets are boring. I don't like studying personal finance." Oh, so you don't like it, and so you don't do things you don't like, and you don't work at things you don't like? That's called laziness. So get over it, okay? Not learning about finance and not planning ahead is bad theology. It's foolish neglect, and it's laziness.

Proverbs says, "I went past the field of the sluggard, the man who lacks judgment; thorns had come up everywhere, the ground was covered with weeds." That's what happens when you don't plan and you don't work. You don't say, "Oh, I'm going to take whatever God gives me to grow out of the ground." Well, if you take that approach, you're going to get all thorns and weeds. And if you say, "I'm going to just let my finances go whatever way God lets them go," you're going to have a lot of financial thorns and weeds. Because God intends us to tend the garden. God intends us to tend and plan our finances.

Proverbs says, "The plans of the diligent lead to prosperity as surely as haste leads to poverty... Go to the ant, consider its ways and be wise. It stores its provisions in summer and gathers its food at harvest... Make plans by seeking advice." And so we're called to think hard, to use our own minds as much as we can to make good plans, but then also to consult with other good minds who can help us with good planning. The Bible not only does not say we shouldn't plan, but it very clearly says that we should and we must.

Well, when we think about financial planning, sometimes the basics are very simple. The book Personal Finance for Dummies gives three basic guidelines: spend less than you earn, save what you don't spend, invest what you save. You might say, "Man, why would I pay money to get a book that says that?" Well, it says a little more than that, but those are three basics. And then there's a lot of details on how to go about doing that. Sometimes those of us who are dummies can use something really just that simple: spend less than you earn, save what you don't spend, invest what you save.

In an earlier talk, we talked about dealing with debt, and we saw seven guidelines: first, put God first—give to him first by tithing—and pray and seek his wisdom. Then work hard and gain gradually. Don't try to get rich quick or to get rid of your debts all in five minutes. Just keep at it, work hard, keep earning, and gradually deal with things and make some income.

Budget so you track your expenses, and then you plan where you can cut certain kinds of spending so that you spend less than you earn. Build an emergency fund, starting with maybe $1,000, and then make it bigger as you're able. Pay off your debts in the order of the smallest balance first or the highest interest rate first, but have a plan and pay down those debts till they're gone. And then avoid credit and save at least 10% of your income so that you can build up savings and don't need to borrow in the future. And then when you've saved, you also can invest for future goals. Those are some of the guidelines for dealing with debt. That's an important part of your financial planning. It's hard to make much progress if you have huge debts hanging over you.

Another step of financial planning is reckoning with taxes. The Bible says, "Give to everyone what you owe them: pay your taxes and government fees to those who collect them" (Romans 13:7). You can't figure all your finances and ignore the impact of taxes.

When you're going to buy a house, you can't just think about what the amount of the mortgage is going to be or what the costs of the house are. You're also going to have to pay property taxes when you buy that house. And so make sure that's part of your plan so the property taxes don't kill you.

When you buy a car, or some clothing, or some furniture, don't just look at what the item costs. Look at what the sales tax also costs so that you know what the total expense is going to be.

When you're planning for your year, you need to realize that you don't just get to keep all your income. You're going to be paying income taxes on that, and you'll be taking home less than what you're actually earning from your employer because the federal government, the state government, and others are going to take money out of your paycheck.

The inheritance you leave—you sometimes need to have some plans for that, because the government might tax the inheritance that you leave behind for others. And so part of planning your finances is knowing what the taxes are going to be and taking that into account. Don't ignore it. You don't want to pay less than you owe because it's right that you pay what the government requires. At the same time, there's no need to pay more than you ought to, because there are other things you could invest in, like your family, like the church and God's kingdom. So don't pay the government more than you need to, even though you should pay what the law requires.

In this world, nothing can be said to be certain except death and taxes. Those are two foreseeable facts. It's wise to prepare for things that are possible but not certain—that’s what our plans are: we’re planning for things that are possible but not certain. But it's absolutely necessary to prepare for things that are absolutely certain. And Ben Franklin said, “Hey, death and taxes—those are pretty certain.”

Here's some foreseeable facts: you will either get old or you will die young—unless Jesus comes in your lifetime. Now, if you get old, what happens if you get too old for a job? Will you be able to pay for your needs? Well, save and invest for your retirement years in case you get old and need that money.

If you die young, will the people that you leave behind be able to pay for their needs? Are you going to leave them enough so that they can get by? Buy life insurance and make a will so that your beneficiaries get what you intended. So when you're thinking of the future, you say, "Well, I'm either going to get old or I'm going to die young, so I need to save and invest for retirement in case I get old, but I also need to buy life insurance and make a will in case I should die young."

That's part of financial planning. So right now, if you don't have a will, make a note to yourself—when this lecture is over—to get to work and make one, because that's just part of being responsible with the property that you have. And if you don't have life insurance and you have a spouse and children and you have some money and you're able to get it, then you need to do that. Because as the Bible says, you don't know what will happen tomorrow. You don't know if you're going to live. Your life is just a vapor, and so life insurance is one way to help provide for people in case you should die before you expected to.

Life has dangers, and you don't know what they're going to be. "You don't know what a day may bring forth," says Proverbs. "You don't even know what will happen tomorrow," says James. And Proverbs says, "A prudent man sees danger and takes refuge, but the simple keep going and suffer for it." You want to be a simpleton? Then you ignore the bad things that could happen and you just pretend that they're not going to happen. "Come," each one cries, "Let me get wine; let us drink our fill of beer. It's party time, and tomorrow will be like today or even far better!" That's the way the Bible portrays a fool. You just expect things are going to be okay no matter what you do, no matter how much you drink. Why would you need to plan? But the wise see danger, and they plan for it.

So be prepared for problems. What are some of the problems that we ought to plan for? Well, you could get sick. You could get injured. The medical costs of illness or injury can be very high. So do you have insurance, or a cost-sharing ministry among Christians that will cover the cost of medical treatment?

If you have property or a car, you may be liable if you're in an accident. If you have a car and the car is damaged, do you have to pay for it? Do you have the money to pay for a whole new car? Well, you should have auto insurance so that it could be paid for. If your house were to burn down, you can't just build another house—and few of us have money to do that. So you need property insurance.

If somebody else is injured in your house, or by your bad driving—(I know, we're all better drivers than average!)—but you may still have an accident that's your fault, who's going to pay the others who have the injuries from your accident? You need some liability insurance.

What if you lose your job? Or what if you get injured and disabled over the long period of time? Do you have disability insurance? Those are important things to think of, because it's too late once it happens. And if you're the provider in the family and you should die—as I pointed out already—what about the survivors? Do you have life insurance lined up to help provide for their needs?

So be prepared for problems. Financial planning is not just thinking about the rosy future and where to put all of my money and see my investments grow. Part of it is planning for the possibility of some problems.

Now you may say, "Well, don't you have faith in God? People of faith shouldn't have to plan on anything bad happening to them." Well, God himself says, "You don't know what's going to happen tomorrow." If injury or difficulty comes your way, be ready for that.

So again: share risks by insurance or through a well-run Christian cost-sharing ministry. Or also, for some of these, you can save up extra for hard times. Having an emergency fund—you’re going to need insurance for the big ones, no doubt about that. But for small problems that aren’t too expensive, that’s why you have your emergency fund, so that you can pay out of your own pocket rather than borrowing.

And then, when you've dealt with the tax factor, when you've dealt with debt, when you've also done some insuring against possible problems in your future, then also be ready to invest for future goals. And some of those common goals for many people are: buying a home, starting a business, educating children, funding good causes, and your own entire retirement and inheritance. So if those are things that you're aiming to have money for, then you need to know how to invest for them as well.

If you're going to need the money within a year or two, then that's a short-term investment, and you should put it in funds where there's a lower risk—and the return is also going to be lower—but you don't want to lose money if you're going to need it within a year or two. So let's say you're storing up a down payment for a home that you hope to buy three years from now. Put it in a fund that is not going to go up and down and risky and all over the place. Put it in one that's low risk, because you're going to need that money in a short time.

If you're looking toward your retirement and you're still 20 years away from retirement—or more, let's say—then you can invest in something that's higher risk but also higher return, such as a stock mutual fund, where there's the chance that it could gain a lot of money over that time. But in the short term, stocks can drop a lot. And so you need the money for short-term needs in shorter-term investments. And a longer-term investment—such as the stock market—should only be on things that you will only need a long time from now.

Invest for your future goals, because when that future arrives, you need to have invested and saved for it.

When you invest in certain kinds of investments, such as a stock mutual fund or even in bonds, if you're not familiar with them, you may say, "Boy, that's risky. I think I'd just as soon put my money under the mattress or keep my money in a savings account that pays a very little amount—but at least it's safe." Well, that's fine for the short term. But there are times when you do need to take bigger risks in order to reap bigger rewards.

Ecclesiastes 11 talks about risk and reward, and it says, "Whoever watches the wind will not plant; whoever looks at the clouds will not reap." If you're a farmer and you’ll only go out to work in the field if the weather forecast is absolutely perfect for the rest of the summer—if there's never going to be a terrible wind, if there's never going to be problems with rain at the wrong time or lack of rain when you wanted it—if you have to be guaranteed perfect weather for the whole summer, a farmer will never plant and he'll never harvest.

But Ecclesiastes says, "Sow your seed in the morning, and at evening let not your hands be idle, for you don't know which will succeed, whether this or that, or whether both will do equally well." One thing you do know: no risk, no reward. If you never do anything, you're never going to get anything. If you never invest, if you never sow your seed, you're never going to get a crop. And so even though you're a little worried about possible risk, you do need to weigh those risks and the rewards and then go for it.

Ecclesiastes says, "Cast your bread upon the waters, for after many days you will find it again." Here it's talking about sending out grain in ships. There's always the risk that those ships would sink and you'd lose your investment. But if the ships made it there and back again with things that were traded, you could make a huge profit. And so it's encouraging us and saying: sometimes you just cast your bread upon the waters—you dare to invest despite the risk.

But try to spread your risk around. "Give portions to seven, yes to eight, for you do not know what disaster may come upon the land." So you diversify your investments. You put some here, some there, some there, because you don't know which disaster will hit part of it. But if you don't have all your eggs in one basket—if you don't have all your investments in the same kind of thing—then even if one goes down, another one may still prosper.

So you need to dare to invest in the first place, and you need to diversify when you invest, because you don't know what will happen with various types of investments.

Invest in low risk for short-term goals, and seek higher return and risk when investing for long-term goals. So, cash—either a savings account or a money market account—are very low-risk types of accounts. They don't pay very much, but they also don't involve nearly as much risk, and they're excellent for short-term saving and investing.

Bonds are basically lending to companies or lending to governments. And bonds are ways of doing that. It's not wise for most ordinary people to buy individual bonds, but rather to buy bond mutual funds. That’s a way of lending to companies and to government. And these bonds will pay more than savings or a money market would, but also have a bit more risk—but quite a bit less risk in bonds than in stocks, whether stocks in your own country or stocks in other countries.

The way to have the most gain, ordinarily throughout history, has been to invest in the stock market. But those can go down a lot in the short term. So you can seek the higher risk if you've got a longer time frame, because even though they may go down in the short term, they tend to go up over the long haul.

One simple way to invest when you're thinking of your retirement and you don't want to know too much about stocks and bonds is to realize that some of the biggest and best mutual fund companies—such as Vanguard or T. Rowe Price or Fidelity, or maybe there are different ones in your country—find a good, reputable firm. But they often have a retirement date index fund where they just take the year of your retirement, and then the professionals figure out what is the best mix of stocks and bonds and whether international and domestic stocks and so on. They do the thinking for you, and they're pretty good at it. And you put your money into that retirement index fund.

What an index fund does is it invests in all the bonds in the bond market and all the stocks in a stock market. So it's very diversified—maximum diversification. It gives you an appropriate level of risk, and you don't have to fuss too much. You don't have to think about rebalancing your portfolio or how much you have. And that's an advantage, too, because if things go down for a while, you'll be tempted to take it all out. Just leave it there and let it go and let it grow.

One of the simplest but smartest ways to do it is simply to get a retirement date index fund, invest, keep saving in it for your retirement, and then let it go.

Some people say, "Well, what's the difference between investing and gambling? They both involve risk." Yeah, that's right. They do both involve risk. But that's where the similarity stops, because there is some kind of risk that is justified, another kind of risk that is very foolish.

With investing, your wealth grows if others flourish. When you invest in stocks and bonds, your wealth grows if the companies and the governments you invested in do okay—if they remain stable, if the companies grow—then your wealth grows. If people are benefiting and buying from those companies, then you are reaping some of the benefit of that. So you're benefiting because others are also flourishing.

In gambling, the only way your wealth grows is if somebody else loses. That's the only way—you're getting their money if you get lucky. And I've got news for you: usually your wealth is shrinking while the casino owner or the lottery is growing in its money. So, if you made any money at gambling, it's at somebody else's expense—and most of the time, you're going to lose.

Investing aims for gradual growth in wealth. It’s not a get-rich-quick scheme. Real investing—if you buy in the stock market today and then sell tomorrow hoping for a quick buck—that’s not real investing. That is gambling, because there you’re not investing based on how companies are going to do over the long term. You’re just trying to make quick money.

But real investing—longer term—aims for gradual growth in wealth. And gambling just aims for instant money. "I want it now, all of it." You want to hit the Mega Millions jackpot—and you won’t. You have a much better chance of getting killed in a car accident on the way to the store to buy the lottery ticket than you have of winning the lottery.

Investing is very likely to make you richer. Gambling is almost certain to make you poorer. So investing is rational risk. Gambling is rotten risk.

If you have a tendency to gamble—if you buy lottery tickets, if you go to casinos—just eliminate that from your life. It's wrong to use God’s money that way, and it’s foolish to treat yourself that way. I sometimes say that gambling is just a tax on people who are bad at math. Because the house wins. The casinos make money—they make it off you. The lotteries make money—they make it off you. Gambling is a rotten risk. It’s not a risk for the casinos and the lotteries—it’s just taking money from many, many people.

So, investing—yes. Gambling—no.

Warren Buffett is one of the richest men in the world. And I'm not saying he should be a model for all of us, but he does know a little bit about investing. And here are a few of his proverbs about planning and investing.

He says, "If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes." So Buffett is saying it’s just crazy to try to buy stocks and sell them a few minutes later or sell them the next day or sell them a few months later. You’re just speculating—you’re not really investing.

Another Buffett saying: "Someone is sitting in the shade today because someone planted a tree a long time ago." If you have wealth today, it’s probably because you invested and earned a long time ago. And so, expecting to have instant results isn’t wise. If you want the shade someday, plant a little tree now and see it grow.

Buffett also says, "Predicting rain doesn’t count. Building arks does." So just talking about finance is one thing, but you actually have to put your money where your mouth is. You have to actually take action. Noah didn’t just hear a forecast—he took action. When you think about financial planning, don’t just think about possible things in the future—you need to take action. Predicting rain doesn’t count. Building arks does.

Jack Bogle is the founder of the Vanguard group of funds, the biggest mutual fund company in the world. And Bogle has some proverbs too about investing.

One is, "If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks." Because stocks go up and down. Over the long term, they have historically gone up, but if you can’t afford a short-term loss of 20%, then don’t invest in it for the short term.

Another saying: "Don’t look for the needle in the haystack—just buy the haystack." By that he means: buy an index fund. He was one of the pioneers of index funds, which take the entire stock market and buy chunks of each of the companies in that market. And so when you buy an index fund, you are basically buying something that’s diversified across the whole stock market. So he says: don’t just look for the needle in the haystack—for that one company that’s going to do great—you probably won’t find it. If you buy the whole haystack, then you’ll get a little chunk of that company and of all the others, and as the total market rises, so will your investment.

He says, "The miracle of compounding returns has been overwhelmed by the tyranny of compounding costs." By that he means that sometimes your financial investor or your broker and your manager will cost you lots of money. So if you're going to invest, do it in low-cost mutual funds, not in a situation where you're paying a broker and a so-called expert who can't predict the market anyway. When you're paying them lots of money, that all comes out of your earnings.

Some more Bogle proverbs: "Time is your friend. Impulse is your enemy." When the stock market drops temporarily, the impulse is to sell. Time is your friend—wait, it goes up again.

"To invest with success, you must be a long-term investor." So don't mess with mutual funds and stocks if you're just investing for next year.

And I like this one: "Learn every day—but especially from the experiences of others. It’s cheaper." People have made a lot of mistakes—learn from their mistakes. It's cheaper than learning from your own.

And I would just add: learn from the Bible's proverbs. Because that's the experiences of others stamped with God's own inspiration and guidance on those proverbs. And it is cheaper to learn from the Bible's proverbs than to learn from your own bitter financial experience.

And in all of this—when you're planning, when you're investing—don't forget the ultimate investment. It's not just your retirement. If a few years or decades of retirement matter, what about the eternity that comes afterward?

Jesus says, "Do not store up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy and where thieves do not break in and steal. For where your treasure is, there your heart will be also" (Matthew 6:19–21).

So always be investing in God—investing in his kingdom, in its enterprises. In your planning, you do need to provide for your family. You need to provide for possible problems. You may need to provide for education and your retirement years. But that’s not your ultimate investment. That’s not your real treasure. So don’t let money on earth be your biggest treasure. It can go bad in a lot of ways—moth and rust destroy. Or as Proverbs says, sometimes money just sprouts wings and flies away.

So we do our planning. We do our investing. But above all, plan to serve God. Invest in the kingdom of heaven. Put your heart there. Put your treasure there. And you will find full satisfaction in your God.

 

Financial Planning
By David Feddes
Slide Contents


The Ultimate If

Now listen, you who say, “Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.” Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, “If it is the Lord’s will, we will live and do this or that.” (James 4:13-17)


God has final say

In his heart a man plans his course, but the LORD determines his steps. (16:9)

Many are the plans in a man’s heart, but it is the Lord’s purpose that prevails. (19:21).


Don’t plan proudly

A man’s steps are directed by the LORD. How then can anyone understand his own way? (20:24)

Do not boast about tomorrow, for you do not know what a day may bring forth. (27:1)

Pride goes before destruction, 
a haughty spirit before a fall. (16:18)


Change of plan

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 anyone who stores up things for himself but is not rich toward God. (Luke 12:20-21)


Do not worry

I tell you, do not worry about your life, what you will eat; or about your body, what you will wear… Who of you by worrying can add a single hour to his life? Since you cannot do this very little thing, why do you worry about the rest. (Luke 12:25-26).


Godly fear and faith
 when making plans

Fear of God (vs. pride): There is no wisdom, no insight, no plan that can succeed against the LORD. (21:30)

Faith in God (vs. worry): Commit to the LORD whatever you do, and your plans will succeed. (16:3)


Why not plan ahead?

  • Misguided faith: God will take care of my future. I should trust, not plan.
  • Neglect: I haven’t paid attention to finance. I’m busy with other things.
  • Laziness: Budgets are boring. I don’t like studying personal finance.


Financial folly

Not learning about finance and not planning ahead is bad theology, foolish neglect, and laziness!

I went past the field of the sluggard… the man who lacks judgment; thorns had come up everywhere, the ground was covered with weeds. (24:30-31)


Planning for prosperity

The plans of the diligent lead to prosperity as surely as haste leads to poverty. (21:5)

Go to the ant… consider its ways and be wise! ... it stores its provisions in summer and gathers its food at harvest. (6:6-8)

Make plans by seeking advice. (20:18)


Finance for dummies

  • Spend less than you earn.
  • Save what you don’t spend.
  • Invest what you save.


Dealing with debt

  1. Put God first. Tithe and pray.
  2. Work hard. Gain gradually.
  3. Budget to spend less than you earn.
  4. Build an emergency fund.
  5. Pay off debts in order of smallest balance or highest interest rate.
  6. Avoid credit. Save at least 10%.
  7. Invest for future goals.


Tax planning

Give to everyone what you owe them: Pay your taxes and government fees to those who collect them. (Rom 13:7)

  • Property tax
  • Sales tax
  • Income tax
  • Inheritance tax


Foreseeable fact

In this world nothing can be said to be certain, except death and taxes. (Benjamin Franklin)

It’s wise to prepare for things that are possible but not certain. But it’s absolutely necessary to prepare for things that are absolutely certain!


Foreseeable facts
You will either get old or die young.
(unless Jesus comes in your lifetime)

If you get too old for a job, will you be able to pay for your needs?
Save and invest for retirement!

If you die young, will those you leave behind be able to pay for their needs?
Buy life insurance! Make a will!


Dangers ahead

You do not know what a day may bring forth. (27:1)

You do not even know what will happen tomorrow. (James 4:14)

A prudent man sees danger and takes refuge, but the simple keep going and suffer for it. (22:3, 27:12).


Simpleton

“Come,” each one cries, “let me get wine! Let us drink our fill of beer! 
And tomorrow will be like today, 
or even far better.” (Isaiah 56:12)


Prepare for problems

  • Medical costs of illness or injury
  • Property, auto, and liability
  • Disability and loss of income
  • Death of provider; needs of survivors

Share risks by insurance or a well-run Christian cost-sharing ministry.

Save up extra for hard times.


Invest for future goals

  • Buying a home
  • Starting a business
  • Educating children
  • Funding good causes
  • Retirement & inheritance

Shorter time: lower risk & return

Longer time: higher risk & return


Risk and reward

Whoever watches the wind will not plant; whoever looks at the clouds will not reap… Sow your seed in the morning, and at evening let not your hands be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well. (Ecclesiastes 11:6)


Dare and diversify

  • Dare to invest despite risk: Cast your bread upon the waters, for after many days you will find it again.
  • Diversify investments: Give portions to seven, yes to eight, for you do not know what disaster may come upon the land. (Ecclesiastes 11:1-2)


Risk and time

Invest in low risk for short-term goals. Seek higher return and risk when investing for longer term goals.

  • Cash: savings or money market
  • Bonds
  • Domestic stocks
  • International stocks


Dare and diversify

Spread risk and seek reward among various types of assets, since you don’t know what will perform best.

  • Cash: savings or money market
  • Total U. S. Stock Index Fund
  • Total U. S. Bond Index Fund
  • Total International Stock Index Fund


Simple but smart

Choose a retirement date index fund: a mix of domestic stocks, international stocks, and bonds. As the date gets closer, the mix is automatically adjusted to be less risky. This offers:

  • Maximum diversification
  • Appropriate level of risk
  • Freedom from fuss


Investing

  • Your wealth grows if others flourish.
  • Aims for gradual growth in wealth
  • Very likely to make you richer
  • Rational risk

Gambling

  • Your wealth grows only if others lose.
  • Aims for instant wealth
  • Almost certain to make you poorer
  • Rotten risk


Buffet’s proverbs

If you aren’t willing to own a stock for ten years, don't even think about owning it for ten minutes.

Someone is sitting in the shade today because someone planted a tree a long time ago.

Predicting rain doesn’t count. Building arks does.


Bogle’s proverbs

If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.

Don't look for the needle in the haystack. Just buy the haystack!

The miracle of compounding returns has been overwhelmed by the tyranny of compounding costs.

Time is your friend; impulse is your enemy.

To invest with success, you must be a long-term investor.

Learn every day, but especially from the experiences of others. It’s cheaper!


Investing in eternity

Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. (Matthew 6:19-21)

Last modified: Monday, June 9, 2025, 4:03 PM