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The Nitty Gritty of Money
I borrowed this title from a book written by the current Kansas District LCMS treasurer, Brad Brunkow. Brad states, in the preface that, “The purpose of this book is to present a complete set of basic principles to manage money in daily life as a Christian”. The book was written targeting students grade five through eight, but I learned from this book also. Every one of us needs to be aware of sound, Bible-based, financial principles.
Below are Brad’s twelve "Nitty-Gritty Principles of Money".
1) With all things put God first. A tithe (10%) is a good benchmark for putting God first with your money.
2) Be content: Know the difference between wants and needs.
- Live within your means.
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Avoid debt in daily living.
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Practice saving.
3) More money just makes you more of what you already are, so learn to practice money values early on.
4) Budgeting is setting and following priorities and choices about money and time.
5) Demand and supply determine prices. Trendy, popular items will carry a higher price. Items in short supply will carry a higher price.
6) Time value of money: A dollar today is more desirable than a dollar in the future, so if spending is delayed, the desire is to have more money to spend later.
7) Compounding is the key to long-term wealth.
- Compounding is increased with more time and higher returns.
- The rule of 72 is a good approximation of the time it will take to double your money. Divide 72 by the interest rate to estimate the years it will take to double your money.
8) Risk includes
- not knowing what you are doing.
- uncertain outcomes, and
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the chance of losing money.
--Historically, over long time periods, the higher the risk, the higher the reward.
--Risk is described mathematically by standard deviation of the past results.
--One standard deviation is the range that captures about 2/3 of the past results. About 1/6 of the data is lower and 1/6 is higher the one standard deviation.
9) Business benefits have a coast. The benefit of compounding returns or sharing the business profits comes at the cost of investing your money and reinvesting the returns rather than spending it.
10) Financial plans and decisions are better made looking to the future. What happened in the past is helpful to know, but you must plan and act looking forward, not backward.
11) You are defined by your character, not by your possessions, power, prestige, pleasure, or popularity.
12) Start being a money manager now. Start with a simple plan and grow with it. Give, save, spend, and invest.
Principles one, two, and four I believe are foundational, spiritually. First fruit giving is an act of worship. God will give us our daily bread. He richly and daily provides for all our needs. Budgeting is a tool that helps us recognize the gifts God gives and the way He provides. Principal eleven I would rewrite to say that we are defined by our relationship to Christ. We are God’s chosen and redeemed children by grace. This is what defines us. This is what gives us value and worth.
Reading this book gave me insight into investing. I also see the benefit of good informed financial planning. I would commend this book for you to read. You can borrow my copy, or it is available on Amazon. If you read the book and want the activity guide Brad has graciously shared this with me to share with you.
I am told that the Bible has 2,350 verses that deal with possessions and money. Compare this to 500 passages about faith and prayer. God calls us to be good stewards of the gifts He gives us. It good for us to learn and study God’s principles for managing our money. Brad Brunkow does a good job doing this in his book, The Nitty-Gritty of Money.
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