Saturday, January 09, 2010
A New Pattern in 2010
Among other things, 2010 brings with it an opportunity for a fresh start for millions of Americans who have learned the hard way that poor financial planning can create tremendous hardship and prevent the exercise of radical generosity. So, whether you have weathered the "great recession" or been victimized by it, here are some things that can help you get on the right track in 2010.
1) Create and Maintain a Budget This is the most important thing you can do this year regarding your personal finances. If you don't have a systematic way of structuring and tracking your spending, it will be very difficult to make much progress.
If you don’t like the old-school method of cash envelopes, you can create a simple budget in Excel, Google Spreadsheets, or on a yellow legal pad if you need. There are also several good software programs that can help: Microsoft Money, Quicken, and the free website Mint.com
2) Let Your Money Work for You Regardless of recent changes in most banks’ checking accounts, if you pay a single dime in fees this year, it’s your own fault. There are still some free accounts out there like ING Direct. The advantage of a bank like ING is that your money will make more interest in their checking account than most banks are paying for CD’s.
I recently switched to ING after several years of eyeing them, and they have quickly won my customer loyalty. The downside is that they don’t have a brick-and-mortar operation, but since you read blogs you’re obviously web savvy and can figure out how to deal with an online account. If you want to try ING I’ve got some referral codes that will get you a $50 bonus for opening an account. Let me know and I’ll be happy to send you one. ING is currently my #1 financial provider recommendation, by far.
3) Set Some Goals If you don’t have any goals, your only measure of success is solvency vs. bankruptcy, and that’s pretty lame. How much debt do you have to pay off? Make that your goal. Do you want to buy a home one day? Make that a goal. Have you thought about adopting a child? Make that a goal.
By setting sound financial goals, you’ll be able to tell if you can really “afford” your latte habit or netflix subscription (by the way, having the cash for it doesn’t equal being able to afford it; having the cash for it after you’ve accounted for your goals means being able to afford it)
4) Establish an Emergency Fund and a Retirement Account Conventional wisdom suggests that you should have 3-6 months living expenses in savings in case of a job loss or medical crisis (preferably sitting liquid while earning decent interest, like with ING)
If you aren’t contributing to a 401k or something similar, make this the year to set up a Roth IRA and begin putting 10-15% of your income towards it. Ask anyone over 40 that didn’t do this adequately when they were in their 20’s how vital it is.
5) Move from “Giving When You Can” to Radical Generosity If we are intent on following Jesus, then we have to learn what this means. 2 Corinthians 8 tells us how radically generous God is: “For you know the grace of our Lord Jesus Christ, that though he was rich, yet for your sake he became poor, so that you by his poverty might become rich.”
Most people who claim to follow Jesus give about 2% of their income away. If just those people would give 10% of their income away instead, we’d have 150% of what it would take to solve world hunger for a year. What if they gave away 20% or 30%...or even 50%!
If your giving is driven primarily by guilt, then you’ll never be able to break into radical generosity. You’ve got to develop a vision for the better future that will be created by your sharing. What kind of future will your generosity help shape? If God is renewing creation and healing this current brokenness, how will you be a part of that amazing work? Rescuing women from sex slavery? Providing life saving heart surgeries for children in war torn countries? Empowering the severely oppressed? Helping start churches all over the world?
Have a better vision for your life this year than merely upgrading your current standard of living or being entertained by the newest gadget. Understand that God desires for his people to embrace a radical, future-shaping generosity that will “loose the bonds of wickedness, undo the straps of the yoke, and let the oppressed go free.” Is 58
In order for us to see this kind of generosity released more and more in our lives, it means we’re going to have to be people of diligence who steward our money in a mature, responsible, judicious way (see numbers 1-4).
May this year be one of joyous freedom, abounding love and radical generosity.